A pair of lawsuits that allege China Construction Bank staff were complicit in the reinsurance collateral fraud perpetrated by executives at Vesttoo could now be combined, as the Southern District of New York court looks to save time and conserve judicial resources.
The Vesttoo letter of credit (LOC) fraud scandal continues to create litigation costs for the parties involved and we’ve now learned of another ongoing case in the Southern District of New York, as well as the fact the outstanding lawsuits against China Construction Bank may now be brought together.
As we’d reported before, Porch Group’s Homeowners of America Insurance Company (HOA) had filed a law suit in New York against China Construction Bank Corporation over the Vesttoo reinsurance collateral fraud.
Porch accused the massive Chinese bank of “enabling its personnel to perpetrate a colossal fraud” on the plaintiffs.
China Construction Bank had been named as the issuing institution for a significant amount of the fraudulent letters of credit (LOC) from the Vesttoo case.
As a reminder, of the billions of dollars in letters of credit (LOC) that should have supported the reinsurance deals involving Vesttoo, most were found to be forged or invalid and the majority of those were purported to have come from China Construction Bank.
In total, almost $3.36 billion of standby letters of credit (LOC) are presumed to have been fraudulently created under the Vesttoo scheme.
Of these, figures Artemis had seen towards the end of 2023 suggested that $2.81 billion of these were linked to China Construction Bank, with $362.5m purportedly linked to Standard Chartered Bank and $186m to Santander.
During the bankruptcy of Vesttoo, it came to light that emails show a China Construction Bank (CCB) employee, Chun-Yin Lam, used an official bank email address to communicate with some of the Vesttoo employees accused of perpetrating the fraud, including co-founders Yaniv Bertele and Alon Lifshitz, as well as capital finder Udi Ginati.
CCB employee Lam had also identified the Chinese investor implicated in the fraud, Yu Po Holdings, as a client of the bank. Recall that Yu Po Holdings was the primary investor in reinsurance transactions involving fraudulent LOCs issued by CCB, although questions remain over whether Yu Po actually exists as an investor, or was merely a shell used for the fraud, with most saying the latter is the more likely.
Now, we’ve learned that program services and fronting specialist Incline P&C Group also has an open lawsuit against China Construction Bank in the same district court, over the Vesttoo reinsurance collateral fraud.
Incline P&C Group entities are seeking damages from China Construction Bank for much the same reasons as Porch Group, alleging that several letters of credit (LOCs) each “constituted a valid and enforceable contract” between their insurance entities and CCB, so they seek breach of contract damages .
The LOCs affecting Incline P&C linked reinsurance deals, each of which were among those fraudulently created during the Vesttoo fraud it seems, have been collectively valued at more than $43 million.
In both cases, China Construction Bank has sought to have the case dismissed, claiming the New York court does not have jurisdiction over it, but the plaintiffs are persisting and have rejected the attempt to dismiss the lawsuits, leading to a proposal to combine the cases, we understand.
Now, the parties involved have been given seven days to object to the pre-trial consolidation of the cases against China Construction Bank.
As the cases appear to be following a similar pattern of calls for dismissal and updated complaints, while the ultimate grievance is the same, it perhaps makes sense to save judicial time and bring the actions together.
So, Incline P&C emerges as another company seeking to be compensated for the damage it suffered as a result of the Vesttoo reinsurance collateral fraud, joining others seeking to hold to account companies linked to the fraud that occurred.
The costs of legal action related to the Vesttoo scandal continue to rise at the same time.
How successful attempts to get recoveries from the defendants in these various Vesttoo-linked court cases will be remains to be seen, while the still conspicuously absent criminal case remains just that.
Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.
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Publish date : 2024-08-06 02:41:00
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