Baruch Gottesman and the $50 Million Letter for an Account That Didn’t Exist

Editor’s Note: This article tells the story of a $23 million investor fraud and the federal malpractice lawsuit that followed– not against the con man, who is already in prison, but against the lawyer whose name was on the paperwork. It is, at bottom, a story about what happens when the professional who is supposed to be the last line of defense either fails to look or looks and fails to act. Whether you call that negligence, recklessness, or something worse depends on facts that have not yet been found. The allegations against Baruch Gottesman are unproven. He has denied them. No court has entered a finding of liability or professional misconduct against him. We publish this piece because the questions it raises– about gatekeeping, about professional accountability, about the gap between what lawyers know and what prospective clients can find out– are questions that matter to anyone who relies on a lawyer’s word.

It started with a letter.

The letter was dated September 9, 2021, and it was short– barely a paragraph. In it, an attorney said he had done his own due diligence: he had reviewed a bank statement, spoken with a customer service representative at Wells Fargo, and could confirm that Sean Grusd held freely available funds of at least $50 million in an account there. The letter went out to prospective investors in two Delaware SPVs, November Acquisitions and December Acquisitions, which were pitched as a way to gain exposure to pre-IPO names like Stripe and Klarna.

The account never existed, according to a complaint pending in the Northern District of Illinois. But on the strength of that letter and the deal documents that followed, a group of Chicago-area investors put in more than $20 million. Grusd, the SPVs’ managing member, is alleged to have swept nearly all of it into his personal accounts and spent it.

Grusd’s own story is done. Federal prosecutors described him as a con man who ran three funds– Dylan Ventures, November Acquisitions, and December Acquisitions– telling investors the money would go toward private fintech names. Instead, he routed their cash into his own accounts and spent it on luxury cars and condos in Chicago and Montreal. He backed up the pitch with fabrications: a fake Harvard Law pedigree, a made-up track record of early bets on companies like Instacart and Coinbase, and forged stock certificates and bank statements.

He pleaded guilty to wire fraud in May 2023. In late 2024, U.S. District Judge Sara L. Ellis sentenced him to seven years and ordered more than $21 million in restitution; his plea acknowledged roughly $23 million defrauded. He reported to federal prison in January 2025. The Seventh Circuit took up his appeal of the restitution order and affirmed in January 2026. Of the roughly $23 million taken, only about $4 million has been recovered.

But the criminal case left something unresolved: the role of the lawyer whose name was on that letter.

The gatekeeper theory

The man who wrote the September 2021 letter was Baruch Gottesman, who practiced under the names Gottesman Law and Gottesman Legal Services. According to the complaint filed March 25, 2025, by November Acquisitions, December Acquisitions, Bad Gremlin LLC, and Remora LLC, Gottesman served as counsel to both SPVs, signed their certificates of formation, and he was the sole identified Investor Relations contact.

The claims against him are worth stating carefully. The plaintiffs do not allege that Gottesman knowingly joined Grusd’s theft. They allege professional malpractice, breach of fiduciary duty, and negligent misrepresentation — the theory being that a lawyer in his position either knew or, using ordinary care, should have known that what he was putting his name to was false. The complaint identifies three specific failures:

The proof-of-funds letter. The plaintiffs allege that no Wells Fargo representative could have confirmed a $50 million balance because no such account existed. A competent verification, they say, would have turned that up before any investor saw the letter.

The formation documents. Gottesman allegedly drafted and circulated operating and subscription agreements naming prominent outside investors who were supposedly supplying the bulk of the capital. In reality, the complaint says, there were no such investors; the named plaintiffs put up essentially all the equity while being told they held roughly 10 percent minority stakes. That misunderstanding, the plaintiffs argue, kept them from asserting control they actually had– control that might have stopped Grusd.

The August 2022 letter. When an investor asked to reach the other members after a promised Stripe transaction fell through, Gottesman allegedly responded with a letter naming specific outside investors– including one entity said to hold 50%– that the plaintiffs say did not exist. Gottesman allegedly marked the information “highly confidential” and told them not to contact those members directly. According to the complaint, that instruction shut down the one inquiry that might have exposed the scheme while some of the money was still traceable.

