An Aspenite who sold a majority stake in his luxury jewelry company for $200 million in 2021 has been sued by two investors who accuse him of stealing more than $14 million.
The lawsuit, filed last month in Pitkin County District Court, is the latest fallout from a financial scandal involving Lugano Diamonds, which has a store in Aspen, and its founder Moti Ferder. Lugano’s parent company fired Ferder in May and sued him for fraud in June.
“What has been uncovered through the investigation thus far does not reflect who we are as a business and the values we uphold,” Elias Sabo, the CEO of Lugano parent company Compass Diversified, said in May of an audit that revealed financing oddities and misconduct.
One aspect of that financing is the source of the recent Aspen lawsuit. Bryan Gadol and Darren Testa, two investors from Orange County, California, say that Ferder approached them last year with an opportunity: The duo would give him money, he would buy diamonds and create rings from them, and Ferder would then split the profits with them after the jewelry sold.
Some Lugano pieces sell for north of $10 million, according to a recent Forbes cover story.
Gadol, a partner at the national law firm Holland & Knight, says he invested $3 million in Ferder’s diamonds. Testa, a technology executive, says he invested $2.5 million.
“Mr. Ferder did not actually buy diamonds with most of the money that he obtained from investors, including the plaintiffs,” they wrote in their lawsuit June 18.
Gadol and Testa say they are now owed $7.9 million and $6.4 million, respectively, from Ferder and Lugano. After their demands for payment were ignored in May, they sued Ferder.
“The actions of Mr. Ferder were malicious, oppressive and taken in reckless disregard of the plaintiffs’ rights,” Gadol and Testa allege, “so as to justify an award of punitive damages sufficient to punish and deter Mr. Ferder from engaging in such conduct in the future.”
Ferder did not respond to BusinessDen’s emails. Gadol and Testa declined to comment.
The investors’ lawyers are Michelle Schindler and Marcus Gould with Ferguson Schindler in Aspen, plus Alice Hodsden and Jonathan Altman at Theodora Oringher in California.
Ferder, 55, was born in Israel and emigrated in 2005 to Orange County, where he and his wife started Lugano Diamonds. The company has nine stores. Ferder bought the 6,000-square-foot home at 1220 Red Butte Drive in Aspen for $18.7 million in 2021.
