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A private credit fund has sued US law firm Pillsbury Winthrop, saying it helped defraud the lender of $145mn in a case centred on a collapsed start-up once backed by Wall Street and Hollywood luminaries.
Clover Private Credit Opportunities Origination, which until February was managed by UBS’s O’Connor unit, accused the law firm of sending “dozens of fake financials” to secure $145mn in loans for an entity controlled by Joseph Sanberg, co-founder of fintech start-up Aspiration Partners. O’Connor made the loans starting in 2020.
Sanberg was sentenced on Monday to 14 years in prison after pleading guilty to fraud charges, including over the Clover loans, following the collapse of Aspiration.
The start-up, which Sanberg co-founded in 2013, pitched itself as a champion of environmentally friendly investing. It attracted hundreds of millions of dollars in investments from Wall Street heavyweights such as Oaktree Capital, as well as celebrities including Microsoft billionaire and LA Clippers owner Steve Ballmer and actor Leonardo DiCaprio.
The attempt to pursue the law firm to recover the lost $145mn comes as investors question whether Aspiration and its executives will be able to fully repay investor losses. UBS last year agreed to sell the O’Connor business to Cantor Fitzgerald.
Clover said in its lawsuit, filed on Tuesday in New York state court, that Pillsbury Winthrop partner Riaz Karamali sent it a falsified financial statement asserting that another Aspiration executive, Ibrahim AlHusseini, held $199mn in assets in a Fidelity account when the actual figure was less than $3,000. Karamali is also named as a defendant in Clover’s lawsuit.
The filing, which is yet to be reviewed by the court’s clerk, said Clover had extended loans to Sanberg after AlHusseini agreed to be a guarantor. The loans were made to a Sanberg-controlled entity called In Loving Memory of Bruce LLC.
The lawsuit said Karamali had told a UBS employee in 2020 that he would “personally vouch for” AlHusseini’s “integrity and honour” even though he knew AlHusseini did not hold the assets he claimed to have.
“The claims against Pillsbury and Mr Karamali are frivolous and lack any merit,” said a spokesperson for the law firm. “We will vigorously defend ourselves in court.”
AlHusseini provided the repayment guarantee on the Clover loan in the form of a “put option”, where he would be liable for the loan principal if Sanberg defaulted.
In exchange for taking that risk, Clover paid AlHusseini $12.3mn in fees known as a “premium”.
AlHusseini pleaded guilty to wire fraud in a separate criminal case in March 2025 and admitted to personally receiving $12.3mn from the scheme. He is due to be sentenced next month. The US Department of Justice said this week that Sanberg and AlHusseini had “falsified AlHusseini’s bank and brokerage statements” to secure loans.
In the civil case, Clover said Karamali also helped funnel the proceeds of its loan to the Middle East and elsewhere, and to protect AlHusseini’s assets from creditors.
“Karamali, who effectively had been the AlHusseini family lawyer for over 20 years, was willing and able to help his longtime client AlHusseini and his co-conspirator Sanberg defraud Clover for his own financial gain,” the filing said.
After AlHusseini received the first part of the premium payment, Clover said that he wrote in an email to Karamali: “Thank YOU, Riaz. You’re always there for me. So appreciated.”
Sanberg initially approached UBS’s wealth division in 2019 looking for a loan to buy more Aspiration shares, according to the lawsuit. The Swiss bank referred him to its O’Connor subsidiary.
The New York state court had previously issued more than $300mn worth of civil judgments against Sanberg and AlHusseini for money owed to Clover over the loans, including interest and AlHusseini’s obligations under the put option agreement.
“Pillsbury collected over $4 million from sources connected to Sanberg and AlHusseini,” according to the complaint.
