China Construction Bank Sued in US Over Reinsurance Fraud Losses

China Construction Bank Corp., the nation’s third-largest commercial lender, was accused in a US lawsuit of enabling a massive fraud in the reinsurance industry that left companies with “monumental losses” and sinking stock prices.

The bank allowed employees to conspire with Israeli insurance startup Vesttoo Ltd. to sell reinsurance policies that weren’t real, according to a complaint filed late Thursday by the Porch Group in Manhattan federal court.

Vesttoo filed for Chapter 11 bankruptcy in August after it was accused of using some $2 billion of fraudulent letters of credit.

The Porch Group said that its unit Homeowners of ...