Risk register · entry
Q-F · FraudVesttoo LOC fraud
'Collateralised' reinsurance where the bank letters of credit were forged.
The fifth quadrant, where the thing was never real. The tell is that the story is too clean.
Why this room
The payoff structure looked simple and bounded, a fixed collateral amount backing a defined reinsurance risk, exactly the low-complexity, low-tail profile of Q4. But because the "collateral" was forged rather than real, the actual tail was unbounded loss dressed up as a modeled, diversifiable exposure, which is why the story reads as a slide from Q4 toward Q1 once the forgery is exposed.
The record
- Total forged letters of credit approximately $4 billionlikely
- White Rock (Aon) filing: 37 letters of credit worth about $2.35 billion flagged as likely invalidlikely
- China Construction Bank accused of fabricating over $2.8 billion of the LOCsuncertain
- Total creditor claims in Vesttoo bankruptcy reached $4.8 billionlikely
- Expected creditor recovery under confirmed plan: less than $100 million (roughly $77-88 million plus $6-48 million contingent on litigation)likely
- Santander shown a fraudulent $77.75 million letter of credit around mid-July 2023, triggering discoverylikely
- Chapter 11 petitions filed in Delaware on August 14-15, 2023certain
- Co-founders Yaniv Bertele (CEO) and Alon Lifshitz removed from executive roles August 3, 2023, later officially firedcertain
- Kroll investigation named Bertele, Lifshitz, Udi Ginati, and Josh Rurka as directly involvedlikely
- Chapter 11 liquidation plan confirmed in Delaware bankruptcy court late February 2024likely
Sources
The book
This entry is one of 111 in the register. The full story, and what it cost the people who lived it, is in Risky Business by Claudia Zeisberger, David Munro and Joanna Reijgersberg-Siew.
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