4th Cir.: Al-Sabah v. World Business Lenders, No. 24-1345 & 24-1382 (4th Cir. Nov. 26, 2025)- Willful Blindness Is Not Mere Sloppiness
4th Cir.: Al-Sabah v. World Business Lenders, No. 24-1345 & 24-1382 (4th Cir. Nov. 26, 2025)- Willful Blindness Is Not Mere Sloppiness Ed Boltz Fri, 12/05/2025 - 19:32 Summary: In a case that reads like The Wolf of Wall Street meets Fixer Upper, the Fourth Circuit waded into an international fraud, a botched lis pendens, and a high-cost lender accused of acting as the “getaway driver” for a Baltimore restaurateur who managed to siphon nearly $7.8 million from a member of the Kuwaiti royal family. Judge Agee—no stranger to unwinding complex fraud narratives after In re Sugar—writes for a unanimous panel that shows impressive discipline in keeping Maryland aiding-and-abetting doctrine from morphing into “negligence plus vibes.” And the court's bottom line? World Business Lenders (WBL) might be an aggressive, loose-underwriting, high-risk shop…but that does not make it an aider and abettor of fraud. Not on Loan One. Not on Loan Two. And certainly not on Loan Three. The Fourth Circuit reverses the district court’s only finding of lender liability, vacates all damages, and directs judgment for WBL across the board. I. Facts in Brief: A Royal Scam Meet a Hard-Money Lender The Fraudster A Baltimore restaurateur, Jean Agbodjogbe, convinces Al-Sabah to invest millions in “joint” ventures—restaurants, real estate, community projects—while secretly titling everything in entities he controlled. Her money ends up buying: multiple Baltimore commercial properties, a New York condo for her daughter, and a Pikesville house for his own family. The Lender WBL makes short-term, high-cost, rapid-turn loans secured by real estate. Think “merchant cash advance meets hard-money lender.” It funded: Loan One: $600k on the NYC condo Loan Two: $1.2M refinance, same condo Loan Three: $360k on the Pikesville home WBL saw red flags—large wires from Kuwait—but it repeatedly obtained CPA-prepared IRS gift-tax returns, spoke with the CPA, reviewed title reports, demanded attorney opinion letters, and obtained title insurance. Al-Sabah sues WBL, arguing it aided and abetted the fraud by “monetizing” the stolen equity through liens that converted her real-estate dollars into spendable cash for Agbodjogbe. The district court bought this only as to Loan Three. The Fourth Circuit did not. II. The Law: Aiding & Abetting Requires Willful Blindness, Not Hindsight Finger-Wagging Maryland recognizes aiding and abetting if: There’s a primary tort (fraud) — stipulated. Defendant knew or was willfully blind to the fraud. Defendant substantially assisted it. The Fourth Circuit focuses entirely on willful blindness: “Deliberate actions to avoid confirming a high probability of wrongdoing.” Crucially: “Willful blindness is a form of knowledge, not a substitute for it.” This opinion is a long, well-reasoned pushback against the district court’s conflation of: unconventional underwriting, sloppy due diligence, fast-paced lending, and actual knowledge of fraud. Negligence—even gross negligence—does not make a lender a co-conspirator. III. Why Loans One and Two Were Properly Dismissed The Fourth Circuit affirme as WBL investigated the suspicious wires, as it: demanded explanations, received IRS Form 3520 gift-tax filings, confirmed with a CPA, tied the wires to the condo purchase, and saw no other inconsistencies beyond the ones typical of their high-risk borrower pool. As Judge Agee noted that high-risk lenders deal with flaky revenue projections, sloppy bookkeeping, and odd behavior routinely. That is not fraud knowledge; that is their customer base. IV. Loan Three: The District Court’s Lone Finding of Liability Implodes The trial court found WBL willfully blind because a lis pendens appeared on the initial title report for the Pikesville home. According to the district court: this should have triggered a full investigation into Al-Sabah’s fraud suit. The Fourth Circuit: No it shouldn’t have. Why? Because two independent professionals— the title insurer, and Agbodjogbe’s attorney, through a long-form opinion letter— affirmatively represented that the title was clean and that no pending litigation impaired performance. The court stresses that lenders must be able to rely on: title insurance (“the insurer bears the risk”), opinion letters (“the attorney is liable if wrong”). Importantly, WBL never saw the lis pendens notice itself—only a docket notation. The district court invented knowledge WBL never had. As the panel notes, WBL’s behavior may be “couched in terms of negligence or recklessness,” but it falls “far short” of willful blindness. Thus, the district court’s finding “collapsed” the standard into negligence. Result: Reversed. V. A Delightful Footnote: Even If the Lis Pendens Had Been Proper… It Died in 2020. Judge Agee