John Paulson was sued by his longtime business partner in Puerto Rico, who alleges the hedge fund billionaire made fraudulent claims to convince him to invest $17 million in a luxury automobile dealership on the island.
Fahad Ghaffar filed suit Wednesday in federal court in Puerto Rico, asking for more than $50 million in damages from Paulson. Ghaffar claims Paulson told him in February 2022 that he would be investing his money in a convertible note that would eventually give him 50% ownership in the dealership, F40, which a Paulson family trust had just bought for $103 million.
“Ghaffar would not have purchased the convertible note and invested $17 million, but for Paulson’s misrepresentations regarding the convertible note, including his promise to deliver documentation thereof,” Ghaffar says in the suit. “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.
In his suit, Ghaffar claims Paulson solicited his investment because the billionaire had become “skittish” about Puerto Rico. That would be a departure for Paulson, who has invested heavily in hotels and other businesses in the US territory and once predicted that it would become the “Singapore of the Caribbean.”
“With Paulson’s financial backing and Fahad’s operational skills, they significantly improved the economics of the St. Regis transaction,” Ghaffar says on his site. He praised their continuing partnership, saying Paulson Puerto Rico was set to exceed $1 billion in revenue in 2023.
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