Media reports that the Porch Group, a United States-based homeowner’s insurance company and provider of home inspection software, has sued China Construction Bank, accusing this financial institution of reinsurance fraud.
According to information available to journalists, Porch claims in its complaint that the bank colluded with employees of Vesttoo, currently a bankrupt Israeli insurance firm. The applicant claims that in this case, the purpose of the fraudulent scheme was to issue fake reinsurance letters of credit.
Porch also stated in its complaint that its unit, Homeowners of America (HOA), had to pay $80 million to cover insurance claims that should have been reinsured. The company also provided $57 million to stabilize HOA. Moreover, after it became known that some of the letters of credit issued by Vesttoo were fake, the share price of Porch dropped.
The media reports that the company is demanding monetary compensation in court, the amount of which is not yet available.
Vesttoo declared bankruptcy last summer. At that time, the company was involved in the so-called fake collateral scandal. Also, in the summer of 2023, the firm announced its intention to sue those responsible for the scandal. After the fake letters of credit were discovered, the company laid employees, closed offices, and appointed an interim CEO.
Matt Ehrlichman, CEO, chairman of the board, and founder of Porch, announced during a telephone conversation this week his intention to continue to pursue the parties in the context of the Vesttoo-related claims.
As we have reported earlier, US Sues Apple.
