US investment firm 777 Partners, whose bid to buy English Premier League soccer team Everton has been on hold for months amid questions about the company’s finances, was accused on Friday by one of its lenders of carrying carried out a fraud scheme hundreds of millions of years long. of dollars.
The allegation emerged in a lawsuit filed Friday in federal court in New York by Leadenhall Capital Partners, a London-based asset management firm. It said it had provided 777 Partners with more than $600 million in financing, only to discover that approximately $350 million in assets serving as collateral for the loans were not under 777’s control or had already been pledged to other lenders.
The lawsuit is the latest and most serious claim against 777 Partners, which for years has made bold claims about its financial health (it had previously claimed $10 billion in assets) even as a series of lawsuits, corporate bankruptcies and unpaid bills followed. .
The lawsuit could have immediate implications for 777’s stalled bid to buy Everton: the Premier League has not approved the sale, and the financially troubled club recently said it was looking for alternative investors.
But questions about the company’s balance sheet also carry the risk of contagion to the broader global soccer market, given that 777’s portfolio includes stakes in teams in Australia, Brazil, Belgium, France and Germany, and because it has debts to all of them. they.
Leadenhall’s lawsuit names a series of 777 companies as defendants, as well as its two owners, Steven Pasko and Josh Wander, and its largest financial backer, Kenneth King, and his firm, A-CAP.
Leadenhall Capital Partners offered no further comment Saturday on the court filing. A-CAP legal director Jill Vinjamuri Gettman did not respond to an email seeking comment.
777 Partners did not respond to a request for comment on the lawsuit or its allegations, and in recent months has refused 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, Wander acknowledged that questions had been raised about his company’s finances. “Rest assured,” he wrote then, “in this case, the truth is much more boring than fiction.”
Beyond its central allegation that 777 Partners had persuaded Leadenhall to lend it $350 million through a false representation of its assets, the claim includes details of behind-the-scenes discussions and investigations to resolve the matter.
In the filing, Leadenhall said it had begun to question its relationship with 777 after receiving an anonymous tip in 2022 accusing Wander of having pledged assets it did not own or had already pledged elsewhere to secure new loans.
After investigating the complaint and concluding that the allegation was true, Leadenhall said, its executives confronted Wander. In several recorded calls in March and April 2023, Leadenhall said in the lawsuit, Wander acknowledged that assets had been double compromised, which he described as a “shameful mistake,” and pledged to fix the problem.
Upon further investigation, Leadenhall said, it was discovered that all of 777’s assets were already committed to a separate investment company, A-CAP, run by Mr. King. In unusually forceful language, Leadenhall accused the 777 owners, Wander and Pasko, and A-CAP of “operating a gigantic trick game at best, and a complete Ponzi scheme at worst.”
In the months since last autumn’s announcement of 777’s bid for Everton, there has been increased scrutiny on his business and himself, and Wander has repeatedly sought to reassure the team’s fans that 777 Partners remains committed to his acquisition proposal. But executives and fans of other soccer clubs controlled by 777 Partners may be baffled by the latest allegations and the potential consequences for their teams.
Last fall, for example, executives at Brazilian club Vasco da Gama complained that a $25 million loan that 777 Partners had extended to Everton was similar to an amount that, at the time, was still owed to Vasco. . The money finally arrived, but only after 777 Partners attributed the delay to a holiday in the United States.
Elsewhere, concerns are likely to continue to grow. At a match in France on Saturday, fans of another 777-owned club, Red Star FC of Paris, handed out counterfeit bills with a photo of Mr. Wander and the words “Josh we don’t trust.”
The protest, the bills on the back said, “is a reflection of the current owner of Estrella Roja: an appearance of wealth that in reality hides a lack of real economic stability and an imminent disaster waiting to happen.”