SAN MATEO, Calif. (CN) - A Silicon Valley investor with ties to Elon Musk is suing Brookfield Asset Management, accusing the $1 trillion firm of fraud, mismanagement and attempted bribery.
In a 100-page lawsuit filed Thursday in San Mateo County Superior Court, Josh Raffaelli - a former managing partner at Brookfield until his firing in December - claims the firm misled investors and retaliated against him after he blew the whistle to regulators.
Raffaelli claims Brookfield improperly diverted capital away from the funds he managed to offset losses in its struggling commercial real estate arm. The complaint also accuses Brookfield of limiting access to high-profile private investments, including Musk's artificial intelligence company, xAI, to the detriment of clients.
A Brookfield spokesperson did not immediately respond to requests for comment about the lawsuit.
Raffaelli built his career in venture capital with early exposure to Musk's companies, including SpaceX and Tesla. In 2017, he joined Brookfield to lead tech investments and eventually oversaw funds totaling $1.75 billion from pension funds, institutional clients and Brookfield itself.
Raffaelli says in his complaint that Brookfield reneged on funding commitments in 2024 and blocked a $100 million investment from a foreign conglomerate, forcing Raffaelli to scale back stakes in Musk ventures like xAI. One fund's planned $25 million investment in xAI was slashed to $5 million - a move that Raffaelli says was "indefensible" and was akin to "walking away from the chance to buy Facebook or Apple stock."
"The markets expected this investment to go nowhere but up, and that is exactly what has happened," Raffaelli says in the complaint.
Brookfield later proposed folding Raffaelli's funds - known in the complaint as Fund 2 and Fund 3 - into Pinegrove Capital Partners, an internal firm Raffaelli claims had inflated its financial strength by over $100 million. Raffaelli says he reported these concerns anonymously through Brookfield's internal whistleblower channel and later to the Securities and Exchange Commission in late 2024.
Raffaelli says hundreds of institutions, including nonprofit organizations and pension funds for police officers and firefighters, had been duped under false pretenses to entrust their money to Pinegrove.
Investors in Raffaelli's funds needed to approve any merger with Pinegrove, and Raffaelli says Brookfield pushed him to pitch his investors to approve the idea because they trusted him.
"At this point, it became clear to Raffaelli that the Brookfield defendants intended to proceed with their lunatic plan to aggravate the existing securities fraud issues - and now ensnare Fund 2 and Fund 3 investors into the web of fraud victims by merging Funds 2 and 3 into Pinegrove - so he had no choice but to act," Raffaelli says.
After raising objections to the Pinegrove deal and turning down what he viewed as a $46 million bribe to support it, Raffaelli was fired over email nine days after sharing his SEC complaint with Brookfield's legal department, he says.
"As uncomfortable as this is for me, I wanted to share with you that I felt I had an obligation to blow the whistle on certain illegal conduct," he wrote to Brookfield's general counsel, he says in the lawsuit.
Raffaelli added, "The termination email stated that Raffaelli was terminated because of his 'connection with the Pinegrove transaction,' which he believes refers to his complaints about illegal activity relating to and arising from the proposed merger of Funds 2 and 3 with Pinegrove."
Brookfield's former chairman, Mark Carney, stepped down in January to become Canada's new prime minister.
Source: Courthouse News Service
