Vesttoo wins $30.5m foreclosure against founder and executives
Embattled insurtech Vesttoo has won restraining orders against its co-founders and top executives and had also been awarded foreclosures valued at more than $30.5 million against them, the company said.
Vesttoo, which has entered Chapter 11 bankruptcy proceedings and has accused the executives of actively participating in creating fraudulent letters of credit used as collateral for reinsurance transactions, said it had sought the injunctions on September 12.
It said it had asked to seize $199.8 million from Yaniv Bertele, former CEO of the company, and Alon Lifshitz, former chief financial engineer.
The company also requested that the courts seize $64.3 million from former employees Udi Ginati and Joshua Rurka, as well as a former finder for the company, Tal Ezer.
“The second request of the district court was for a temporary freeze on the bank accounts, real estate assets and any stock of the above mentioned, as well as a freeze on wire transfers from a bank account in Switzerland,” Vesttoo said in a statement.
“The court ruled in the company’s favour on both requests, providing a temporary restraining order on the 14th of September. The court approved a foreclosure of 90,002,116 New Israeli Shekels ($23.4 million) on Bertele and Lifshitz’ assets, as well as 27,602,116 NIS ($7.2 million) on the other two employees and the finder.
The Vesttoo statement said that as a result of the independent investigation carried out by leading third parties, Vesttoo alleges that the defendants carried out forgery and other fraudulent activities while misleading insurance companies, reinsurers and other clients, as well as the Board of Directors and the company’s employees. The company claims that, according to the evidence discovered by the investigation, the five defendants forged fraudulent letters of credit (LOCs) from leading international banks that were then used as collateral in the majority of the company’s transactions.
The company further claims that, according to the findings, Bertele and Lifshitz forged signatures of bank employees, as well as impersonated a fictitious bank employee by the name of “Alex Garcia”, who they allegedly created in order to hide their fraudulent activities. Vesttoo is demanding that Bertele and Lifshitz compensate it for use of its funds for their personal expenses, including family vacations and private jets, which had nothing to do with the company’s activities. Bertele also used company funds for an extravagant birthday party, personal aesthetic treatments, large payments to his family and more.
Ami Barlev, CEO of Vesttoo, commented, “The unilateral court ruling and temporary restraining order reinforce the results of the investigation and our claims against Mr Bertele and Mr Lifshitz, as well and Mr Ginati, Mr Rurka and Mr Ezer.
“This ruling was supported by very clear evidence obtained by the courts and support the findings of the investigation. This injunction is part of a larger legal process to be heard by the courts, however the fact that the judge provided the foreclosures at such a scale demonstrates the straightforwardness and conclusiveness of the evidence.”
The decisions come as Vesttoo is also engaged in a war of words with the liquidators of Bermuda-based Vesttoo Alpha P&C and the segregated cells of an Aon affiliated company, White Rock Insurance.
The Bermuda Monetary Authority and segregated cell company White Rock Insurance have joined forces to pursue “maximum recovery” of assets from beleaguered insurtech Vesttoo.
White Rock, a subsidiary of insurance broker Aon, had said it was launching arbitration proceedings against Vesttoo to recover $136.7 million in funds disbursed to the troubled insurtech.
Vesttoo has found investors for White Rock insurance cedants in insurance linked securities, but Vesttoo later learned that some investors had presented fraudulent letters of credit to Vesttoo.
As a result, White Rock said it was launching arbitration proceedings against Vesttoo. It also attempted to freeze the company’s assets in the US, a move which was stymied when Vesttoo put all its companies into Chapter 11 bankruptcy proceedings.
Last week in a filing in the Delaware bankruptcy courts, liquidators Michael Morrison and Charles Thresh argued they should dbe allowed to continue the liquidation of the Wite Rock cells.
They also cast doubt on the credibility of the Vesttoo board.
“Vesttoo has admitted it perpetrated what is likely the largest fraud ever in the Bermuda (re)insurance market through ‘pervasive and systematic misconduct’ as part of a conspiracy among multiple Vesttoo senior officers and directors and others,” the filing said.
“Despite the pervasive fraud at Vesttoo, no trustee or independent crisis manager has been installed to oversee Vesttoo. Instead, many of Vesttoo’s pre-bankruptcy senior officers and directors remain in place.
“Yet Vesttoo admits that for years there was a massive ongoing fraud and multiple ‘red flags’ right in front of those officers and directors that they somehow perceived as ‘business as usual’.”
Vesttoo pushed back at the claims in a statement, placing responsibility for the fraud at the hands of the now fired employees.
Judge Mary Mary F Walrath, of the United States Bankruptcy Court in the District of Delaware,,ordered the Bermuda joint provisional liquidators to hold off in their pursuit of White Rock cell assets.
“White Rock and the JPLs shall not take any action that violates the automatic stay applicable to these debtors’ bankruptcy estates without further relief from this court modifying the automatic stay,” her ruling said.
She ordered the parties to try to come to an agreement. If they failed to do so, a hearing would be held on October 2.