Lugano Diamonds Files for Bankruptcy Amidst Fraud Allegations
Luxury jewelry brand Lugano Diamonds & Jewelry has filed for Chapter 11 bankruptcy in the District of Delaware, triggered by allegations of fraud against its founder, Moti Ferder. The company is seeking to restructure its finances while pursuing a sale.
Lugano reported assets between $100 million adn $500 million and debts between $500 million and $1 billion in its bankruptcy filing. It is currently awaiting court approval for $12 million in debtor-in-possession financing, with $10 million earmarked for immediate operational cash flow.
The bankruptcy follows lawsuits filed over the summer alleging that Ferder concealed diamond sales to wealthy clients from investors, inflating the company’s financial performance.Court documents suggest reported 2024 revenue of $470 million and operating profit of $180 million were inaccurate and “the company’s performance was exaggerated.”
“The company entered this process prepared, and I am committed to working closely with the management team and advisors to determine the best path forward,” stated J. Michael Issa, Lugano’s Chief Restructuring Officer.
An auction process is underway, with Enhanced retail Funding, a Boston-based investment firm, establishing the initial bid. As part of the restructuring, Lugano intends to close its retail locations in london, Greenwich, Connecticut, and Washington D.C.
Despite the challenges, Interim CEO Josh Gaynor expressed gratitude for the company’s stakeholders, stating, “We are grateful to our loyal employees, customers, partners, and community for their continued support. As we approach the holiday season, we look forward to continuing to deliver exclusive and timeless designs to our customers.”
