Insurtech Vesttoo has now filed its first interim report in the U.S. bankruptcy court for Delaware following its investigation into fraudulent letters of credit (LOC), and says that its scrutiny of the matter has 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, the misconduct was shielded from most of the firm’s employees, the Board, and the insurance markets.
Interim Chief Executive Officer (CEO), Ami Barlev, commented: “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.”
Vesttoo notes that the report was prepared in order to provide an update on four core objectives of the bankruptcy case. This includes identifying the root cause of Vesttoo’s collapse through a comprehensive internal investigation; establishing a process to pursue both individuals and entities that had caused the harm to Vesttoo; to create institutional controls to address those shortcomings found in the firm’s on-going investigation and provide timely information to regulators throughout the world; and to re-formulate Vesttoo’s strategic business plan.
Vesttoo says that the investigation team was given unfettered access to company documents and systems, as well as employees and others within the control of the company.
The insurtech explains that one of the key findings of the investigation is that numerous former executives at the firm, including Bertele, Lifshitz, Udi Ginati, and Josh Rurka, were “directly involved in creating fake documents and forging identities.”
Numerous third parties were also involved, says Vesttoo, including bank employees of China Construction Bank and other banks and individuals associated with the the firm’s largest investor, Yu Po Finance Ltd.
On August 11th, Vesttoo said that following initial conclusions from an in-depth investigation it had discovered that numerous external factors caused the current crisis. Today, however, the insurtech says that there is evidence that the individuals noted in this article “knowingly directed, instigated and engaged in the fraudulent activities themselves,” and that the “nature and extent of the conspiracy by and among the various wrongdoers took various forms.”
According to Vesttoo, the report shows the steps it has taken to ensure that appropriate institutional financial security controls are in place and to resolve contractual obligations on a commercial basis.
Vesttoo also says that the report describes the “development of a commercially reasonable and achievable plan for reforming and conducting its business going-forward, named “Trade Forward.””
The company says that these efforts are being led by a Board Special Committee, comprised of industry veterans Chris Gottschalk and Pasha Romanovski, and a number of Vesttoo’s key employees.
Barlev continued: “We can guarantee today that the company has embarked on a new path, after a deep identification of the factors that harmed its activity. 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. This is the only way forward. We will work day and night in order to direct the company on a new business path. The company operates in a high-quality market, with tremendous business potential, and at the same time brings with it groundbreaking technology and a model of significant economic value to the insurance market.”
In its statement, Vesttoo also explains that the report of the investigation notes that there is no dispute the firm suffered from a lack of institutional controls and misdeeds of those in charge and others which has ultimately led to “substantial value destruction and mistrust” in its platform.
Despite this, Vesttoo says that together with its advisors it intends to work with the newly-formed Committee of Unsecured Creditors in the US bankruptcy case and other key stakeholder groups in an effort to address the issues and position the firm for future success.
“Lastly, the company can confirm 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 was subsequentially removed from the Board,” concludes Vesttoo.