Investor lawsuit accuses 777 partners of $600 million fraud

American investment firm 777 Partners, whose planned takeover of English Premier League soccer team Everton had been on hold for months due to doubts about the company’s finances, on Friday carried out a years-long fraud scheme worth hundreds of millions of dollars. was sued by one of the lenders. of dollars.

The accusations were made in a lawsuit filed Friday in federal court in New York by London-based asset management firm Leadenhall Capital Partners. The company provided more than $600 million in loans to 777 Partners, but approximately $350 million in assets that served as collateral for the loans were either not under 777’s control or had already been pledged to other lenders. announced that it had been found.

This lawsuit is the latest and most serious lawsuit against 777 Partners. 777 Partners has long made bold claims about its financial health, claiming assets of $10 billion, even as it faces a series of lawsuits. lawsuit, corporate failure and unpaid bills.

The lawsuit could have an immediate impact on stalling 777’s plans to take over Everton. The Premier League has not approved the sale and the financially strapped club recently announced it was looking for a replacement investor.

But questions about the company’s balance sheet also carry the risk of contagion to the broader global soccer market. 777’s portfolio includes ownership He plays for teams in Australia, Brazil, Belgium, France and Germany, all of which are in debt.

The Leadenhall lawsuit names a number of 777 companies as defendants, including its two owners, Stephen Pasco and Josh Wonder, and their biggest financial backer, Kenneth King and his The company A-CAP is also named.

Leadenhall Capital Partners had no further comment on Saturday regarding the court filing. Jill Binjamuri Getman, A-CAP’s chief legal officer, did not respond to an email requesting comment.

777 Partners has not responded to requests for comment on the lawsuit or the accusations, and in recent months has refused to answer questions about its ability to conclude a 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, Wonder said: acknowledged that questions had been raised About his company’s finances. “Rest assured, in this case the truth is far more boring than fiction,” he wrote.

The allegations include the main accusation that 777 Partners persuaded Leadenhall to loan him $350 million through misrepresentation of assets, as well as behind-the-scenes discussions and investigations to resolve the issue. Contains details.

In his filing, Mr. Leadenhall said that in 2022, he received anonymous information that Mr. Wonder had pledged assets he did not own or had already pledged elsewhere to secure new loans. After receiving it, he said he began to question his relationship with the 777.

After investigating the information and concluding the accusations were true, executives confronted Wonder, Leadenhall said. Leadenhall said in the lawsuit that in several recorded calls made in March and April 2023, Wonder admitted that the assets were double pledged, calling this an “embarrassing mistake.” He said he promised to resolve the issue.

Leadenhall said further investigation revealed that all of the assets on the 777 were already collateralized by another investment company run by King, A-CAP. In rare candor, Mr. Leadenhall called 777 owners Mr. Wonder, Mr. Pasco, and A-CAP “running a giant shell game at best and an outright pyramid scheme at worst.” he accused.

In the months since the announcement of 777’s bid for Everton last autumn, and the increased scrutiny on his business and himself, Wonder has repeatedly assured the team’s fans that 777 Partners remains committed to the proposed takeover. I’ve tried to guarantee that. However, executives and fans of other soccer clubs managed by 777 Partners may be upset by the latest accusations and the possible repercussions for their teams.

Last fall, for example, executives at Brazilian club Vasco da Gama complained that a $25 million loan given to Everton by 777 Partners was equal to the amount still owed to Vasco at the time. . The money eventually arrived, but only after 777 Partners admitted that the delay was caused by a U.S. holiday.

Concerns are likely to intensify in other regions as well. At a match in France on Saturday, fans of Parisian Red Star FC, another club owned by 777, handed out fake banknotes It featured a photo of Mr. Wonder and the words, “We don’t trust Josh.”

The back of the memo said the protests were “a reflection of Red Star’s current owners, who feign wealth but in reality demonstrate a lack of real financial stability and an impending disaster.” It is written as “hidden.”

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