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Lugano Diamonds is suing its insurance provider for “refusal” to cover its defense costs for nearly 20 civil actions as well for fees related to a United States Securities and Exchange Commission (SEC) investigation.
Lugano asserted that the insurer, Travelers, breached its contract following a disagreement between the two parties over the responsibility for payment of attorney’s fees, it said in a lawsuit dated February 4.
In addition, Lugano claimed Travelers was refusing to treat all of the actions against the company as related, even though they all stemmed from the alleged “wrongful acts” of its former CEO, Mordechai Ferder, it explained in the filing. As a result, Travelers is requiring Lugano to pay multiple deductibles of $50,000 each for the civil actions.
Lugano maintained Travelers was declining to reimburse it for “reasonable attorney fees to defend Lugano and agree to indemnify Lugano up to the full amount of its policy limits.” The rates “sophisticated trial counsel” charges are “two to three times” what Travelers is willing to pay, Lugano added.
To date, Lugano said it had spent more than $300,000 in legal bills and Travelers had not “paid a single dollar for Lugano’s defense,” according to the lawsuit.
Instead, Travelers is demanding that Lugano enter into an agreement in which privileged information it provided can be used by the insurance firm against Lugano in subsequent coverage action, based on the insurer’s position that the jewelry company had no indemnity obligation, Lugano alleged.
In May 2025, Lugano’s CEO stepped down as the company faced an internal investigation into financial irregularities. A month later, an investor who entered into a joint deal with Lugano to manufacture jewelry and split the profits brought a lawsuit against the company. In November, it filed for Chapter 11 bankruptcy protection as it looked for a buyer.
Image: A Lugano boutique in London. (Lugano Diamonds)
