An outstanding Silicon Valley investor is in a bitter dispute with his former employer, one of the world’s largest asset administrators, the fraud battery and bribery attempt.
In a lawsuit filed on Thursday in California, Josh Raffaelli, who until the end of last year was a fund manager at Brookfield Asset Management, said the company had mistreated investors in their funds, since it sought to compensate for the losses of its or its.
The 100 -page complaint is notable in part because Mr. Raffaelli has close links with Elon Musk, the richest man in the world. That relationship allowed Mr. Raffaelli’s funds to put money in the private companies of Mr. Musk, an opportunity coveted in Silicon Valley. But among the accusations of Mr. Raffaelli is that Brookfield incorrectly limited the amount he could invest in a Musk company in the name of Brookfield’s customers.
In December, shortly after Mr. Raffaelli filed a complaints from the Bolsa and Securities Commission, Brookfield dismissed him, according to his demand.
“Brookfield repeatedly betrayed the trust and the best interests of its investors, and then fired the employee who challenges his behavior,” said Mark Mámelstein, lawyer of Mr. Raffaelli.
Brookfield manages more than $ 1 billion on behalf of pension plans, government investment funds and financial institutions. Until January, its president was Mark Carny, the new Prime Minister of Canada.
“This demand is absolutely without merit and these unfounded statements go on how Brookfield manages his business,” said Kerrie Mchugh, Brookfield spokesman. “We will defend ourselves vigorously against this demand without merit, who was brought by a former discontent employee.”
Mr. Raffaelli, 45, has had a long career in Silicon Valley. In 2004, he became an analyst of what was then called Draper Fisher Jurvetson, a leading venture capital firm. At that time, Mr. Musk was in the ascent in Silicon Valley. Recently, the SpaceX E Company had founded an early investment in Tesla, which would become the most valuable automotive company in the world.
For 2009, Mr. Raffaelli was an observer of the Board in Spacex and Tesla, according to his LinkedIn profile. That gave him the right to attend the confidential meetings of the Board of Companies. The proximity to Mr. Musk also gave Mr. Raffaelli the opportunity to invest their customers’ money in private companies of the billionaire. In Silicon Valley, that access made Mr. Raffaelli a hot product in its own right.
In 2017 he joined Brookfield, working in his San Francisco office. His work was to manage a handful of funds that would invest customer money in technology companies. His base salary was $ 500,000, but his bosses told him that if their funds served well, their total compensation could be in the dozen millions of dollars, according to the lawsuit, presented on Thursday in a higher court.
Partly to attract external investors, Brookfield agreed to put his own money in the funds of Mr. Raffaelli, which means that the company’s financial interests would be aligned with those of their clients. By 2024, its funds collectively managed more than $ 1.75 billion, most of which came from pension funds and other external investors.
Helping his contacts in the orbit of Mr. Musk, Mr. Raffaelli organized that his funds invested in several of Mr. Musk’s private businesses, including Spacex, the XAI artificial intelligence company and the tunnel construction company known as the boring company, according to Mr. Raffaelli’s demand and people familiar with investments.
But Brookfield soon found financial problems, according to the demand. The Covid-19 Pandemia had hit the commercial real estate industry, in which Brookfield and its affiliates were main investors. Brookfield Property Partners, the sister company of the asset management firm, lost around $ 2 billion in 2020.
That prepared the stage for Brookfield to begin to participate in fraud, Raffaelli said in the demand.
Short in cash, Brookfield backed away in some of his promises to place hundreds of millions or dollars in Mr. in 2024. Raffaelli’s funds together with external investors, said the demand.
Almost at the same time, Brookfield also vetoed a proposal of an “important foreign conglomerate” of the UN that wanted to invest up to $ 100 million in one of Mr. Raffaelli’s funds, said the lawsuit, which describes that decision as “indefensible.”
The combined result was that there was less money than expected so that Mr. Raffaelli invested. That, in turn, limited the upward potential of Brookfield’s external clients, the demand said.
Mr. Raffaelli had already been forced to abruptly reduce $ 25 million to $ 5 million, the amount that one of his funds planned to invest in XAI of Mr. Musk. (Demand did not identify XAI by name, but people familiar with investments confirmed it).
“That is like getting away from the opportunity to buy Facebook or Apple shares” at a bargain price, the demand said. “The markets expected this investment not to go anywhere more than above, and that is exactly what has happened.” The estimated XAI value has more than more than tripled to $ 80 billion during the past year.
Last summer, Brookfield informed Mr. Raffaelli that the company thought about the medulla in its funds in a company called Pinegrove Capital Partners, according to their demand.
Mr. Raffaelli began investigating Pinegrove, an asset manager who was owned by Brookfield. He was alarmed by what he found. He said that Pinegrove had exaggerated his capital levels at more than $ 100 million, which makes financial agitator of what he really is. Hundreds of institutions, including non -profit organizations and pension funds for police officers and firefighters, had been persuaded under false claims to understand their money to Pinegroove, according to the demand.
Last October, Mr. Raffaelli anonymously reported his findings to Brookfield through the company’s complainant website. A few weeks later, he said, he filed a complaint to the SEC
Shortly after, Mr. Raffaelli’s head, Anuj Ranjan, told him that Brookfield’s executive director had signed the decision to double his funds in Pinegrove. According to the lawsuit, Mr. Ranjan recognized Mr. Raffaelli that the measure was not good for his clients, but was designed to prop up Pinegrove and save money for Brookfield. Mr. Raffaelli saw this as a violation of federal laws of values.
Mr. Ranjan did not respond to a request for comments.
Investors in the funds of Mr. Raffaelli needed to approve Pinegrove’s merger. Brookfield pushed Mr. Raffaelli to put them in him “because his credibility would resonate better with the investors who trusted him,” said the demand.
In exchange for his help, said Mr. Raffaelli, Brookfield offered to pay him an amount “beyond what was currently OED. He said that the company’s head of the company’s human resources department sent him a spreadsheet that showed that up to $ 46 million could be due animately under his existing compensation agreement.
Mr. Raffaelli said he saw him as a sacrifice of Brookfield, he is a bribe.
The following week, Mr. Raffaelli sent the general advisor to Brookfield Asset Management the complaint that had previously sent to the SEC
“As uncomfortable as this is for me, I wanted to share with you that I felt that I had a grimace to drop the whistle on some illegal behavior,” he wrote to the demand.
Nine days later, said Raffaelli, was fired.
