In the latest in a seemingly never-ending series of negative headlines swirling around Everton’s prospective new owners, 777 Partners are being sued for fraud in a New York court by a pair of London-based asset management companies.
According to Bloomberg, Leadenhall Capital Partners LLP and Leadenhall Life Insurance Linked Investments Fund PLC are seeking “unspecified damages”, accusing 777 co-founder and Managing Partner, Josh Wander, “along with his group of alter ego entities” of fraudulently borrowing against £350m in assets that “it didn’t own, didn’t exist or were already promised to someone else.”
There are also allegations of forged documents and faked records and the assertion by Leadenhall that 777 have been operating “a giant shell game, at best, and an outright Ponzi scheme, at worst”.
Involved in the plaintiffs’ case are 777 Partners’ links to insurance giant Advantage Capital Holdings (A-Cap) which recently began the process of withdrawing from its entanglements with Wander’s company following the downgrade of Bermuda-based reinsurance subsidiary 777Re’s credit to C- “weak” status.
In the court filing it is alleged that obstruction by A-Cap has prevented 777 from restructuring its loans with Leadenhall who allege that Kenneth King’s firm “is the ‘silent partner’ behind all of Wander’s businesses, providing the firm with at least $1 billion in loans to fund its dealings, with the two firms so intertwined that A-Cap has secured “the right to control all facets of 777 Partners’ operations”.
Indeed, the lawsuit, described by Matt Slater of The Athletic as staggering in its implications for the future of Wander’s company, says that 777 admits that “it does not control its own operations and ability to perform” under the lending agreement.
The Blues are named in the complaint which says, “Everton is the latest shiny object of Wander’s fraudulent scheme, solvency aside.
“Despite the fact that 777 Partners and many of the operating businesses and professional football teams that Wander owns are deep in debt, behind on their obligations, and on thin ice with regulators, Wander’s strategy has been continued expansion — using debt to acquire new assets that he can then use as collateral for more debt, which he then fails to timely pay off, in a seemingly never-ending cycle of ‘robbing Peter to pay Paul’.”
This fresh legal wrangle for the Blues’ prospective owners comes on the heels of another New York lawsuit filed by Change Lending LLC seeking to recover more than £30m it says it is owed by 777 Partners, and the news last week that, through its holding company AIP Capital in which it holds a majority 51% stake, A-Cap repossessed the entire fleet of 777’s low-cost Australian airline, Bonza, forcing that company into voluntary administration.
At the same time, 777 delivered another £16m in loans to Everton to cover stadium construction and general operating costs, taking the amount they have provided the Club over the last few months past the £200m mark.