District of Maryland Argues ‘Specific Evidence’ Must Be Presented to Prove Lender Has Knowledge of Loan Applicant’s Fraudulent Actions | King and Spalding


[co-author: Archie Wilson, Jr.]

On April 1, 2022, the U.S. District Court for the District of Maryland granted in part and denied in part motions for summary judgment brought by lenders on claims against them for alleged participation in fraud by a borrower against a third party. Plaintiff Alia Al-Sabah, a member of the Kuwaiti royal family, filed a lawsuit alleging that a business partnership with Jean Agbodjogbe ended with Al-Sabah defrauding over $7.8 million. Agbodjogbe allegedly used money that Al-Sabah wired for joint investments in a restaurant and real estate investments for personal gain, then borrowed against the properties to receive substantial loans from Sharestates Investments, LLC and World Business Lenders, LLC (“WBL”). Al-Sabah sued the defendant lenders for “not following[ing] [their] underwriting guidelines” and lending money to Agbodjogbe despite “numerous character concerns” and being a “high risk of fraud”. The court granted summary judgment to the defendants on most of the claims, including civil conspiracy, fraud by omission, fraud by construction and negligence. But the court denied summary judgment to WBI on allegations of aiding and abetting and unjust enrichment.

The court found that there was no express agreement or understanding between Agbodjogbe and either defendant to defraud the plaintiff, and that Al-Sabah could not establish a duty to her by one or other of the defendants. The court noted that the decision to loan Agbodjogbe may have been a “risky business proposition”, but not a deliberate decision by Sharestates to ignore the fraud. However, for WBL, “specific evidence” has shown that they are “investigating[d] enough to develop suspicions” about Agbodjogbe’s actions. Emails and documents revealed that WBL had issues with fraud, truthfulness and character. Additionally, WBL was aware that Al-Sabah had filed a lis pendens on the Pikesville property and that someone from WBL had Googled the term “N&A Kitchen LLC scam.” Because the evidence may have created a genuine issue of material fact as to whether WBL chose to remain “willfully blind” to Agbodjogbe’s fraudulent activities, summary judgment was dismissed for WBL as to unjust enrichment and claims of aiding and abetting.

The case is Al-Sabah vs. World Business Lenders, LLC, 18-cv-2958 (D.Md. 2022 Apr 1). Al-Sabah is represented by Venable LLP. WBI is represented by Troutman Pepper Hamilton Sanders LLP. Sharestates is represented by Rudow Law Group LLC. The decision is available here.


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