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Investor lawsuit accuses 777 partners of $600 million in fraud

The American investment firm 777 Partners, whose Offer to buy English Premier League football team Everton The company, which has been on hold for months because of questions about the company’s finances, was accused Friday by one of its lenders of running a years-long fraud scheme worth hundreds of millions of dollars.

The allegation came in a lawsuit filed Friday in federal court in New York by Leadenhall Capital Partners, a London-based asset management firm. It said it provided more than $600 million in financing to 777 Partners, only to discover that about $350 million in assets used as collateral for the loans were either not under 777’s control or have already been pledged to other lenders.

The lawsuit is the latest and most serious claim against 777 Partners, which has been making bold claims about its financial health for years — it has previously sought $10 billion in assets — despite having a string of lawsuits behind it complain, Corporate failure And unpaid bills.

The lawsuit could have an immediate impact on 777’s stalled bid to buy Everton: the Premier League has not agreed to the sale and the financially struggling club recently said so Search for alternative investors.

However, questions about the company’s balance sheet also pose the risk of contagion for the entire global football market 777’s portfolio includes ownership interests in teams in Australia, Brazil, Belgium, France and Germany, and because it is in debt to all of them.

Leadenhall’s lawsuit names a number of 777 companies as defendants, as well as the two owners, Steven Pasko and Josh Wander, as well as their largest financial backer, Kenneth King, and his company A-CAP.

Leadenhall Capital Partners had no further comment on court filings Saturday. Jill Vinjamuri Gettman, A-CAP’s chief legal officer, 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 declined to respond to questions about its ability to complete the Everton deal “out of respect for the process.”

But in an open letter to Everton fans published on the team’s website last year, Mr Wander said admitted that questions were raised about his company’s finances. “Rest assured,” he wrote at the time, “in this case the truth is far duller than fiction.”

In addition to the central allegation that 777 Partners persuaded Leadenhall to lend him $350 million by misrepresenting its assets, the claim also details behind-the-scenes discussions and investigations to resolve the matter.

In the filing, Leadenhall said it began to question its relationship with 777 after it received an anonymous tip in 2022 alleging that Mr. Wander had pledged assets that he either did not own or already owned had pledged elsewhere to secure new loans.

After Leadenhall reviewed the tip and concluded the allegation was true, executives confronted Mr. Wander about it, Leadenhall said. In several recorded calls in March and April 2023, Leadenhall alleges in the lawsuit, Mr. Wander admitted that assets had been double-pledged, which he called an “embarrassing mistake,” and pledged to fix the problem.

Upon further investigation, Leadenhall discovered that all of the 777’s assets were already pledged to a separate investment company, A-CAP, run by Mr. King. In unusually blunt language, Leadenhall accused the 777 owners, Mr. Wander and Mr. Pasko, and A-CAP of “operating at best a giant shell game and at worst an outright pyramid scheme.”

In the months since the announcement of 777’s takeover bid for Everton last fall brought increased scrutiny of his businesses and himself, Mr. Wander has repeatedly sought to reassure the team’s fans that 777 Partners remains committed to the proposed takeover. But executives and fans of other soccer clubs controlled by 777 Partners may be unsettled 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 from 777 Partners to Everton was equivalent to an amount still owed to Vasco at the time. The money eventually arrived, but only after 777 Partners attributed the delay to a holiday in the United States.

Elsewhere, concerns are likely to remain. At a game in France on Saturday, fans of another 777-owned club, Paris-based Red Star FC, met distributed counterfeit banknotes with a photo of Mr. Wander and the words “In Josh We Don’t Trust.”

The protest, the back of the notes said, “is a reflection of Red Star’s current ownership: an appearance of wealth that in reality masks a lack of real economic stability and imminent catastrophe.”

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