John Paulson sued his former Puerto Rico business partner, accusing him and several members of his family of siphoning millions of dollars from the hedge fund billionaire to finance a luxury lifestyle.
Fahad Ghaffar fraudulently billed to Paulson entities $3.4 million in personal expenses, including $147,000 in Louis Vuitton and Chanel shopping sprees, more than $600,000 in private jet travel and $20,000 for a single night of partying at Las Vegas’s Omnia night club, Paulson said in a suit filed Monday in federal court in Puerto Rico. Ghaffar also allegedly steered millions of dollars in Paulson business to firms owned by relatives, who overcharged for their services.
“Though Fahad touted himself a loyal member of the Paulson team and a philanthropist, nothing could be further from the truth,” Paulson said in his suit, which alleges racketeering and fraud, among other claims. “For years he and his co-conspirators siphoned off value from the Paulson entities at every turn, betraying Paulson’s trust and biting the hand that had 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 duty, among other claims. He is seeking around $190 million in damages. Ghaffar, his wife, father-in-law, brother, two sisters and personal assistant are all named as defendants, along with several companies they allegedly created.
“This complaint is a publicity stunt,” said Martin Russo, an attorney for Ghaffar, suggesting the racketeering claim was overblown. “The fact that Paulson leads with civil RICO indicates the weakness of his allegations and inability to prove any real misconduct. We look forward to dismantling their lawsuit and vindicating Mr. Ghaffar and his family.”
Monday’s suit escalates the rift that was exposed Sept. 6 when Ghaffar sued the billionaire for allegedly cheating him in a $17 million investment in a Paulson-owned luxury automobile dealership. Ghaffar claims Paulson reneged on a promise to give him a convertible note that would eventually grant him a 50% stake in the dealership.
The feud also intersects with Paulson’s New York legal battle 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 have alleged John Paulson’s Puerto Rico businesses, which include a number of luxury hotels, are mainly held by one of those trusts.
According to Paulson’s suit, Ghaffar was an “unemployed small-time commercial real estate investor” in 2013, when he sought out the “self-made highly successful owner of Paulson & Co.” and “begged for an opportunity to work for him.” Starting as a junior analyst, Ghaffar earned Paulson’s trust over the years and eventually became the billionaire’s senior manager in Puerto Rico.
Ghaffar allegedly used that position to enrich himself and members of his family. According to the suit, the lot on which Ghaffar built his current residence was given to him by a developer as reward for getting Paulson to overpay for the project.
50% Discount
Paulson also claims Ghaffar arranged for Paulson’s hotels to buy $3.2 million 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 suit, Ghaffar similarly arranged for Paulson’s businesses to buy insurance from his brother, who allegedly collected $48 million in premiums. Ghaffar and his brother also allegedly sold Paulson $3 million in “useless” software services. One of Ghaffar’s sisters sold rugs and furnishings to Paulson’s hotels, while another sold information technology devices, all allegedly at inflated prices. Ghaffar also funneled money to Acevedo-Martinez’s father, providing him with an Audi Q3 that was paid for by a Paulson company, according to Paulson.
Paulson also accused Ghaffar of charging Paulson’s businesses for $300,000 in wedding expenses, $370,000 in home maintenance costs, $700,000 in personal furnishings and $19,000 in personal cell phone service for several members of his household and staff. Ghaffar allegedly also 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 ran up massive tabs at Paulson properties, including $440,000 at the Condado Vanderbilt Hotel between 2020 and 2023, that he never paid, despite receiving a generous discount. Ghaffar allegedly arranged for himself to receive a 50% discount at the St. Regis, even though Paulson himself only got 20%.