(Bloomberg) -- John Paulson’s former Puerto Rico business partner agreed to drop a fraud lawsuit against the billionaire as part of a confidential settlement.
Fahad Ghaffar and Paulson’s lawyers jointly asked for the case’s dismissal in a Friday court filing in San Juan federal court that provided no details of the settlement. Ghaffar claimed in a suit filed last year that Paulson made false claims to persuade him to invest $17 million in a luxury automobile dealership on the island.
The suit exposed a rift between Paulson and Ghaffar, who was at the hedge fund mogul’s side for many of his investments in Puerto Rico over the past decade. Paulson subsequently sued Ghaffar, alleging he and his family siphoned millions of dollars from Paulson-owned hotels and other businesses. That suit remains pending.
Martin Russo, a lawyer for Ghaffar, and a spokesperson for Paulson both said the settlement was tied to the sale of Ghaffar’s interest in the car dealership to Puerto Rico businessman Victor Gomez III. Paulson’s Puerto Rico company announced recently that it was partnering with Gomez to sell cars on the island ranging from Fords to Ferraris.
The terms of the sale were not disclosed. Ghaffar had claimed in his suit that Paulson had promised but failed to deliver a convertible note granting him a 50% stake in the car dealership in return for his investment.
“This sale is made for the wellbeing of the employees of these large companies and to contribute to the vehicle brands they represent,” Russo said. “Mr. Ghaffar wishes success to the employees and Mr. Gomez in his future efforts.”
Russo further expressed confidence that Ghaffar would be successful in having Paulson’s suit dismissed.
Paulson, who is best known for his bet against the US housing market ahead of the 2008 subprime crisis, owns several businesses in Puerto Rico, including two of its top hotels, the Condado Vanderbilt and the St. Regis Bahia Beach Resort.
The case is Ghaffar v Paulson, 23-cv-1455, US District Court, District of Puerto Rico.
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