777 Partners has been accused by one of its lenders of a fraud running into hundreds of millions of dollars, in the latest setback for the Miami-based investment firmâs attempted takeover of Everton Football Club.
According to the lawsuit, which was filed in a federal court in New York on Friday, 777 owes more than $600mn in debt to London asset manager Leadenhall Capital and Leadenhall Life, a related
Leadenhall is seeking damages after accusing 777 and co-founder Josh Wander of pledging more than $350mn in assets that âeither did not exist, were not actually owned by Wanderâs entities, or had already been pledged to another lenderâ.
âWander acknowledged that there had been a âscrewupâ and [an] âembarrassingâ problem caused by 777 Partnersâ antiquated computer system,â the complaint said.
A spokesman for 777 declined to comment.
The lawsuit raises further questions about 777âs ability to close the Everton deal following months of delays. Wanderâs firm has been a pioneer of the so-called multi-club ownership model that has transformed football, buying stakes in a series of football clubs.
Backed by Bermudian reinsurer 777 Re, 777 has acquired a portfolio of football club investments, including Genoa in Italy, Vasco da Gama in Brazil, Hertha Berlin in Germany and Standard Liège in Belgium.
777 had aimed to complete the acquisition of Everton by the end of last year but it is yet to obtain approval from the Premier League, which has said 777 must meet a series of conditions for the takeover to go ahead.
The lawsuit portrayed Everton as âthe latest shiny object of Wanderâs fraudulent schemeâ. It alleged that Wanderâs strategy has been based on âusing 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 ârobbing Peter to pay Paulâ.â
Everton has climbed to 15th in the table, 11 points clear of the bottom three, the relegation zone that results in demotion from the top flight. Clubs and their owners dread the prospect of dropping out of the Premier League because it cuts them off from lucrative broadcast revenues.
Everton has built a points cushion at a time when its finances are stretched. The clubâs net debt position increased to roughly ÂŁ330mn at the end of June 2023 from ÂŁ141mn a year earlier. Net losses widened to ÂŁ89mn in the year ended June 2023, from ÂŁ38mn the prior year.
Evertonâs lenders include New York-based MSP Sports Capital, which is part of a group that has provided ÂŁ158mn of financing for the clubâs new stadium in Liverpool. 777 is required to repay this loan as a condition of the takeover. The other major lender is a company called Rights and Media Funding.
Separately, 777 has provided more than $200mn of loans to Everton since September last year to fund working capital requirements.
British-Iranian businessman Farhad Moshiri agreed to sell Everton after the club ran into financial difficulties due to heavy spending on players and the new stadium, and hits to revenues from the pandemic and its decision to cut ties to sponsors linked to Uzbek-born oligarch Alisher Usmanov after Russia invaded Ukraine.
But 777, Moshiriâs chosen buyer, has come under scrutiny from regulators, rating agencies and the media. The firmâs ties to A-Cap, an insurance group led by chief executive Kenneth King, have also raised concerns.
Leadenhallâs complaint alleged that A-Cap was the âWizard of Oz behind the 777 Partnersâ curtainâ. Wander allegedly âdisclosed on callsâ that A-Cap had a first-priority âall asset lienâ over 777âs assets.
âThe enterprise is propped up and able to attract new lenders and investors only by the patronage of A-Cap, which pays off the enterpriseâs last-minute obligations â including 777 Partnersâ own payroll â in âWhac-A-Moleâ fashion to keep 777 Partnersâ creditors at bay, if only temporarily, and to avoid the entire scheme from being laid bare in public,â the complaint said.
https://www.ft.com/content/d99f425c-da9d-4860-9a6b-ee65b7424490 
