News Summary
Mordechai Ferder, CEO of Lugano Diamonds & Jewelry, has resigned following serious fraud allegations and multiple lawsuits against him and his company. His resignation is effective immediately as claims surface regarding fraudulent business practices, including manipulating financial documents and soliciting funds under false pretenses. The company has begun downsizing in response to the fallout from these allegations, which have also led to a significant decline in shares for its parent company. Ongoing legal battles threaten to redefine the future of both Lugano Diamonds and Compass Diversified.
Newport Beach, California – Mordechai “Moti” Ferder, the founder and CEO of Lugano Diamonds & Jewelry, has resigned amid serious fraud allegations and several lawsuits against him and his company. His departure from the parent company, Compass Diversified, took effect on May 7, 2023, as mounting legal threats led to his decision to step down from leadership. Ferder is reportedly living abroad in Tel Aviv, Israel, and is moving assets out of California in response to the escalating allegations.
Lugano Diamonds was established in 2005 and rapidly gained prominence in the luxury jewelry market. In 2021, it was sold to a private-equity firm for $256 million, solidifying its position as a significant player in the industry. However, recent events have cast a dark shadow over the company and its reputation. Multiple lawsuits have been filed against Ferder in both county and federal courts since early June 2023. These legal complaints allege that he engaged in fraudulent business practices, including entering into unpermitted contracts with wealthy investors.
According to the lawsuits, Ferder solicited funds under the pretense of acquiring diamonds, promising to share profits through various investment agreements. However, several transactions reportedly resulted in significant losses for investors as the funds were depleted. Additionally, Lugano Diamonds has filed its own lawsuit against Ferder, accusing him of fraud, civil theft, and breach of fiduciary duty, alleging that he procured outside investments without the necessary approvals, thereby misrepresenting the company’s financial status.
The complaints against Ferder include allegations of falsifying financial documents, such as irresponsibly recording over $100 million in liabilities as revenue. It is claimed that he manipulated internal accounting records, thereby misleading internal stakeholders and auditors about the company’s actual performance and valuation. Reports suggest that Ferder went as far as sending empty box shipments and concealing repayment obligations from the official financial records.
The repercussions of these actions have begun to affect the workforce of Lugano Diamonds, which has initiated a downsizing process and is exploring options for potential buyers amid the financial turmoil attributed to Ferder’s alleged misconduct. Reports indicated that the complaints against him have caused reputational harm to the company, with some disgruntled investors confronting staff and threatening to involve law enforcement.
Ferder’s questionable actions may have been ongoing for several years, dating back to 2020. He is reported to have approached investors over 15 times with offers of higher returns, leading to a significant outstanding payment of nearly $4.6 million to Aronoff Capital, Inc., which is pursuing treble damages in light of the situation.
Following the news of Ferder’s resignation, shares of Compass Diversified saw a dramatic decline of 64%, resulting in an estimated drop of $700 million in market capitalization, plummeting from $1.1 billion to approximately $400 million. This class action lawsuit has been initiated by shareholders who allege that they purchased securities under false pretenses, leading to substantial financial losses linked to Ferder’s fraud allegations.
Additionally, Ferder’s philanthropic efforts had been previously highlighted, including a notable $2.5 million donation that allowed the Orange County Museum of Art to offer free admission for a decade post-reopening in 2022. Just weeks prior to the legal turmoil, Ferder was recognized in Forbes for his contributions to philanthropy. However, the current allegations and ensuing lawsuits now overshadow his previous community involvement and contributions.
As this situation continues to unfold, the implications for Lugano Diamonds and Compass Diversified remain uncertain, with potential repercussions that could affect investors and employees alike. The ongoing legal battles and the fallout from Ferder’s actions may lead to further transformative changes within the companies involved.
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Additional Resources
- Los Angeles Times: Newport Beach Businessman Fraud
- Wikipedia: Newport Beach, California
- Orange County Business Journal: Lugano Success
- Google Search: Lugano Diamonds Fraud
- KTLA: Embezzlement Case in Newport Beach
- Google Scholar: Lugano Diamonds Fraud
- My News LA: Suspended Attorney Fraud Case
- Encyclopedia Britannica: Fraud
Author: STAFF HERE COSTA MESA WRITER
COSTA MESA STAFF WRITER The COSTA MESA STAFF WRITER represents the experienced team at HERECostaMesa.com, your go-to source for actionable local news and information in Costa Mesa, Orange County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the OC Fair, Concerts in the Park, and Fish Fry. Our coverage extends to key organizations like the Costa Mesa Chamber of Commerce and Boys & Girls Clubs of Central Orange Coast, plus leading businesses in retail, fashion, and technology that power the local economy such as Vans, Experian, and South Coast Plaza. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
