FBI investigating alleged fraud at Vesttoo
FBI investigating alleged fraud at Vesttoo
Vesttoo announced on Tuesday that it is laying off around 150 employees, accounting for 75% of the company’s workforce
The FBI Financial Crimes team is investigating the alleged fraud at Vesttoo, according to a statement from reinsurance firm Corinthian published on website Artemis.
“In conjunction with our investigation, we have been in constant communication with the FBI Financial Crimes team who is conducting their own investigation into the alleged fraudulent activity,” read the Corinthian statement. “The Corinthian team is committed to providing any and all relevant information to the FBI to assist with their investigation and we are confident that their involvement will provide answers to many of the unanswered questions that exist.”
The fraud scandal at Vesttoo involves a number of American insurance companies that in recent weeks had to issue notices on the status of their collateral and their relationship with the Israeli company.
Vesttoo announced on Tuesday that it is laying off around 150 employees, accounting for 75% of the company’s workforce.
Calcalist uncovered last month that the allegedly fake letters of credit (LOCs) provided by investors to insurers for reinsurance transactions on the Vesttoo platform are believed to total a sum of around $4 billion. The fraud came to light when one of the LOCs was found to be fake, leading to a comprehensive review of all letters of credit issued by the company.
The Israeli startup released a statement last week admitting that “at a minimum, it appears that Vesttoo’s procedures were circumvented.”
“The only way to give the company a fighting chance of survival and getting back to a path of sustainable growth is to keep on a small core of people that represent bare operational necessity,” CEO Yaniv Bertele wrote in an email to employees. “These changes are meant to preserve, and focus on Vesttoo’s core services, our data-driven solution and marketplace, and providing solutions for our affected clients.
“With regards to the investigation, the company is doing all it can to determine how and where the fraudulent LOCs originated. At a minimum, it appears that Vesttoo’s procedures were circumvented by external parties but we are committed to understanding the full picture of what happened. This is why we have engaged an experienced investigations team and external attorneys to advise us throughout this process.”
Clear Blue Insurance Group and Obsidian Insurance Holdings were among the companies which released statements last week aimed at reassuring their clients in the wake of the Vesttoo scandal.
Corinthian said earlier this week that it has agreed to terms on an injection of capital that could reach up to $200 million to replace collateral linked to Vesttoo.
