Relaxing at his 40,000-square-foot mansion, Palazzo di Amore, Jeff Greene reflects on a stellar 12-month run. He snatched the estate out of receivership for $35 million in a bidding war. He got married in a spectacular wedding here with boxer Mike Tyson as his best man. And he is up more than half a billion dollars on a bet that the housing market would crater, thew Wall Street Journal reports.

He may have lost a friend in the process: John Paulson, a hedge-fund manager who devised what proved to be a wildly profitable strategy for betting against risky mortgages.

It was the spring of 2006, and Mr. Paulson, seeking investors for a new fund, gave Mr. Greene a peek at his plan. Mr. Greene didn’t wait for the fund to open. He beat his friend to the punch by doing the same complex mortgage-market trade on his own.

“He never told me: ‘Don’t do it,'” Mr. Greene says. Mr. Paulson won’t discuss the matter.

If Mr. Paulson is the pensive, low-key mastermind of the lucrative bearish bet, 53-year-old Mr. Greene is the strategy’s most flamboyant exemplar. A Los Angeles real-estate investor who made and lost a bundle 15 years ago, bounced back, bought himself three airplanes and a yacht, and entertains celebrities in his multiple homes, Mr. Greene has hired a P.R. firm to raise his profile and help him move into new business spheres.

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