Musk-connected investors collisions with one of the largest asset managers in the world

A prominent investor from Silicon Valley is in a bitter dispute with his former employer, one of the world’s largest asset managers, who accuses it of fraud and attempted bribery.

In a lawsuit that was tightened in California on Thursday, Josh Raffaelli, who was a fund manager at Brookfield Asset Management, who had abused investors in his funds until the end of last year, because it tried to compensate for losses in other parts of its activities.

The complaint of 100 pages is partly remarkable because Mr. Raffaelli has close ties with Elon Musk, the world’s richest man. That relationship enabled Mr. Raffaelli’s funds to place money in the private companies of Mr. Musk, a coveted opportunity in Silicon Valley. But under the allegations of Mr Raffaelli, Brookfield is wrongly limited the amount that he could invest in a Musk company on behalf of Brookfield’s customers.

In December, shortly after Mr. Raffaelli had filed a whistleblower a complaint with the Securities and Exchange Commission, Brookfield fired him according to his lawsuit.

“Brookfield has repeatedly betrayed the trust and the best interests of his investors and then dismissed the employee who challenged his behavior,” said Mark Mermelstein, Mr Raffaelli’s lawyer.

Brookfield manages more than $ 1 trillion on behalf of pension schemes, government investment funds and financial institutions. Until January, the chairman Mark Carney, the new Prime Minister of Canada.

“This suit is absolutely without merit and these unfounded claims take against how Brookfield manages his company,” said Kerrie Mchugh, a spokeswoman for Brookfield. “We will strongly defend against this deserving lawsuit, which was brought by a dissatisfied former employee.”

Mr. Raffaelli, 45, had a long career in Silicon Valley. In 2004 he became an analyst at what was then called Draper Fisher Jurvetson, a leading business capital company. At the time, Mr. Musk on the climb in Silicon Valley. He recently founded the Rocket Company SpaceX and made an early investment in Tesla, who would become the world most valuable Autobedrijf.

By 2009, according to both SpaceX and Tesla, Mr. Raffaelli was a board observer, according to his LinkedIn -Profile. That has the right to attend the confidential board meetings of the companies. The proximity of Mr. Musk also gave Mr. Raffaelli the opportunity to invest the money of his customers in the private companies of the billionaire. In Silicon Valley, that access made Raffaelli in itself a hot commodity.

In 2017 he joined Brookfield and worked from the San Francisco office. It was his job to manage a handful of money that the money from customers would invest in technology companies. His basic salary was $ 500,000, but his bosses told him that if his funds performed well, his total reimbursement could eventually be in the tens of millions of dollars, according to the court case, submitted to San Mateo, Calif on Thursday at Superior Court.

Partly to attract external investors, Brookfield agreed to place his own money in Mr Raffaelli’s funds, which means that the financial interests of the company would be tailored to those of his customers. By 2024, his funds together passed more than $ 1.75 billion, most of which came from pension funds and other external investors.

Raffaelli tapped his contacts in Mr Musk’s job and arranged that his funds invest in various private companies of Mr. Musk, including SpaceX, the artificial intelligence company Xai and the company for building tunnel, according to Mr. Raffaelli’s lawsuit and people who are familiar with the investments.

But Brookfield soon experienced financial problems, according to the lawsuit. The COVID-19 Pandemie had hammered the commercial real estate sector, in which Brookfield and his subsidiaries were large investors. Brookfield Property Partners, the sister company of the asset management company, lost around $ 2 billion in 2020.

That was the scene for Brookfield to start fraud, Mr. Raffaelli said in the court case.

In short, in cash, Brookfield withdrew in 2024 on some of his commitments to put hundreds of millions of dollars in the funds of Mr Raffaelli next to external investors, the court case said.

Around the same time, Brookfield also pronounced Veto about a proposal of a non -specific ‘large foreign conglomerate’ that wanted to invest up to $ 100 million in one of Mr. Raffaelli’s funds, said the court case, which described that decision as ‘indefinable’.

The combined result was that there was less money than expected for Mr. Raffaelli to invest. That limited in turn the potential benefit for Brookfield’s external customers, the court case said.

Although Mr. Raffaelli said, he was forced to clearly reduce – from $ 25 million to $ 5 million – the amount that one of his funds intended to invest in Mr. Musk’s Xai. (The lawsuit did not identify Xai by name, but people who are familiar with the investments confirmed it.)

“That is when running away from the opportunity to buy Facebook or Apple shares” at a bargain price, the court case said. “The markets expected that this investment would not go anywhere, and that is exactly what happened.” The estimated value of Xai has more than tripled $ 80 billion over the past year.

Last summer, Brookfield announced Mr Raffaelli that the company was considering merging his funds in a company called Pinegrove Capital Partners, according to his lawsuit.

Mr. Raffaelli began to investigate Pinegrove, an asset manager who was mainly owned by Brookfield. He was alerted by what he found. He said that Pinegrove had exaggerated his capital level with more than $ 100 million, making it seem stronger financially than it actually was. Hundreds of institutions – including non -profit organizations and pension funds for police officers and firefighters – were convinced by the lawsuit by the lawsuit to entrust their money to Pinegrove.

Last October Mr. Raffaelli Anonymous reported his findings to Brookfield via the company Whistle-Blower website. A few weeks later, he said, he submitted a complaint to the SEC

Shortly thereafter, Mr. Raffaelli, Anuj Ranjan, told him that Brookfield’s chief had signed the decision to fold his money in Pinegrove. According to the court case, Mr Ranjan acknowledged Mr Raffaelli that the move was not good for his customers, but was designed to support Pinegrove and save money for Brookfield. Mr. Raffaelli considered this a violation of the federal securities laws.

Mr. Ranjan did not respond to a request for comment.

The investors in Mr. Raffaelli’s money needed to approve the merger of Pinegrove. Brookfield pushed Mr. Raffaelli to pitch them “because his credibility would better resonate with the investors who trusted him,” said the court case.

In exchange for his help, Mr. Raffaelli said, Brookfield offered to pay him an amount “far beyond” what he currently owed. He said that the head of the Human Resources department then sent him a spreadsheet that shows that he could eventually be up to $ 46 million under his existing compensation agreement.

Mr. Raffaelli said he saw that as Brookfield who offered him bribery.

The following week Mr. Raffaelli sent the general counselor at Brookfield Asset Management the complaint he had previously sent to the SEC

“No matter how uncomfortable this is for me, I wanted to share with you that I felt that I had a duty to whistle the whistle on certain illegal behavior,” he wrote, according to the court case.

Nine days later, Mr. Raffaelli said, he was fired.