Key insight: A private-credit fund formerly part of UBS Asset Management is suing the law firm Pillsbury and partner Riaz Karamali, arguing they helped defraud it of $145 million \u2014 an unusual bid to hold a borrower’s lawyer liable.What’s at stake: A win for Clover could expose law firms to liability when partners vouch for clients in financings, and sharpen scrutiny of how private credit underwrites its loans.Supporting data: The complaint says a falsified Fidelity statement claimed Ibrahim AlHusseini held more than $199 million in securities when his accounts held about $2,694.<\/p>\n
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A former UBS private-credit fund is suing a major law firm it says helped defraud it of $145 million.<\/p>\n
Clover Private Credit Opportunities Origination filed the complaint on Tuesday in New York County Supreme Court against Pillsbury Winthrop Shaw Pittman and one of the firm’s partners, Riaz Karamali.<\/p>\n
Clover accused the attorneys of helping the two men behind the $145 million fraud that drained the fund: Aspiration<\/a> co-founder Joseph Sanberg and an Aspiration board member, Ibrahim AlHusseini. Aspiration was a neobank that focused, ostensibly, on helping consumers neutralize their carbon footprint.<\/p>\n Specifically, the suit claims Karamali sent the fund falsified account statements, vouched for AlHusseini’s “integrity and honor” and helped conceal a discrepancy the fund had flagged, all of which allegedly made the scheme look legitimate.<\/p>\n The suit charges Pillsbury and Karamali with common-law fraud, aiding and abetting fraud, fraudulent inducement, negligent misrepresentation and civil conspiracy. It asks the court to hold the firm and the lawyer jointly liable for the loss.<\/p>\n O’Connor, the firm that manages Clover, was a UBS Asset Management business when the fund made the loans. Clover brought the case for itself and as assignee of two related UBS entities.<\/p>\n Cantor Fitzgerald has since bought the O’Connor business from UBS. The first part of that deal closed at the end of 2025, with more funds and assets set to transfer through early 2026, Cantor announced in December<\/a>.<\/p>\n The suit is an unusual attempt to make a law firm pay for a client’s fraud. It comes as banks pour money<\/a> into private credit and questions grow<\/a> about how carefully the asset class vets the loans it makes.<\/p>\n Falsified bank and brokerage statements, backed by a brand-name law firm’s word, got past the fund’s diligence. Now, the fund, unable to collect on the judgments it already won against Sanberg and AlHusseini, is going after the firm it says made the deal possible.<\/p>\n How the scheme cleared a sophisticated lender<\/p>\n Sanberg borrowed against his stake in Aspiration<\/a>, which called itself a “green digital bank backed by celebrities like Leonardo DiCaprio,” as the complaint puts it.<\/p>\n Sanberg pledged about 10.3 million Aspiration shares as collateral and borrowed through a different company he controlled (In Loving Memory of Bruce, LLC). In 2020, he took a $55 million loan, then refinanced it the next year into the $145 million loan from Clover.<\/p>\n Because Aspiration was private, and its stock was hard to sell, the lenders wanted a backstop. AlHusseini gave them one.<\/p>\n He and his Husseini Group sold the funds a promise to buy the pledged shares if Sanberg defaulted. This is known as a put option. The put was only good if AlHusseini had the money behind it.<\/p>\n He did not.<\/p>\n To convince the lender otherwise, the conspirators sent the fund’s investment manager, O’Connor Alternative Investments, dozens of fake financial statements, including a falsified Fidelity statement that claimed AlHusseini held “more than $199 million in securities,” according to the complaint.<\/p>\n His accounts actually held about $2,694, prosecutors later found.<\/p>\n For selling the put, AlHusseini collected premiums of $6 million and $6.3 million, and O’Connor treated him as the “key” to making the deal work, according to the complaint.<\/p>\n The fraud itself is no longer in question. A federal judge sentenced Sanberg on Monday to 14 years in prison<\/a> after he pleaded guilty to two counts of wire fraud.<\/p>\n AlHusseini also pleaded guilty and faces a $145 million restitution order and sentencing in July.<\/p>\n “This is a case about greed and abuse of trust,” Jose Perez, an assistant director at the FBI, said in August 2025 when the Justice Department announced fraud charges against Sanberg<\/a>.<\/p>\n The lawyer who allegedly vouched the con into being<\/p>\n What sets Clover’s suit apart from the criminal cases is its target.<\/p>\n Karamali had been AlHusseini’s transactional lawyer for more than 20 years and brought him along as a client when he joined Pillsbury in 2013. The firm’s name gave the fraud “a veneer of undeserved legitimacy,” the complaint argues.<\/p>\n The lawsuit leans on the conspirators’ own words.<\/p>\n In a February 2020 text exchange reproduced in the complaint, Sanberg told AlHusseini to “have Riaz in his capacity as your lawyer attest to it rather than showing them statements,” and said that “should be sufficient given the Pillsbury connection.”<\/p>\n In a later message quoted in Sanberg’s criminal sentencing record, he put his instructions to AlHusseini plainly: Tell the lender “that you’ve given him plenty and your lawyer vouches for everything.”<\/p>\n Karamali did vouch, and often, the suit alleges. He sent O’Connor false financial statements, received copies of dozens more and, in a February 2020 email, personally attested to AlHusseini’s “integrity and honor.”