Hedge fund billionaire John Paulson has been hit with a $50 million lawsuit by his longtime business partner over allegations he tricked him into investing $17 million in a fraudulent transaction.
Paulson, 67, has worked with Fahad Ghaffar in Puerto Rico since 2013, but a legal complaint has now driven a wedge between the two men – with Ghaffar claiming the investment was “misrepresented” to him.
Ghaffar, 42, invested the money in Paulson’s F40 luxury car company in 2022, in a deal that would convert it into a 50% stake.
The complaint filed in federal court last week says Ghaffar thought he was going to earn an extra 10 percent for his work for the company — and repeatedly requested documents.
But Paulson and his lawyers continued to “misrepresent” to Ghaffar that he had purchased a half stake in the luxury car maker, according to court documents.
Paulson (right), 67, has worked with Fahad Ghaffar (left) in Puerto Rico since 2013, but a legal complaint has now driven a wedge between the two men – with Ghaffar claiming the investment was ‘misrepresented’ to him
Paulson and his lawyers continued to “misrepresent” to Ghaffar that he had purchased half the stake in the luxury car maker, according to court documents
Paulson denied the allegations, calling them “baseless,” with a spokesperson for his company confirming that an internal investigation had been launched into Ghaffar’s actions.
They added that they plan to file their own counter-complaint against Ghaffar.
“This action is a baseless attempt to divert attention from the serious misconduct committed by Fahad Ghaffar. We are conducting an independent investigation to fully document these cases,” said a spokesperson for Paulson PRv.
“We will file a complaint that will show numerous instances of misconduct, embezzlement, fraud and self-serving dealings involving himself, his family members and associates in almost every Paulson entity in Puerto Rico. Fahad was a former executive at Paulson PRV and was terminated, for cause, on July 31.
“Fahad no longer has any responsibilities at Paulson PRV or any of its subsidiaries.”
The billionaire had just purchased the dealership for $103 million in February 2022, promising Ghaffar that his investment would be in a convertible note that would eventually give him the 50 percent.
But Ghaffar says he never received the note, despite wiring the $17 million, and alleges in court documents that he became CEO of F40 without pay.
He performed the work based on the terms promised in the memo and says in the filing that Paulson emailed him in August to remove him from his position.
The suit states: “Ghaffar would not have purchased the convertible note and invested $17 million without Paulson’s misrepresentations regarding the convertible note, including his promise to provide documentation relating thereto.
“Ghaffar would not have worked tirelessly on behalf of F40 to increase its profits for the benefit of Paulson, but for Paulson’s misrepresentations regarding the convertible note.”
Ghaffar claims Paulson requested his investment because the billionaire had become “nervous” about Puerto Rico.
The billionaire had just purchased the dealership for $103 million in February 2022, promising Ghaffar that his investment would be in a convertible note that would eventually give him the 50 percent.
Ghaffar, 42, invested the money in Paulson’s F40 luxury car company in 2022, in a deal that would see it converted into a 50% stake.
Paulson is currently in the midst of a bitter divorce from his ex-wife and is dating influencer Alina de Almeida
He has already invested heavily in hotels and other businesses in the US – predicting that the country would become the “Singapore of the Caribbean”.
According to court documents, the two men met in 2013, with Ghaffar’s website saying they spoke when Paulson entered into a deal to buy the St. Regis Bahia Beach resort.
The lawsuit states that Paulson “exploited Mr. Ghaffar for 16 months of services while pretending to assert the distorted terms of the convertible note that he never succeeded in producing.”
Ghaffar is suing Paulson for securities fraud, unjust enrichment in violation of Puerto Rico law, breach of contract, fraud, damages, violation of the Puerto Rico Uniform Securities Act, and constructive trust.
He is seeking at least $50 million in damages, proof of the contract between Ghaffar and Paulson and attorney’s fees.
Paulson has talked about moving to the island for years after purchasing two iconic hotels in San Juan, the Condado Vanderbilt and La Concha, which his company bought for $260 million in 2014.
Paulson is in the middle of an ugly multibillion-dollar divorce from his wife Jenny, 51, with the couple having no prenuptial agreement.
Paulson’s new girlfriend Alina de Almeida, 34, shows off her ripped abs in workout gear on her company’s Instagram
John Paulson and Alina de Almeida sitting side by side at the US Open in September
But he never made that decision, and a spokesperson told Bloomberg in 2022 that he no longer planned to do so.
The billionaire, estimated to be worth around $3 million by Forbes, made his fortune short-selling subprime mortgages, or betting against them, in the run-up to the 2008 financial crisis.
He recently made headlines when he said he wanted to marry his 34-year-old girlfriend after moving her into his Fifth Avenue apartment.
Paulson is in the middle of an ugly multibillion-dollar divorce from his wife Jenny, 51, with the couple having no prenuptial agreement.
In July 2022, Jenny Paulson sued John over allegations that he hid billions of dollars in secret trusts that deprived her of her share of his fortune, according to court documents.
Sources claim he told friends he wants to marry nutrition influencer Alina de Almeida, who is almost half his age – and that he “wants to have a baby with her.”
The couple, who now share Paulson’s posh Manhattan home, have made their relationship public at glitzy events since filing for divorce in November last year.