Each allegation comes down to the same thing: a lawyer who served as the trusted intermediary, whose word investors relied on, and whose alleged failure to check the facts let a fraud run its course. It is a pattern with precedent in major fraud cases.

The innocent-mistake problem

The complaint frames all of this as negligence, gross negligence, or recklessness. That framing raises the obvious question: how does a transactional lawyer end up here by accident?

Look at what the letter actually says. It does not just assert a number. It describes a method (a review of a bank statement, a conversation with a Wells Fargo representative) and certifies, on that basis, funds of not less than $50 million. But if the account never existed, as the complaint alleges, the method described could not have produced that result. No bank representative would confirm the balance of an account the bank does not hold. So either the confirmation was invented, or the diligence the letter describes was never actually performed, or it was performed so carelessly that it blessed a fiction.

The other investors’ representations sit no more easily inside a negligence theory. Operating and subscription agreements name parties and assign percentages. The complaint alleges these documents identified specific outside investors supplying the bulk of the capital, and the August 2022 letter went further, assigning exact stakes, with one entity supposedly holding half. A lawyer either holds executed signatures from counterparties or he does not. Reciting investors who, according to the complaint, never existed or had never heard of the deals is not the kind of thing one gets wrong by accident.

There is also a practical reason the word “negligence” does so much work in this complaint. Malpractice insurance covers negligence. It does not cover intentional fraud. The plaintiffs are chasing a $23 million hole —and most of the money is unrecoverable from Grusd, who is in prison. So, they have every reason to plead toward the one solvent target still standing (the lawyer’s carrier), and that means pleading carelessness rather than knowledge, whatever the facts may eventually show (and even a casual reader may notice that the conduct described in the complaint looks a lot worse than carelessness).

None of this has been proven, and Gottesman is entitled to the presumption that it will not be. But extending him that presumption does not require anyone to find the innocent-mistake version of events persuasive.

Where the case stands

For a while, the case looked like a routine defense. Counsel appeared for Gottesman in June 2025. He took two unopposed extensions and filed an Answer with affirmative defenses on July 11, 2025, denying the claims. The matter was referred to Magistrate Judge Albert Berry III for discovery supervision.

Then things stalled. Through the fall of 2025, the parties feuded over a discovery schedule. At one point, the magistrate noted that a defense motion styled “unopposed” did not actually appear to be unopposed. At a November 18, 2025 status hearing, defense counsel agreed that Gottesman would provide written responses and document production by November 25, and the fact-discovery deadline was pushed to March 2026.

According to the docket, that production never came. At a status hearing on August 18, 2026, the magistrate waited for eight minutes for defense counsel, who did not appear. Plaintiffs’ counsel reported that no documents had been produced as ordered by the court. The judge set a rule-to-show-cause hearing for September 15, 2026, directing Gottesman to explain why sanctions should not follow.

That hearing took place on September 15, 2026, and was contentious. Defense counsel was adamant that Gottesman had no further documents to produce. Plaintiffs’ counsel pressed the point they had been making for months: that the defense had agreed to turn over more. At times, plaintiffs’ counsel could barely be heard over defense counsel’s objections. Defense counsel kept insisting the demand lacked specificity, repeating the phrase “produce the documents” back almost mockingly, as though its generality and vagueness were the problem. The magistrate left it with a deadline and a fork: by September 29, the defense must either produce the documents plaintiffs had requested or file a sworn affirmation that none exist. And if nothing arrived by 5:00 p.m. that day– 5:00, the judge was explicit, not 11:59– plaintiffs could draw up their motion for sanctions.

That is the question the defense seems built to avoid, and it is worth pressing, because the letter’s own account of the diligence describes a chain of communications– and communications leave records. Before Gottesman could call the Wells Fargo representative, someone had to hand him the number; if Grusd supplied it by text or email, that is a document. Once the banker had supposedly confirmed that $50 million sat in the account, the obvious next move was to tell Grusd the funds were verified– and that message is a document too. And if Gottesman says it all happened by telephone, the calls have their own trail: records showing him dialing the number, and the identity of the banker who answered. The banker is not his client; that conversation is not privileged.

