A new filing in the Vesttoo scandal involving allegedly fraudulent letters of credit (L/Cs) being used to perpetrate a multi-billion dollar fraud involving insurance fintech, Vesttoo (DC World News, 19 July 2023), has shed more light on the size of the scam.

Whereas previous reports suggested that forged L/Cs worth an apparent US$4 billion were deployed in the alleged fraud, a new filing by White Rock Insurance states that 37 L/Cs purportedly worth US$2.35 billion were used to support its reinsurance deals.

Banks involved

A Delaware bankruptcy court filing by White Rock, which is owned by insurance giant Aon, asks the judge to reject the imposition of an automatic stay in its dispute with Vesttoo and claims that it now appears that the 37 L/Cs used to support White Rock Bermuda transactions are fraudulent.

The filing lists the banks named on fraudulent documents as China Construction Bank (CCB), Banco Santander and Standard Chartered.

Not issued by CCB

"The banks listed above have indicated that the L/Cs that Vesttoo had represented collateralised reinsurance contracts had actually been invalidly executed," according to the filing.

It then explains that one of the parties to an insurance contract attempted to draw on an L/C apparently issued by CCB but was told that the documents were "not issued by CCB and appeared to be fraudulent."

Co-founders sacked

In other developments, Vesttoo co-founders, CEO Yaniv Bertele and chief financial engineer Alon Lifshitz, have been sacked, by the insurance fintech's board after an investigation by financial and risk advisory firm, Kroll.

Apparently hinting at the co-founders' involvement in the fraud, board representatives stated that 'individuals' in Vesttoo suspected of participating in fraudulent activities had been removed from the company.

Bertele and Lifshitz have responded by claiming that the Kroll-run internal investigation represented a significant conflict of interest and that no evidence has been found against them, let alone presented.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.