When trying to explain just how serious the latest 777 legal case is for the Miami-based investment company, it’s hard to know where to start.
The plaintiff this time is London-based investment firm Leadenhall and the civil suit it filed against 777 Partners, some of its portfolio companies, its co-owners Steven Pasko and Josh Wander, its close partner A-Cap and its boss Kenneth King. at 82 pages. And there’s a hurtful zinger on every page.
But perhaps the simplest place to start is simply to say that this must surely be the end of 777’s almost eight-month attempt to complete its purchase of Everton, and quite possibly the end of 777 too.
The allegations are stunning, although for many they won’t really come as a big surprise.
After all, Leadenhall’s complaint, filed Friday in a U.S. district court in New York, says 777 and its associated companies already face 16 different lawsuits for unpaid debts totaling more than $130 million ($104 million of dollars). Leadenhall, for what it’s worth, claims the group owes him more than $600 million.
Wow, right? But Leadenhall claims that 777 and its subsidiaries owe A-Cap more than $2 billion, but he doesn’t think A-Cap itself deserves any sympathy, because Leadenhall believes A-Cap is involved in the scam.
The central allegation is that 777 and its associated companies established a credit facility with Leadenhall in 2021 which was secured by assets which were to be “free and clear” of any other potential claims. And the unencumbered status of these assets had to be confirmed monthly to Leadenhall by the group. This allowed the 777 Group to borrow a lot of money from Leadenhall, at a relatively low interest rate.
However, a combination of anonymous information, forensic accounting, conversations with other lenders and, even, confessions from the 777’s main man, Wander himself, led Leadenhall to the conclusion that what was happening here was “a giant shell game, at best, and a veritable Ponzi scheme at worst.”
Instead of “free and clear,” most 777 warranties either did not exist or were “double pledged.” Oh, and the borrowers falsified documents and falsified records to hide their deception, Leadenhall claims.
The plan, as best Leadenhall could imagine, was to funnel the money, usually borrowed money, into “speculative bets” on airlines, payday lenders and football clubs, with Everton being the bet the most important of all.
“Everton is the latest shiny object in Wander’s fraudulent scheme, solvency aside,” the complaint states.
“Despite the fact that 777 Partners and many of the operating businesses and professional soccer teams that Wander owns are heavily in debt, behind on their obligations and in trouble with regulators, Wander’s strategy has been continued expansion – using debt to acquire new assets. which he can then use as collateral for additional debts, which he then fails to repay on time, in a seemingly endless cycle of “robbing Peter to pay Paul.”
This “house of cards” was backed, “Whac-A-Mole” style, by King’s A-Cap, which, unlike the 777 deal with Leadenhall, had blanket security over all 777 assets.
But, according to Leadenhall, King’s control over 777 goes even further. He is the “puppeteer of Wander’s puppet” and the “Wizard of Oz behind the curtain of 777”. It was A-Cap’s money that financed 777’s purchase of airlines and football clubs. It was A-Cap’s money that helped pay Everton’s bills.
And when we talk about A-Cap money, what we really mean is the insurance premiums of millions of ordinary Americans, ordinary people who have invested in health and retirement plans , people who thought their money was going into gold-plated, copper… full-on investments that would definitely be there for them if and when needed.
Evertonians, do you agree with current owner Farhad Moshiri that these two are the “best partners to take (your) big club forward”?
Obviously, this is only a civil action. We are not yet at the criminal stage and we may never get there. Wander and 777 declined to comment, but their usual line is to never comment on pending litigation.
A-Cap has not yet responded to a request for comment from Athleticism but in a statement to the New York Times, he said the accusations were “sensational and unfounded.” “A-Cap, like Leadenhall Capital, serves as lender to 777 – there is no ownership relationship,” it said. “The key distinction is that A-Cap holds senior rights to the collateral associated with 777.”
But A-Cap has already been forced to try to divest itself of the 777, under pressure from its rating agency and national insurance regulators.
Good luck with that. I hope everything goes well, if not for you, but certainly for your customers, who have not registered.
But can you conduct your financial engineering experiments outside of our football clubs, please? They are not moles to shoot, Peters to steal, or shells to play with.
It is difficult to see what 777 could say in response to these assertions. But whatever happens, for Everton, the FA and the Premier League, it is surely too much.
It has to be over. This must be the end.
(Top photo: Peter Byrne/PA Images via Getty Images)