Ghaffar asks court to reject Paulson’s amended complaint, saying it ‘lacks standing’
In a motion filed in the U.S. District Court for the District of Puerto Rico, Fahad Ghaffar sought dismissal of an amended complaint presented by his former business partner John Paulson, arguing it “lacks standing.”
“Plaintiffs’ [Paulson] amended complaint is not only late, but futile, because plaintiffs lack standing, a fatal flaw that requires dismissal before the need to reach other dispositive issues that require dismissal of plaintiffs’ [Racketeer Influenced and Corrupt Organizations Act (RICO)] claims as amended,” states the motion filed on Feb. 23.
Ghaffar accuses Paulson of false representations in federal court regarding the ownership of the Vanderbilt, La Concha, and Bahía Beach Resort hotels “to evade compliance with the partnership agreements he held with Ghaffar.”
“In the recent amendment to the complaint filed by Paulson, alleging violations of the RICO Act, Paulson makes false representations regarding the companies owning the hotel assets. He does so to evade commitments and responsibilities contracted with Ghaffar,” said Leo Aldridge, Ghaffar’s legal adviser.
The dispute between the former business associates centers on allegations of fraud and breach of contract. Paulson PRV Holdings LLC, along with other companies, amended their RICO complaint to include new allegations against Ghaffar; his wife, Glenda Acevedo; and others, accusing them of misconduct and fiduciary duty violations.
The amendment also names ACE LLC, established by Ghaffar, alleging it served for personal expense misrepresentation.
Ghaffar claims a $17 million investment in Paulson PRV Holdings LLC, expecting profits, interest and a 50% equity stake in a luxury car dealership company, which he claims was not honored.
The court partially denied Paulson’s motion to dismiss Ghaffar’s lawsuit, allowing claims of unjust enrichment, breach of contract and securities fraud to proceed. The decision highlighted the improbability of Ghaffar investing without clear expectations and agreements on the investment’s return and criticized the Paulson defendants for seemingly not intending to comply with the original agreement from the beginning.
Ghaffar’s attorney said that an analysis of previous complaints filed by Paulson before the court against other entities “demonstrates that Condado JV Holdings LLC and Bahía Beach Holding Company LLC are not direct owners of the three hotels, thereby lacking truth in the federal court’s amended legal recourse to not fulfill their contractual obligations with Fahad Ghaffar.”
Aldridge criticized Paulson for allegedly including false statements in court motions with the intention of undermining Ghaffar’s motion to dismiss.
“When Paulson refused to acknowledge Ghaffar’s $17 million investment to own 50% of the F40 car dealerships, we took him to court. When Paulson ignored Ghaffar’s membership status in Vanderbilt Residences after Fahad invested $11 million, we took him to court,” Aldridge said.
“And when Paulson pressured Ghaffar to contribute $7 million to become a member of La Concha and Vanderbilt and then deceived him and reneged on his promises, we took him to court. Paulson now attempts to evade his responsibilities and legal duties by making false representations to the court,” Aldridge added.
The defendants argue the plaintiffs lack standing as the entities named as plaintiffs did not suffer the alleged harm. The amended complaint contains the same “insurmountable deficiency,” Ghaffar’s legal team stated.
Paulson’s legal team responds
Attorney María Domínguez, former first assistant U.S. attorney and a member of Paulson’s legal team, countered Ghaffar’s latest move by saying, “This latest press release is a desperate attempt by Fahad to distract from the very serious criminal conduct alleged in our complaint. No press release can hide or disguise these serious allegations leveled against Fahad and his inner circle.”
Domínguez said the allegations against Ghaffar include a range of “unacceptable behavior,” including:
- Using shell companies for outrageous expenses, including $240,000 on a private plane rental to Las Vegas and $20,000 at a nightclub.
- Using a shell company to pay more than $1 million in commissions to his wife and $3 million for unwanted furniture.
- Extorting Paulson’s former insurance broker to pay 50% of commissions for his brother, to keep Paulson’s business.
- Firing Paulson’s long-standing broker and transferring all insurance business, worth more than $45 million in premiums, to his brother Amir’s newly formed entity.
- Paying his brother more than $5 million in insurance commissions, of which Ghaffar may have received a share.
- Diverting hundreds of thousands of dollars from Paulson’s business to his sisters.
- Claiming reimbursements for personal luxury purchases at Hermes and Louis Vuitton from Paulson entities.
- Misappropriating Paulson Puerto Rico business opportunities for personal gain.
“Our complaint is legally appropriate and supported by ample reliable facts, including documentary support, financial information and documents, and knowledgeable witness accounts,” Domínguez asserted.
“Legal maneuvers cannot moderate [Ghaffar’s] guilt,” she continued. “The more he litigates, the more he will lose and the more serious his future defeats will be.”
