The fall of Vesttoo enters criminal phase with Hong Kong arrests
Two former bankers accused of aiding billion-dollar fraud with fake LOCs.
In a development that marks the first criminal prosecution linked to the sprawling Vesttoo scandal, Hong Kong authorities have charged a former China Construction Bank (CCB) employee with accepting nearly half a million dollars in cryptocurrency bribes to authenticate forged financial documents.
The arrest and charging of Chun-Yin Lam, a former relationship manager at CCB (Asia), is the clearest indication yet that the multi-billion dollar scam operated not only across borders and regulatory regimes but also with the active complicity of insiders at some of Asia’s most prominent financial institutions. Lam is accused of conspiring with a Vesttoo employee, Udi Ginati, along with a local middleman and others, to legitimize false standby letters of credit (LOCs) and collateral letters used to back reinsurance deals, transactions that turned out to be backed by nothing at all.
Lam allegedly received over $470,000 in the stablecoin Tether (USDT) in exchange for helping authenticate the fake documents.
Also charged is Lee Ka-man, a former senior relationship manager at Standard Chartered Bank (Hong Kong), who faces similar allegations involving forged letters of credit bearing the bank’s name. Both defendants have been released on bail, and their case will be transferred to the District Court in Hong Kong.
The criminal proceedings follow months of civil litigation and bankruptcy proceedings surrounding Vesttoo, an Israeli-founded insurtech startup that once boasted a billion-dollar valuation before collapsing under the weight of a $3.36 billion fraud. At the center of the scheme were fraudulent LOCs, over $2.8 billion of which bore the name of China Construction Bank. Some 88 fake LOCs and two collateral letters were allegedly certified as authentic by Lam and others, according to prosecutors.
Emails previously uncovered during Vesttoo’s bankruptcy showed Lam using an official CCB email address to communicate with Vesttoo staff, raising early suspicions about CCB’s potential involvement. Those suspicions deepened when it became clear that the Chinese investor purportedly backing many of Vesttoo’s reinsurance deals, a firm called Yu Po Holdings, may never have existed beyond paper.
While the scandal has resulted in widespread litigation, including lawsuits against CCB by affected reinsurers, criminal cases have been conspicuously absent until now. The Hong Kong Independent Commission Against Corruption (ICAC), which brought the charges, said its investigation began after receiving a complaint and was conducted with full cooperation from both CCB (Asia) and Standard Chartered.
What remains murky is how deeply embedded the fraud was within Vesttoo itself. One of the individuals implicated in the bribery, Ginati, was previously named by Vesttoo’s own internal investigation. But efforts by the bankrupt firm to claw back funds from Ginati and other former employees failed in a Tel Aviv court.
Meanwhile, Vesttoo’s former CEO Yaniv Bertele, who was removed after the scandal broke and accused by the board of knowing about at least some of the forgeries, has quietly returned to business. As reported last month, Bertele has launched a new investment firm called Everoak Innovations, which is developing a platform for secondary trading in life insurance policies. The company, still small and privately owned, bears a striking resemblance to Vesttoo in both structure and ambition.
