Carl Icahn is used to being on the offensive, but this time, he’s the one facing an all-out assault.
In a May 2 report, the famed short-seller Hindenburg Research targeted Icahn’s publicly traded conglomerate, Icahn Enterprises, alleging that the company is using a juicy but unsustainable dividend yield to lure retail investors into a “ponzi-like” operation.
“Icahn has been using money taken in from new investors to pay out dividends to old investors,” Hindenburg wrote while revealing it had taken a short position against his company’s stock.
Icahn Enterprises did not immediately respond to Fortune’s request for comment about Hindenburg’s allegations. But in a May 10 statement responding to Hindenburg’s report, Icahn pushed back with his typical bravado.
“Hindenburg Research, founded by Nathan Anderson, would be more aptly named Blitzkrieg Research given its tactics of wantonly destroying property and harming innocent civilians. Mr. Anderson’s modus operandi is to launch disinformation campaigns to distort companies’ images, damage their reputations and bleed the hard-earned savings of individual investors,” the billionaire wrote, promising to “fight back” against the allegations.
Icahn’s billionaire arch rival, Pershing Square Capital co-founder and CEO Bill Ackman, was quick to remark on the irony of the corporate raider, who is well known for his harsh criticism of executive mismanagement and corporate malfeasance, being accused of his own misdeeds. “There is a karmic quality to this short report that reinforces the notion of a circle of life and death. As such, it is a must read,” he wrote in a May 2 tweet.
Icahn has had a long-running feud with Ackman, which culminated in a 2013 CNBCinterview where he called the Pershing Square Capital founder a “liar” and a “crybaby” after the two had taken opposing positions on the multi-level market company Herbalife. Ackman famously shorted Herbalife in 2012, arguing the company was a ponzi-scheme and its stock would eventually drop to $0 per share, but was forced to abandon his bet in 2018 as the stock soared after Icahn invested in the company.
On Thursday, however, it was Icahn who was under pressure, as Hindenburg alleged in a follow up report that he had borrowed billions against his holdings in Icahn Enterprises (IEP) and invested “some or all” of the money into his own funds.
“These funds subsequently generated significant losses, which could pose an overleveraging risk for both Carl Icahn himself, and IEP unitholders,” Hindenburg wrote, noting that it doubled down on its bet against Icahn Enterprises by shorting its bonds as well.
Icahn Enterprises did not immediately respond to Fortune’s request for comment.
Carl Icahn became famous for his cutthroat tactics as a corporate raider in the 1980s, which director Oliver Stone relied on to create his Michael Douglas’ “greed is good” character Gordon Gekko in the 1987 film Wall Street. The billionaire would commonly purchase a large number of shares in companies he felt were mismanaged and then push for changes to the board, layoffs, or the sale of assets in an attempt to improve earnings and stock prices. Although Icahn, 87, isn’t the aggressive activist investor he once was, he still loves to criticize corporate mismanagement.
In 2015, he warned of a pending recession and blasted U.S. CEOs for borrowing money for buybacks and acquisitions in an attempt to artificially inflate earnings in a 15-minute video called “Danger Ahead.”
“It’s financial engineering at its height,” he said. “The earnings that are being put out today, I think they are very suspect.”
But now Icahn is being accused of his own type of financial engineering. Icahn Enterprises stock has plummeted more than 30% since Hindenburg first revealed its short position earlier this month, leading Icahn’s personal net worth to drop over $10 billion, according to Bloomberg Billionaires Index.
The fallout for Icahn comes after Hindenburg targeted India’s Adani Group in January, leading the company into a tailspin that saw CEO and co-founder Gautam Adani’s net worth plummet by $60 billon, according to the Bloomberg Billionaires index.
Hindenburg might not be the investor’s only problem. Icahn Enterprises revealed in a May 10 regulatory filing, that Federal prosecutors from the U.S. Attorney’s office for the Southern District of New York were seeking information regarding its “corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence and other materials.” That disclosure came a little more than a week after Hindenbug’s first attack on the company.
Icahn Enterprises said it was cooperating with the request, adding that “the US attorney’s office has not made any claims or allegations against us or Mr. Icahn.”