And to the extent Gottesman might claim privilege over his communications with Grusd, the crime-fraud exception has something to say about that: the privilege does not protect a client’s use of a lawyer’s services to further a fraud, and Grusd is not merely accused of one– he pleaded guilty and is serving seven years. A defense that meets each of these points with the assurance that nothing more exists asks an outsider to accept that a diligence process, that the letter lays out step by step, produced no paper at all.

So the picture is not ’dodged service‘ nor is it ‘vigorous defense.’ It is a case that was answered and then, by the record, allowed to drift into non-compliance and non-appearance– and by September 15, into a sanctions hearing that restated the dispute without resolving it. Nothing has been decided on the merits. A complaint is an accusation, not a finding. But a defendant cannot litigate the merits indefinitely if he will not turn over documents or show up when the judge tells him to.

None of which answers the question a prospective client would want answered.

Still on the roll

A pending civil malpractice suit, on its own, does not touch a law license. Attorney discipline runs on a separate track: a grievance, an investigation, a finding by a disciplinary authority. And none of that happens automatically just because a lawyer is named as a defendant, no matter how large the dollars at issue.

So here is where things stand. According to the New York attorney registration records maintained by the Office of Court Administration, Baruch Simcha Gottesman, Registration No. 4480539, is currently registered and practicing as Gottesman Legal PLLC at 11 Broadway in lower Manhattan. Registration status can change, and it can be verified in seconds through the OCA attorney directory. Clients weighing an engagement can and should check for themselves.

That is not an indictment. It is a description of a gap. A man is in federal prison for stealing $23 million. A federal complaint says the letter that unlocked that money was written by his lawyer. And the lawyer, who denies the alleged malpractice, continues to take on new clients, none of whom would learn of this unless they thought to look.

Whether that gap should be closed, and by whom, is an argument worth having. It is also the argument that the rules of professional responsibility were written for.

Sources

Civil docket: November Acquisitions SPV LLC et al. v. Gottesman, No. 1:25-cv-03148 (N.D. Ill.) — complaint filed March 25, 2025 (complaint PDF); appearances and Answer, June–July 2025; discovery proceedings before Magistrate Judge Albert Berry III, including the November 18, 2025 minute entry (PDF) resetting fact discovery and ordering production by November 25, 2025. The August 18, 2026 status hearing and September 15, 2026 rule-to-show-cause setting are reflected on that same docket.

Criminal matter: U.S. Attorney’s Office (N.D. Ill.) press release on Grusd’s sentencing (Oct. 18, 2024); United States v. Grusd, No. 24-3120 (7th Cir. Jan. 14, 2026) (appeal docket).

Reporting: Chicago Sun-Times (Frank Main, Nov. 25, 2024) and Fox 32 Chicago (Oct. 18, 2024).

Bar status: New York State Office of Court Administration attorney search (Reg. No. 4480539); public registration snapshot via OpenGovNY attorney record.

Editor’s Notes

For more information about legal malpractice and the relationship between civil liability and attorney discipline, read “Avoiding Legal Malpractice and Disciplinary Trouble.”

For more information about the defense theories available to lawyers sued for their role in a client’s fraud, read “The Attorney Immunity Defense: Ongoing Allen Stanford Ponzi Case Sparks Debate.”

For more information about how contributory negligence defenses work in fraud cases, read “Blame Games: Understanding the Contributory Negligence Defense in Fraud Cases.”

For more information about the heightened pleading standards that apply to fraud complaints in federal court, read “It’s All in the Details: The Importance of FRCP Rule 9 in Fraud Cases.”.

For more information about how attorneys who facilitate fraud face professional consequences, read “Fraud and Deceit in Bankruptcy Cases – Lessons from ‘The Clouds.’”

For more information about what investors should look for when evaluating co-investment SPV structures like those used in this case, read “Should You Co-Invest? 10 Considerations for Co-Investment SPVs.”