<\/p>\n He did all that while knowing the figures were “grossly inflated” and that AlHusseini’s businesses were “failing and underwater,” according to the complaint.<\/p>\n Clover alleges that Karamali “knew it was not plausible that AlHusseini could cover the put.”<\/p>\n Karamali had also drafted settlement agreements months earlier for several women who had accused AlHusseini of harassment, Clover says, and AlHusseini owed Pillsbury itself more than $357,000 in unpaid bills.<\/p>\n The complaint alleges a motive beyond billable hours; Karamali took in more than $4 million in fees tied to the scheme, it says.<\/p>\n Karamali kept pitching investors on Aspiration’s Series C funding round as “investor counsel” even after the company’s auditor, KPMG, quit and fraud concerns surfaced, according to Clover.<\/p>\n Later, Karamali helped move the loan proceeds to the Middle East and shift AlHusseini’s real estate to his brother to keep it from creditors, the suit says.<\/p>\n When AlHusseini was released on bail in 2024, the conditions of his release<\/a> barred him from contacting “any person that is directly involved in the charged conduct, including Riaz Karamali,” except through a lawyer.<\/p>\n Why a lender is suing a law firm<\/p>\n Clover has already beaten the men who defrauded it in court, and that is part of why it is now after their lawyer.<\/p>\n The fund holds civil judgments of about $282.2 million against Sanberg and $78.8 million against AlHusseini, entered in 2023 and 2025, according to the complaint. The court held AlHusseini in contempt after he tried to evade his.<\/p>\n Collecting has been another matter. A solvent, marquee law firm is a far better target for recovery than two fraudsters, one headed to prison and the other accused of moving his money offshore.<\/p>\n To reach Pillsbury, Clover invokes a legal rule known as respondeat superior. The rule makes an employer answerable for an employee’s conduct.<\/p>\n Karamali acted within the scope of his partnership the whole time, the suit argues. The firm never cut ties even after AlHusseini’s arrest and kept representing him in his criminal case until a conflict forced it to withdraw, Clover alleges.<\/p>\n Whether a borrower’s lawyer can be held responsible for a client’s fraud comes down to what the lawyer knew, according to Stephen Gillers, an emeritus professor of legal ethics at New York University School of Law.<\/p>\n Knowingly doing things that advance a client’s fraud “is likely to support liability,” he told American Banker. A law license offers no protection.<\/p>\n He cited a 1934 ruling<\/a> by the federal appeals court in Chicago.<\/p>\n “One may not use his license to practice law as a shield to protect himself from the consequences of his participation in an unlawful or illegal conspiracy,” the ruling held.<\/p>\n That principle is still the law, Gillers said.<\/p>\n Lawyers remain free to advise clients on the law and to help them try in good faith to follow it, he said.<\/p>\n What they cannot do, under ethics rules that are uniform across the country, is help a client do something the lawyer knows is criminal or fraudulent.<\/p>\n These cases usually end not with a verdict but a settlement, paid by the firm’s insurer, according to Gillers. There is little public data on the amounts, he added.<\/p>\n For bankers, the case is a warning about an asset class to which they are increasingly exposed.<\/p>\n U.S. banks have lent close to $300 billion to private-credit funds, business development companies and collateralized loan obligations, Moody’s Ratings estimated last year<\/a>, and the sector’s underwriting has drawn growing scrutiny<\/a>.<\/p>\n The Clover deal shows the failure mode plainly: a loan secured by illiquid private stock, backstopped by one man’s claimed net worth, with attestations by an outside lawyer.<\/p>\n What comes next<\/p>\n Pillsbury and Karamali have not answered the complaint, and its allegations have not yet been tested in court.<\/p>\n Karamali remains at Pillsbury, which (as of time of publication) lists him on its website as a partner in its London and Silicon Valley offices. The firm did not respond to a request for comment.<\/p>\n A spokesperson for Clover declined to comment on the record.<\/p>\n The criminal cases are all but closed. Sanberg is headed to prison, and AlHusseini is set for sentencing July 20.<\/p>\n That leaves Clover, the fund that financed it all, trying to claw back $145 million. Now, it is asking a court to put a global law firm on the hook.<\/p>\n","protected":false},"excerpt":{"rendered":"Key insight: A private-credit fund formerly part of UBS Asset Management is suing the law firm Pillsbury and…\n","protected":false},"author":2,"featured_media":78395,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[129],"tags":[20513,13235,40874,1723,2094,789,223],"class_list":["post-78394","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ubs","tag-ab-technology","tag-fraud","tag-law-and-legal-issues","tag-litigation","tag-risk-management","tag-technology","tag-ubs"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/116699218739755846","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/78394","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=78394"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/78394\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/78395"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=78394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=78394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=78394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}