LOS ANGELES — The co-founder of the now-bankrupt “environmentally conscious” digital bank Aspiration that allegedly gave Los Angeles Clippers star Kawhi Leonard a $28 million endorsement as a way to circumvent the league’s salary cap pleaded guilty Monday to conspiring to fleece investors out of $248 million.
Joe Sanberg, 46, of Orange, entered his plea in Los Angeles federal court to two counts of wire fraud, felonies that together carry a sentence of up to 40 years behind bars.
Sentencing was scheduled for Feb. 23.
The Marina del Rey firm sold itself as a socially conscious online banking company, offering investments and focusing on the climate crisis. It also generated and sold carbon credits meant to help offset greenhouse gas emissions.
According to court filings, Aspiration’s eco-friendly pitch attracted celebrity investors including Robert Downey Jr., Orlando Bloom, Leonardo DiCaprio and Steve Ballmer, the former Microsoft chief executive, philanthropist and owner of the Clippers, before the banking company filed for bankruptcy in March.
According to court documents, Sanberg devised a scheme in 2020 to use his role as a co-founder and board member of Aspiration as well as his shares of company stock to defraud lenders and investors.
Sanberg and fellow Aspiration board member Ibrahim AlHusseini promised shares of Sanberg’s stock to two lenders to obtain $145 million in loans, according to the U.S. Department of Justice. The board members falsified bank and brokerage statements to inflate AlHusseini’s assets by tens of millions of dollars to secure the loans, the U.S. Justice Department said.
AlHusseini, 51, of Venice, pleaded guilty in March to wire fraud for falsifying documents that aided in the scheme and is also expected to be sentenced in February.
Ballmer and the team are under investigation by the NBA following a report that Leonard allegedly accepted a $28 million endorsement from Aspiration as a way to circumvent the league’s salary cap, according to media reports.
Ballmer, who had previously invested $50 million in Aspiration, has denied he had knowledge of the deal or that he directed the company to strike one.
The Clippers have also denied any wrongdoing in connection with the alleged Aspiration endorsement deal with the two-time NBA champion and two-time Finals MVP.
An early investor in meal delivery service Blue Apron, Aspiration booked revenue from customers between March 2021 and November 2022, but Sanberg allegedly did not disclose that he was the source of the payments. As a result, Aspiration’s financial statements were inaccurate and reflected much higher revenue than the company in fact received, according to prosecutors. Sanberg continued to solicit investors to invest in Aspiration securities into this year, court papers show.
According to the DOJ, Sanberg defrauded lenders and investors with fraudulent materials describing Aspiration’s financial condition, including a fabricated letter from Aspiration’s audit committee that falsely stated Aspiration had $250 million in available cash and equivalents at a time the company had less than $1 million in available cash.
Sanberg used these fraudulent financial materials to obtain millions of dollars in additional loans and investments in Aspiration securities, officials said. As a result of the fraud scheme, the DOJ said, victims sustained more than $248 million in losses.
In 2018, it was reported that Sanberg was considering a run for president in 2020 on an “anti-poverty platform,” but ultimately decided against it.
“This so-called ‘anti-poverty’ activist has admitted to being nothing more than a self-serving fraudster, by seeking to enrich himself by defrauding lenders and investors out of hundreds of millions of dollars,” acting U.S. Attorney Bill Essayli for the Central District of California said in a statement in August when Sanberg agreed to plead guilty. “I commend our law enforcement partners for their efforts in this case, and I urge the investing public to use caution and beware of wolves in sheep’s clothing.”
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