US investment firm 777 Partners, whose bid for English Premier League football team Everton has been on hold for months due to doubts over the company’s finances, was charged on Friday by one of its lenders for having carried out a fraudulent scheme worth several hundred millions for a year. of dollars.
The charge is part of a lawsuit filed Friday in New York federal court by Leadenhall Capital Partners, a London-based asset management firm. She said she provided 777 Partners with more than $600 million in financing, only to later discover that about $350 million in assets serving as collateral for the loans were not under 777’s control or had already been promised to other lenders.
The lawsuit is the latest and most serious complaint against 777 Partners, which has for years made bold statements about its financial health — it once claimed $10 billion in assets — even as it was followed by a series of prosecutions. lawsuits, business failures and unpaid bills.
The lawsuit could have immediate implications for 777’s blocked bid to buy Everton: the Premier League has not approved the sale and the financially troubled club recently said it was seeking other investors.
But questions about the company’s balance sheet also carry a risk of contagion to the wider global football market, given that The 777 portfolio includes holdings in teams in Australia, Brazil, Belgium, France and Germany, and because he owes debts to each of them.
Leadenhall’s lawsuit names as defendants a host of 777 companies, as well as its two owners, Steven Pasko and Josh Wander, and their biggest backer, Kenneth King, and his company, ACAP.
Leadenhall Capital Partners had no further comment Saturday on the court filing. ACAP, through a spokesperson, called Leadenhall’s claims “baseless” but did not deny that it had first claim on the 777 assets.
“ACAP, like Leadenhall Capital, serves as lender to 777 – there is no ownership relationship,” he said. “The key distinction is that ACAP holds senior rights to the guarantees associated with the 777.
777 Partners did not respond to a request for comment on the lawsuit or its accusations, and in recent months it has declined to answer questions about its ability to complete the deal with Everton “out of respect for the process.”
But in an open letter to Everton fans published on the team’s website last year, Mr Wander acknowledged that questions had been raised on the finances of his business. “Rest assured,” he wrote then, “in this case, the truth is much more boring than fiction. »
Beyond its central accusation that 777 Partners persuaded Leadenhall to lend it $350 million by misrepresenting its assets, the complaint includes details of behind-the-scenes discussions and investigations to resolve the matter.
In the filing, Leadenhall said she began questioning her relationship with 777 after receiving an anonymous tip in 2022 accusing Mr. Wander of promising assets he did not own or already had. promised elsewhere to obtain new loans.
After reviewing the information and concluding that the accusation was true, Leadenhall said, his executives confronted Mr. Wander. In several recorded calls in March and April 2023, Leadenhall said in the lawsuit that Mr. Wander admitted that the assets had been double-pledged, which he described as an “embarrassing mistake,” and is committed to solving the problem.
After further investigation, Leadenhall said she discovered all 777 assets were already pledged to a separate investment company, ACAP, run by Mr King. In unusually blunt language, Leadenhall accused the 777’s owners, Mr. Wander and Mr. Pasko, and ACAP, of “operating a giant shell game at best, and a veritable Ponzi scheme at worst.” .
In the months since the announcement last fall of 777’s bid for Everton, which sparked scrutiny of his businesses and himself, Mr. Wander has repeatedly sought to assure fans of the team that 777 Partners remained committed to its acquisition project. But executives and fans of other soccer clubs controlled by 777 Partners may be baffled by the latest accusations and the possible consequences for their teams.
Last fall, for example, executives at Brazilian club Vasco da Gama complained that a $25 million loan 777 Partners gave to Everton was similar to an amount that was, at that time, still due to Vasco. The money eventually arrived, but only after 777 Partners blamed the delay on a U.S. holiday.
Elsewhere, concerns will likely continue to fester. During a match in France on Saturday, supporters of another 777-owned club, Red Star FC de Paris, distributed fake banknotes bearing a photo of Mr. Wander and the words “In Josh We Don’t Trust.”
The protest, the notes on the back say, “is a reflection of the situation of Red Star’s current owner: an appearance of wealth that actually hides a lack of real economic stability and a looming disaster waiting to happen.”
