Vesttoo founders officially fired by board after conclusion of fraud investigation
Vesttoo founders officially fired by board after conclusion of fraud investigation
After being placed on paid leave earlier this month, CEO Yaniv Bertele and Chief Financial Engineer Alon Lifshitz have been sacked, with the board hinting they were involved in the alleged fraud at the company. “The investigative body singled out the founders from the outset. Despite an extensive investigation, no evidence has been found against them, let alone presented,” Bertele and Lifshitz said in response
The Vesttoo board of directors officially fired two of the company’s co-founders on Sunday - CEO Yaniv Bertele and Chief Financial Engineer Alon Lifshitz. This decision comes in light of the conclusion of the investigation and the submission of findings by financial and risk advisory Kroll, which looked into the alleged fraud at the high-tech firm. Bertele and Lifshitz were placed on paid leave earlier this month shortly after the alleged fraud surrounding letters of credit (LOCs) was revealed.
While the results of Kroll's investigation have not yet been published, the company's board of directors hinted two weeks ago that the founders were involved in the fraud. In a statement regarding the lifting of the freeze on Vesstto's assets in the U.S., board representatives stated that "individuals” within the company suspected of being involved in fraudulent activities in some manner were removed from the company.
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Outgoing CEO Yaniv Bertele and Chief Financial Engineer Alon Lifshitz.
(Photo: Vesttoo)
Calcalist learned that the board's allegations against the founders stemmed from the discovery of another problematic deal, amounting to millions of dollars, executed by Vesttoo in 2019, which relied on a fake line of credit from Citibank. At this early stage in the company’s life, Vesstto included only the entrepreneurs and a small group of employees. This appears to further establish a direct or indirect link between the founders and the fraud at the company. Another plausible explanation for the emergence of problems in the company's initial transactions attributes the fraud to the entities with which the company collaborated, who were responsible for connecting sources of insurance risk with investors.
The most recent findings involving an alleged fake credit line from Citibank could prevent the potential sale of Vesstto to a third party. This is due to indications that the fraud may have extended to U.S. banks, contrary to earlier suspicions of it being confined to Chinese banks.
Vesstto did not reply to Calcalist’s request for a response.
Bertele and Lifshitz released a statement reading: "Unfortunately, opportunistic parties exploited the temporary crisis the company was facing to advance aggressive and unilateral actions aimed at taking control of the company. In our view, the auditing body is in a significant conflict of interest, given the personal involvement of those who appointed it in the events being audited. This investigative body singled out the founders from the outset. Despite an extensive investigation, no evidence has been found against them, let alone presented.
"Consequently, in the absence of any substantial findings, baseless and deceitful allegations against the founders began to be leaked to the media in an attempt to tarnish their reputation, without affording them a basic opportunity to address these claims. It's crucial to note that such leaks significantly undermine the company's business endeavors, including with established and reputable entities that have faith in the company and seek to support its growth. Needless to say, the founders retain all their claims and rights in this matter."
Vesttoo - partly backed by Banco Santander's fintech venture capital arm Mouro Capital - has laid off staff, closed offices and appointed an interim chief executive following the discovery of fraudulent letters of credit used on its platform.
The company has conducted internal and external analysis of events leading up to the first report of a fraudulent letter of credit that was used in many transactions. Led by Mouro, Vesttoo last raised $80 million at a $1 billion valuation last October.
