Here's your Forbes Daily Briefing for Thursday, February 12th.

Today on Forbes, the collapse of Lugano diamonds and how it tarnished, compass diversified.

The diamond was a pear-shaped 6.43-carat, fancy, intense blue, internally flawless stone set in a ring and worth nearly $11 million.

In a July lawsuit, New York City-based Scarselli Diamonds says it sent the rock to a Lugano

diamond salon in Miami in January 2025, but only after it had done months of due diligence

on Lugano, completed 14 other consignment

transactions worth $44 million with them, and received confirmation that Lloyds of London

would cover its value if anything went wrong.

When Scarselli shipped the diamond to Lugano CEO Mordecai Modi Furter on January 28, 2025,

it allegedly was to show a potential buyer in Miami, then return upon demand.

So it was a surprise in late February when Scarselli asked Lugano to return that diamond

and several other consigned pieces in time for the

Hong Kong jewelry show in March, and everything was returned except for the blue diamond.

Ferder allegedly responded over WhatsApp, quote, still working on this one.

Then in April, days after Forbes featured Ferder and Lugano's incredible success, based on audited

results in SEC filings, Lugano's parent company, investment firm Compass Diversified, apparently

got a tip to look more closely into how their star CEO was financing inventory.

The slick diamond chief was visiting his native Israel at the time and never came back.

Compass, with Lugano's other executives, quickly launched a forensic accounting investigation

that found irregularities in sales, cost of sales, inventory, and accounts receivable.

They determined that Ferder had, quote, created fake sales

transactions to inflate its reported revenues, sold inventory that either didn't exist or didn't

...