Husch Blackwell LLP failed to convince a New York appellate court that it shouldn’t face claims alleging it aided and abetted a client’s fraud scheme.

Kamran Nezami owns several medical companies. Investors accused Husch Blackwell of aiding and abetting him to embezzle their investments to fund an extravagant life style.

The firm and its partner Diane T. Carter said the investors’ complaint didn’t adequately allege they had actual knowledge of the fraud.

But the complaint alleged Carter was the one who developed the idea to disguise Nezami’s embezzlement as loans, the court said. It also alleged Carter or other lawyers at the firm drafted promissory notes and security agreements documenting the supposed loans, it said.

According to the complaint, the loans weren’t included on financial statements shown to the plaintiffs on Carter’s advice, the court said. It also alleges Carter was at a meeting where it was specifically decided the plaintiffs shouldn’t be told about the fraud because they wouldn’t invest, it said.

The complaint also states a claim against Husch Blackwell for negligently supervising Carter, the court said.

Justices John W. Sweeny, Peter Tom, Marcy L. Kahn, Jeffrey K. Oing, and Anil C. Singh were on the panel.

Epstein Ostrove LLC represented the plaintiffs. Wheeler Trigg O’Donnell LLP represented Husch Blackwell.

The case is Gansett One, LLC v. Husch Blackwell, LLP, 2019 BL 22971, N.Y. App. Div., No. 651097/15 8197 8196, 1/24/19.