John Paulson has sued his former business partner from Puerto Rico, accusing him and several members of his family of siphoning millions of dollars from the hedge fund billionaire to finance a luxurious lifestyle.
Fahad Ghaffar fraudulently charged the Paulson entities $3.4 million in personal expenses, including $147,000 on Louis Vuitton and Chanel shopping sprees, more than $600,000 on private jet trips, and $20,000 for a single night of partying at the Omnia nightclub in Las Vegas, Paulson said in a lawsuit. filed Monday in Puerto Rico federal court. Ghaffar also allegedly directed millions of dollars from Paulson’s business to businesses owned by relatives, who overcharged for their services.
“Although Fahad presents himself as a loyal member of Team Paulson and a philanthropist, nothing could be further from the truth,” Paulson said in his complaint, which alleges, among other things, racketeering and fraud. “For years, he and his co-conspirators siphoned value from the Paulson entities at every turn, betraying Paulson’s trust and biting the hand that fed them.”
Paulson is suing Ghaffar under the civil version of the Racketeer Influenced and Corrupt Organizations Act, a law that was created to target organized crime, as well as fraud, breach of fiduciary duties, among other claims. He is seeking approximately $190 million in damages. Ghaffar, his wife, his father-in-law, his brother, his two sisters and his personal assistant are all named as defendants, along with several companies they allegedly created.
“This complaint is a publicity stunt,” said Martin Russo, a lawyer for Ghaffar, suggesting that the racketeering accusation was exaggerated. “The fact that Paulson is leading with civil RICO indicates the weakness of his allegations and his inability to prove actual wrongdoing. We look forward to dismantling their case and vindicating Mr. Ghaffar and his family.
Monday’s trial deepens the divide that was exposed Sept. 6 when Ghaffar sued the billionaire for allegedly cheating him out of a $17 million investment in a luxury car dealership owned by Paulson. Ghaffar claims that Paulson reneged on his promise to give him a convertible security that would eventually grant him a 50% stake in the dealership.
The feud also intersects with Paulson’s legal battle in New York with his wife, Jenica, who accuses him of hiding billions of dollars in assets from her in three family trusts. Both Jenica Paulson and Ghaffar claimed that John Paulson’s business in Puerto Rico, which includes a number of luxury hotels, was primarily owned by one of these trusts.
According to Paulson’s lawsuit, Ghaffar was a “small, unemployed commercial real estate investor” in 2013, when he sought out the “self-made and highly successful owner of Paulson & Co.” and “requested an opportunity to work for him.” Starting out as a junior analyst, Ghaffar gained Paulson’s trust over the years and eventually became the billionaire’s senior manager in Puerto Rico.
Ghaffar allegedly used this position to enrich himself and his family members. According to the lawsuit, the land on which Ghaffar built his current residence was given to him by a developer as a reward for tricking Paulson into paying too much for the project.
50% off
Paulson also claims that Ghaffar arranged for Paulson’s hotels to purchase $3.2 million worth of outdoor furniture from a company controlled by his wife, Glenda Acevedo-Martinez. She allegedly added a 55% markup and collected $1 million in commissions.
According to the lawsuit, Ghaffar also arranged for Paulson’s companies to write insurance to his brother, who allegedly collected $48 million in premiums. Ghaffar and his brother also allegedly sold Paulson $3 million in “unnecessary” software services. One of Ghaffar’s sisters sold rugs and furniture to Paulson’s hotels, while another sold computer devices, all at allegedly inflated prices. Ghaffar also paid money to Acevedo-Martinez’s father, providing him with an Audi Q3 paid for by a Paulson company, according to Paulson.
Paulson also accused Ghaffar of charging Paulson’s companies $300,000 in wedding expenses, $370,000 in home maintenance costs, $700,000 in personal furniture and $19,000 in personal cell phone service for several members of his household and staff. Ghaffar also allegedly charged the cost of his assistant’s lavish wedding at one of Paulson’s properties, the St. Regis Bahia Beach Resort.
According to the suit, Ghaffar paid huge sums into the Paulson properties, including $440,000 to the Condado Vanderbilt Hotel between 2020 and 2023, which he never paid off, despite a generous discount. Ghaffar allegedly arranged to receive a 50% discount at the St. Regis, while Paulson himself only got 20%.