SEC Suit Targets Former Lugano Diamonds Founder, CEO

By | September 04, 2026

The Securities and Exchange Commission (SEC) has filed a complaint against Mordechai (Moti) Ferder, the former CEO and cofounder of Lugano Diamonds, alleging that he “orchestrated a massive accounting fraud.”

In 2021, Ferder sold 60% of Lugano, which was then a high-end four-store chain based in Newport Beach, Calif., to hedge fund Compass Diversified (CODI) for $104 million—giving the company an enterprise value of $256 million.

Once in charge, CODI recruited high-profile names, including the former CEO of Tiffany & Co., to Lugano’s board. It eventually grew the chain to 10 stores.

In May 2025, the relationship fell apart. CODI declared that Lugano’s financial statements “could not be relied on,” and Ferder stepped down as CEO and left the business. (According to the SEC complaint, he also left the United States around this time and has not returned since.)

Five months later, Lugano filed for Chapter 11. This January, Enhanced Retail Funding, a division of Gordon Brothers, purchased the company. In June, CODI announced that Lugano would liquidate.

Yet the company does not look like it will die quietly. CODI is suing Ferder, and it’s been targeted by a series of shareholder suits. A Bloomberg report suggested the FBI was investigating some of the deals Ferder made at Lugano.

The SEC, however, has gone first. The agency’s complaint, filed Aug. 30 in California federal court, alleges that Ferder and his codefendants “deceived individuals into investing hundreds of millions of dollars in diamonds that neither defendants nor Lugano ever owned, based on promises that Ferder would use his jewelry industry expertise to increase the diamonds’ value. At Ferder’s direction, Lugano then fraudulently recorded the money received from investors as revenue.”

He later disguised those transactions as payments to suppliers, manipulated inventory records, and falsified documents, it said.

All of which could increase scrutiny on two companies the complaint mentions and says worked with Lugano.

One, “Vendor X,” was instructed by Ferder to pay money to third parties “to funnel payments to investors and financiers through the vendor,” claims the SEC’s complaint. “Ferder then arranged for Lugano to reimburse the vendor for these payments, adding a commission.”

Then there’s “Vendor Y,” which the SEC called a set of “three commonly controlled entities” that received $96 million from Lugano.

However, the SEC claims that while Vendor Y appeared to be one of Lugano’s top vendors, it “was not in the business of buying and selling diamonds. Ferder regularly used Vendor Y to make payments to investment contract investors and financiers that would appear in Lugano’s books and records as payments to a supplier.”

The SEC seeks the return of any funds that were “illegally obtained.” It also wants to bar Ferder from holding any role in a U.S. company that issues securities.

Ferder’s attorney, Jeffrey Reeves, didn’t return a request for comment by publication time. However, he told WWD: “Mr. Ferder denies the allegations made against him.… His defense, which will be detailed in court, is grounded in a clear set of facts.”

In response to CODI’s suit, Ferder contended that he was being made a “scapegoat” to “divert attention from [CODI’s] own culpability.”

Top: A Lugano salon (photo courtesy of Lugano Diamonds)