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What you are probably referring to happens in Chapter 8.
Frederick has been negotiating with Napoleon to buy the wood that Farmer Jones left behind. Napoleon finally agrees to sell it to him rather than to Pilkington.
Frederick is going to pay by check but Napoleon wants cash. Frederick pays in cash but we later find out that all the bills he used as payment were fake.
So the trick is that he uses fake money to buy the wood.
In addition to this, Frederick then attacks the farm and blows up the windmill that the animals had built.
In Chapter Eight, Napoleon decides to sell a pile of timber and begins some "complicated negotiations" with Frederick and Pilkington. Initially, it seems likely that Napoleon will sell it to Pilkington but, in a meeting with the animals, Napoleon suddenly announces his intention to sell the timber to Frederick. (These complicated negotiations help to drive the price of the timber up by twelve pounds). Frederick pays Napoleon for the timber in "real five-pound notes" and then arranges collection from Animal Farm. This seems a great deal because the money is enough to buy the necessary equipment for the windmill.
However, three days after the deal is done, it emerges that Frederick's bank notes are forgeries. He has tricked Napoleon and actually paid nothing for the timber. Napoleon is so angry that he sentences Frederick to death and warns the animals that an attack is impending. Napoleon is right: the next morning, Frederick and his men attack the farm.
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