Billionaire John Paulson filed a motion to dismiss a $50 million lawsuit filed by his former business partner over allegations of fraud and breach of contract, claiming he did it to get media attention and distract from his own misdeeds.
Fahad Ghaffar, Paulson’s partner in a number of hotels in Puerto Rico, claims he invested $17 million in Paulson’s F40 car company in 2022 that would be converted into a 50% equity stake.
In the recent filing, Paulson’s legal team stated, “There was no fraud, no deceit, no misconduct, and no misrepresentations on the part of the Paulson Defendants.”
The motion goes on to allege that, “Ghaffar made these false allegations with the sole intent of gaining media attention to capriciously defame Paulson and deflect attention from the avalanche of recently discovered evidence exposing Ghaffar and his family’s multi-year fraud, bribery, kickback, self-dealing, and embezzlement scheme against Paulson in connection with Ghaffar’s management of Paulson’s significant investments in Puerto Rico.”
The motion does not offer evidence of these claims which includes “embezzlement of corporate assets to finance an extravagant lifestyle for himself and his wife; diversion of hotel business to himself and his family members for their enrichment and to the detriment of Paulson; and fraudulently inflating the cost of goods and services provided by his family members to increase the commissions corresponding to those services.”
Around Aug. 18, Ghaffar claimed in his original suit, that Paulson, who became famous for shorting the housing market in 2007, emailed him to “remove him from all positions with F40.”
Ghaffar, a philanthropist in Puerto Rico, further alleged that Paulson’s email prompted him to demand a letter confirming his convertible note, a short-term debt agreement that turns into equity at a future date.
“Paulson responded with further empty promises of an instrument for ‘consideration’ as if the terms of the profits interest and conversion feature had not been set at the time of purchase,” the documents state.
The motion to dismiss paints a different picture.
Paulson’s side claims that, “Once Paulson uncovered Ghaffar’s unlawful schemes, Paulson promptly terminated Ghaffar’s management of his investments, including his role as president and CEO of F40. Shortly thereafter, Ghaffar filed this action.”
The request for dismissal also claims that in emails, “Ghaffar repeatedly received the Convertible Note. . . but he rejected it and demanded new terms.”
Martin Russo, an attorney for Ghaffar, tells Page Six, “We are glad to see that this matter is moving quickly before the esteemed federal court in Puerto Rico.”
He added in a statement: “The notion that emails regarding a financial instrument are the same as delivering an executed document evidencing an investment is folly which we expect the Court will reject. In addition, we welcome the opportunity to disprove the unsupported and unfounded accusations against Mr. Ghaffar should Paulson be able to find lawyers brave enough to attempt to pursue the baseless claims.”
Attorneys for John Paulson and Paulson PRV Holdings, Terrence and Darren Oved of Oved & Oved LLP, told Page Six when reached for comment, “Ghaffar’s allegations are directly refuted by the very emails he selectively quotes in his own complaint. If Ghaffar’s complaint is not immediately withdrawn, his senseless refusal will be met with our motion for sanctions.”
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