Litigation Releases (Mordechai Haim Ferder and Simba IL Holdings LLC, Defendants; Mordechai Haim Ferder and Edit Fintzi Ferder in Their Capacities as Trustees of the Haim[...]

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26625 / September 1, 2026

Securities and Exchange Commission v. Ferder, et al., No. 8:26-cv-02492 (C.D. Cal. filed Aug. 31, 2026)

SEC Charges Former CEO of Lugano Diamonds in Alleged Massive Accounting and Offering Fraud

On August 31, 2026, the Securities and Exchange Commission filed charges against Mordechai Ferder, the founder and former CEO of Lugano Diamonds & Jewelry, Inc., for allegedly running a fraud scheme that caused Lugano and its public parent company, Compass Diversified Holdings ("CODI"), to recognize more than a billion dollars of fictitious revenue.

According to the SEC's complaint, filed in the U.S. District Court for the Central District of California, Ferder orchestrated a fraud scheme from 2021 to 2025 that centered on him convincing individuals to invest hundreds of millions of dollars in diamonds that Ferder and Lugano never owned. As alleged, Ferder made material misrepresentations to investors, including false claims that he or Lugano would acquire the diamonds that were the subject of the investment contracts, that he would identify a buyer for the diamond underpinning an investment contract, and that he would create a piece of jewelry from the diamond or otherwise try to increase the value of the investment. In reality, Ferder and Lugano neither bought nor took any steps to increase the value of the investment contract diamonds, instead making Ponzi-like payments back to the investors. The complaint further alleges that Ferder directed Lugano to fraudulently record investor funds as revenue-causing Lugano and CODI, which acquired Lugano in 2021, to recognize over a billion dollars of fictitious revenue-and to disguise repayments to the investors as inventory purchases. According to the complaint, after Ferder's conduct was discovered in 2025, CODI restated its financial statements to correct the value of Lugano's net identifiable assets at the time of the acquisition from $179 million to just $5 million, and erased over 85% of Lugano's revenue that CODI reported after the acquisition.

The SEC's complaint charges Ferder with violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1 thereunder, and Simba IL Holdings LLC, an entity controlled by Ferder, with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 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. The complaint also names Ferder and his wife, Edit Ferder, as relief defendants in their capacities as trustees of three family trusts, which the complaint alleges received proceeds of the fraud.

The SEC's investigation, which is continuing, was conducted by Nishchay Maskay, John Archfield, and Mark Oh, with assistance from trial counsel Chris Carney, bankruptcy counsel David Baddley, and Alex Lefferts of the Enforcement Division's Office of Investigative and Market Analytics, under the supervision of Jeff Leasure, Kristen Dieter, Jim Connor, and Michael Brennan. The SEC's litigation will be conducted by Mr. Carney and Mr. Maskay under the supervision of Mr. Connor.