Clover Private Credit Opportunities Origination has filed suit against Pillsbury Winthrop, claiming the firm helped defraud it of $145mn through bogus loan documents for an entity controlled by Joseph Sanberg. The private credit fund, formerly managed by UBS's O'Connor unit, alleges the law firm submitted falsified financial statements to secure the massive loan package.

Sanberg, co-founder of fintech Aspiration Partners, was sentenced to 14 years in prison this week after pleading guilty to fraud charges tied to the collapsed start-up. Aspiration had raised hundreds of millions from investors including Oaktree Capital, Steve Ballmer, and Leonardo DiCaprio by pitching itself as an environmentally conscious investment platform. The loans went to a Sanberg-controlled entity called In Loving Memory of Bruce LLC.

According to the lawsuit, Pillsbury partner Riaz Karamali sent Clover a financial statement claiming Aspiration executive Ibrahim AlHusseini held $199mn in a Fidelity account when he actually had less than $3,000. Karamali allegedly vouched for AlHusseini's integrity despite knowing the truth, and helped funnel loan proceeds overseas while protecting assets from creditors.

AlHusseini received $12.3mn in fees as a loan guarantor through a put option arrangement. Pillsbury Winthrop has denied the allegations, calling them frivolous and lacking merit. The case follows over $300mn in prior civil judgments against Sanberg and AlHusseini, highlighting the extensive fallout from the fraud scheme.