further reminded everyone that: A lis pendens only applies to property-related equitable claims (e.g., constructive trust). The district court in the underlying fraud case denied the constructive trust. That denial was incorporated into the 2020 final judgment. No appeal. Therefore: “Any lis pendens… terminated as a matter of law.” This isn’t just a footnote—it eliminates the causation theory entirely. If the lis pendens expired years earlier, Al-Sabah couldn't have been injured by the later WBL loans. Below is a further-revised, deeply integrated NCBankruptcyExpert-style commentary that now weaves together: Al-Sabah v. WBL (4th Cir. 2025) — willful blindness requires deliberate avoidance, not negligence Bartenwerfer v. Buckley (U.S. 2023) — fraud can be imputed to innocent partners for nondischargeability Sugar v. Burnett (4th Cir. 2025) — the reliance on counsel defense is alive, well, and powerful in the Fourth Circuit, capable of mitigating even a debtor’s own missteps Commentary: Why Consumer Lawyers Should Care (Post- Bartenwerfer, Post- Sugar) 1. The Fourth Circuit Reinforces a Boundary That Bartenwerfer v. Buckley Left Intact: Sloppiness ≠ Willful Blindness ≠ Fraud Bartenwerfer teaches that fraud can be imputed—but only where someone actually committed fraud. It does not explain what facts constitute fraud in the first place. That is where Al-Sabah now plays an essential role. If negligence, carelessness, or overlooking irregularities were enough to make a lender (or a partner, or a spouse) an “aider and abettor,” then Bartenwerfer's strict liability structure would yield a terrifying equation: Negligence → Aiding & Abetting → Fraud → Imputed Nondischargeability The Fourth Circuit stops that slippery slope cold. It demands actual knowledge or deliberate avoidance, not mere underwriting shortcuts or failure to ask one more question. In other words: You cannot impute fraud unless fraud actually exists. And you cannot create fraud out of negligence. This is doctrinally essential for protecting consumer debtors in § 523 litigation. 2. Al-Sabah + Sugar = A Sane, Human Standard for Assessing Knowledge and Intent The Fourth Circuit’s decision in In re Sugar (2025) is the perfect complement to Al-Sabah. Sugar establishes that: debtors can reasonably rely on legal advice reliance on counsel is highly probative of good faith, and even when debtors make errors, reliance can negate fraudulent intent. Judge Agee in Sugar made it explicit: Courts must consider whether the debtor acted based on the advice of counsel when assessing misconduct or sanctionable behavior. Judge Warren, on remand, doubled down, finding that reliance on counsel completely shifted the analysis of the debtor’s intent. Al-Sabah aligns perfectly with Sugar In Al-Sabah, WBL relied on professionals’ advice: title insurer CPA outside attorney (long-form opinion letter) The Fourth Circuit holds that this reliance defeats willful blindness. Just like Sugar, the Fourth Circuit again reaffirms that the reliance on independent professionals is evidence of good faith, not culpability. This has profound implications for consumer bankruptcy. 3. Deploying Al-Sabah + Bartenwerfer + Sugar in § 523(a)(2) Litigation (a) When creditors argue imputed fraud under Bartenwerfer: You now respond with: Al-Sabah: negligence ≠ knowledge, and Sugar: reliance on counsel negates fraudulent intent. If the debtor relied on: a bookkeeper, a tax preparer, an accountant, an attorney, a business partner, or even a lender or servicer’s representations The debtor’s reliance becomes a powerful shield against creditor accusations of fraud or willful blindness. This is the perfect doctrinal triad: Al-Sabah — raises the bar for proving knowledge Sugar — establishes reliance on counsel as a defense to fraud-like allegations Bartenwerfer — only imputes fraud that actually exists Outcome: The debtor cannot be saddled with nondischargeable debt through hindsight claims that they “should have known” or “ignored warning signs. 4. Defending Innocent Spouses, Passive LLC Members, and “Non-Business” Partners This is now a key battleground post- Bartenwerfer. To the extent that a creditors argues “Your client didn’t commit the fraud, but they should have known their partner was committing fraud.”, here is an answer: Al-Sabah: knowledge requires deliberate avoidance, not negligence Sugar: reliance on counsel (or on a partner’s representations) defeats bad intent Bartenwerfer: imputation requires real fraud, not carelessness or poor oversight Allowing the argument that: The debtor was not willfully blind. The debtor reasonably relied on counsel or professionals. The debtor did not participate in the fraud. Therefore, Bartenwerfer does not apply. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document al-sabah_v._world_business_lenders.pdf (224.31 KB) Category 4th Circuit Court of Appeals
