DIAMOND KING SCAM! CEO FOOLED INVESTORS WITH FAKE ROCKS FOR BILLION DOLLAR FRAUD!

SEC v. Mordechai Haim Ferder and Simba IL Holdings LLC, Defendants; Mordechai Haim Ferder and Edit Fintzi Ferder in Their Capacities as Trustees of the Haim Family Trust, TF 2021 Irrevocable Trust, and RF 2021 Irrevocable Trust, Relief Defendants — U.S. Securities and Exchange Commission Litigation Release No. 26625, dated September 1, 2026.

The SEC charged Mordechai Ferder, founder and former CEO of Lugano Diamonds, with orchestrating a massive accounting and offering fraud. Ferder allegedly convinced investors to put hundreds of millions into diamonds that Lugano never owned, while fraudulently recognizing over a billion dollars in fictitious revenue. This led to a significant restatement of financial statements by Lugano's parent company, Compass Diversified Holdings.

In Plain English

Imagine someone promising to buy valuable diamonds for you and then sell them for a profit. Instead of buying the diamonds, they took your money and used it to pay off earlier investors, like a game of musical chairs. They also lied about how much money the company was making, making it look much bigger than it was. This deception caused a public company that bought into the diamond business to realize its value was much lower than reported.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Deceptive Diamond Investments From 2021 to 2025, Mordechai Ferder, as CEO of Lugano Diamonds, allegedly convinced individuals to invest hundreds of millions of dollars. He promised to acquire diamonds for these investments and increase their value through jewelry creation or other means, but never actually bought or took steps to acquire the diamonds.
2. Ponzi-like Payments Instead of using investor funds for actual diamond acquisitions, Ferder and Lugano allegedly made Ponzi-like payments back to investors. These payments were disguised as inventory purchases to conceal the fraudulent nature of the scheme and maintain the illusion of legitimate business operations.
3. Fictitious Revenue Recognition Ferder directed Lugano to fraudulently record investor funds as revenue, rather than as debt or liabilities. This practice, along with fabricated invoices and accounting entries, caused Lugano and its parent company, CODI, to recognize over a billion dollars in fictitious revenue.
4. Acquisition and Misrepresentation In September 2021, Compass Diversified Holdings (CODI) acquired a majority interest in Lugano, believing it to be a successful business. Ferder, who retained a 40% interest and became CEO, allegedly continued the fraud, causing CODI to recognize this fabricated revenue.
5. Discovery and Restatement After Ferder's conduct was discovered in 2025, CODI was forced to restate its financial statements. The value of Lugano's net identifiable assets at the time of acquisition was corrected from $179 million down to just $5 million, and over 85% of Lugano's reported revenue after the acquisition was erased.

The Enforcement Action

The SEC filed charges against Mordechai Ferder, founder and former CEO of Lugano Diamonds, and Simba IL Holdings LLC. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil money penalties against Ferder and Simba, as well as an officer and director bar against Ferder. Mordechai Ferder and his wife, Edit Ferder, are also named as relief defendants in their capacities as trustees of three family trusts that allegedly received proceeds of the fraud.

Named in this action: Mordechai Ferder, Simba IL Holdings LLC, Mordechai Ferder and Edit Ferder (as Trustees of HAIM FAMILY TRUST), Edit Ferder (as Trustee of TF 2021 IRREVOCABLE TRUST), Mordechai Ferder (as Trustee of RF 2021 IRREVOCABLE TRUST).

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