FBI agents have interviewed people who struck diamond deals with former Lugano Diamonds CEO Mordechai “Moti” Ferder, as part of an investigation into the business, according to a Bloomberg report, which quoted unnamed sources.
A spokesperson for Lugano’s current owner, Compass Diversified (CODI), told Bloomberg it “has been cooperating with the authorities investigating this matter.”
CODI purchased the Newport Beach, Calif.–based high-end chain in 2021. Last month, Lugano filed for Chapter 11 bankruptcy, and CODI said it’s looking for a buyer. Enhanced Retail Funding, a subsidiary of Gordon Brothers, has been named the stalking horse bidder for Lugano’s eight boutiques.
Ferder, cofounder of the company, left Lugano in May, after CODI found “irregularities” in its books. Shortly after that, Lugano sued Ferder in California state court, alleging that he “concealed and misrepresented the nature of numerous financing transactions he entered into with third-party, high-net-worth individuals.”
In a Dec. 8 SEC filing, CODI went further, saying its investigation found that Ferder “deliberately engaged in fraudulent activity by, among other things, entering into off-balance sheet financing arrangements with third parties in violation of company policies [and] misrepresenting the existence and valuation of inventory, and causing the recording of fictitious sales.”
Ferder has denied the allegations. In a Nov. 14 response to Lugano’s suit, Ferder contended that he was being made a “scapegoat” to “divert attention from [Lugano’s] own culpability.”
According to court papers, Ferder currently lives in Israel.
(Photo courtesy of Lugano Diamonds)
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