Court approves Vesttoo to seize $30m from fraud accused co-founders & execs

According to a report in the Israeli media, the Tel Aviv District Court has approved Vesttoo to seize approximately $30 million in assets from its two ousted co-founders, as well as the persons that worked to source investors who have been implicated in the letter of credit (LOC) fraud scheme.

As we wrote yesterday, Vesttoo went to the Tel Aviv court to demand the return of 770 million Israeli New Shekels (approx US $201 million), from co-founders Bertele and Lifshitz.

The insurtech said that the compensation is due given the large scale fraud the pair are alleged to have been involved in, that has now driven the company to bankruptcy.

On top of that, a further 247 million Israeli New Shekels (almost US $65 million) was being demanded from Udi Ginati, Joshua Rurka and Tal Ezer, who were all named as involved in the sourcing of investors, including those behind the majority of the invalid letters of credit (LOCs).

Now, Israeli publisher Calcalist has reported that the court has approved the seizure of some $30 million of assets from these five persons.

The court is said to have approved foreclosures of roughly $23 million on the assets of co-founders Bertele and Lifshitz, as well as foreclosures totaling $7.2 million for the other three named above.

Another publisher, Globes, said that the court arrangement calls for assets including apartments to be impounded, rather than bank accounts.

Ami Barlev, CEO of Vesttoo, said in a statement following the court decision, “The court’s unilateral approval of the temporary reliefs and foreclosures that were requested confirms the results of the company’s investigation against Mr. Bertele, Mr. Lifshitz, Mr. Ginati, Mr. Rurke, and Mr. Ezer. The request for temporary reliefs was supported by many pieces of evidence. The district court unequivocally states that the evidence presented supports the findings of the investigation conducted by the company. This request for temporary relief is part of a broader legal proceeding that will be discussed later according to the legal procedures, but the fact that the judge imposed these foreclosures and on such a significant scale is the most important thing from our point of view and the proof that the investigation provided true evidence.”

It would seem appropriate that any value recovered by Vesttoo in Israel from those implicated in the fraud, should then be subject to and protected by the bankruptcy proceedings in the US, so giving creditors the potential to benefit from those recoveries of value.

Calcalist also has statements from the lawyers of Bertele and Lifshitz, which we include below for completeness.

Lawyers Tal Shapira and Meirav Bar-Zik, stated on behalf of Bertele, “The request in question, as well as the decision given in it, were not presented to Bertele. As has often been the case, the details were leaked to the media beforehand. The request for relief on which the request for foreclosures is based is an idle request that lacks any factual and legal basis and was unlawfully submitted within the framework of insolvency proceedings in a clear and transparent attempt to avoid paying a toll. It will be rejected outright, along with the request for foreclosures that was submitted alongside it. The decision, which is unknown to Bertele, was given unilaterally without Bertele being given the opportunity to respond to the claims, and there is no need to say that Bertele’s full position in relation to the unfounded claims being made, as well as the flawed and biased investigation procedure that is at the center of it, will be submitted to the court.”

Nati Haim, from law firm Agmon and Tulchinsky, said on behalf of Alon Lifshitz that, “The documents have just been handed to them and they will study them and respond to the court. However, it can already be said that the court has rejected most of the requests to impose temporary foreclosures and not without reason. This is a procedure without a legal and factual basis and we are convinced that the court will reject the procedure in its entirety after hearing our arguments. To add to that and worst of all, it is a procedure that is entirely controlled by those who are in an extreme conflict of interest, who served as directors of the company throughout the relevant period and are now trying to vindicate themselves by filing idle procedures.”

It is important to remember that nobody has been found guilty of the fraud in a court yet, although the start of criminal court proceedings can only be a matter of time.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.