Once poised for a $2 billion public listing, climate-friendly fintech startup Aspiration is now embroiled in a federal fraud scandal. Co-founder Joseph Sanberg was arrested Monday for allegedly orchestrating a scheme to defraud investors of $145 million, while former board member Ibrahim AlHusseini pleaded guilty to wire fraud for his role in falsifying financial documents.
Key Allegations
Federal prosecutors allege that:
Sanberg secured loans from two investment funds in 2020 and 2021, using Aspiration stock as collateral.
AlHusseini falsely posed as a financial backer, agreeing to a “put option” that guaranteed stock purchases if the lenders wanted out.
To convince investors, fake brokerage and bank statements were created, inflating AlHusseini’s assets by $80M to $200M.
Sanberg received $145M in total loans, while AlHusseini profited $12.3M from the scheme.
Sanberg defaulted on the loans in 2023, causing a $145M loss for the second investor fund.
Legal Consequences
Sanberg faces up to 20 years in prison if convicted.
AlHusseini, who is cooperating with prosecutors, faces the same penalty but may receive a reduced sentence.
Aspiration, which previously attracted high-profile investors like Leonardo DiCaprio, Robert Downey Jr., Drake, and Orlando Bloom, saw its SPAC deal collapse in 2023, raising questions about its financial stability.
This scandal adds to the growing scrutiny of fintech startups, particularly those promising sustainable finance solutions while operating under questionable financial practices.