Vesttoo report claims co-founders “directly involved in creating fake documents and forging identities”
Vesttoo report claims co-founders “directly involved in creating fake documents and forging identities”
The insurtech’s board filed its first interim report with the bankruptcy court and confirmed the source of Letter of Credit allegations. "This is a biased and fundamentally flawed investigation, which targeted the company's founders from the beginning," Bertele said
The board of battered insurtech startup Vesttoo filed its first interim report in the United States Bankruptcy Court for the District of Delaware on Thursday. The investigation identified that “pervasive and systemic misconduct” was engaged in by a limited set of Vesttoo executives and other third-parties outside of Vesttoo. According to the report, this misconduct was shielded from the majority of Vesttoo’s employees, the Board of Directors and the insurance markets.
“Among the critical findings from the investigation are that a number of former Vesttoo executives, namely Yaniv Bertele, Alon Lifshitz, Udi Ginati and Josh Rurka were directly involved in creating fake documents and forging identities,” read the report prepared by financial and risk advisory firm Kroll. “A number of third parties were also involved in this scheme, including bank employees of China Construction Bank and other banks and individuals associated with the Company’s largest investor, a company known as Yu Po Finance Ltd. While the company initially stated that the source of the fraud is external, the evidence found demonstrates that the individuals stated above knowingly directed, instigated and engaged in the fraudulent activities themselves. The nature and extent of the conspiracy by and among the various wrongdoers took various forms.”
Ami Barlev, Vesttoo’s interim CEO noted that, “The investigation has confirmed that this scheme was confined to the following Vesttoo executives - Yaniv Bertele (former CEO), Alon Lifshitz (former CFE), Udi Ginati (former Senior Director, Capital Markets) and Josh Rurka (former Senior Director, Asian Markets), who acted with external entities such as employees of China Construction Bank and Standard Chartered. While we obviously remain very troubled by the misconduct of those that the Company and markets placed great trust in, we are pleased that the investigation has confirmed that this scheme was confined to a small subset of the Vesttoo leadership team.
“The Company’s technology platform and its core value remain strong and we intend to use it and our deeply experienced insurance professionals to emerge from this process as a trusted partner.”
According to the report, in total, almost $3.36 billion of standby letters of credit (LOC) may be involved, $2.81 billion from China Construction Bank, $362.5 million from Standard Chartered Bank and $186 million from Santander.
“We can guarantee today that the company has embarked on a new path, after a deep identification of the factors that harmed its activity,” added Barlev. “We will act decisively in order to sue anyone who harmed the company's activities, its name and its reputation, including China Construction Bank, Yaniv Bertele, Alon Lifshitz, Udi Ginati and Josh Rurka.
“We believe that the company has significant technological, business and economic value, and through a proper process of restructuring, and conducting proper negotiations, we will be able to reach a result to the benefit of all stakeholders.”
The Vesttoo board of directors officially fired Bertele and Lifshitz last week. Bertele and Lifshitz were placed on paid leave earlier last month shortly after the alleged fraud surrounding letters of credit (LOCs) was revealed.
The Vesttoo board, which included current interim CEO Ami Barlev, Pasha Romanovski, General Partner of Hanaco Ventures, and Chris Gottschalk, General Partner at Mouro Capital, alongside the three founders of the company, initiated an external investigation when the scandal emerged. According to Bertele, the initial investigation was entrusted to the Meitar law firm, but shortly afterward, was reassigned to Kroll, which he says is operating under a conflict of interest and has ties to members of the board of directors.
The company also confirmed on Thursday that Yaniv Bertele’s attempt to install attorney Ziv Ironi to serve on Vesttoo’s board on his behalf was not accepted by the Board of Directors, and Bertele has been removed from the Board.
Attorneys Tal Shapira and Meirav Bar-Zik stated on behalf of Yaniv Bertele that he strongly rejects the claims.
"This is a biased and fundamentally flawed investigation, which targeted the company's founders from the beginning," their statement read. "Mr. Bertele has serious complaints about both the way the inspection procedure was conducted and its conclusions, as well as the conduct of certain company executives and the decisions made in his case.
"Mr. Bertele, along with the other founders, established the company with their own hands, dedicating their days and nights to it, and performed their duties to the best of their abilities in accordance with the binding legal provisions.
"Unfortunately, the inspection procedure, accompanied by trending and misleading leaks, was designed to facilitate a takeover of the company as part of a shareholder conflict within the company, and matters will be clarified in court."
