“To induce Leadenhall to fund their operation, Wander, along with his group of alter ego entities, ‘pledged’ over $US350 million in assets as collateral to Leadenhall, knowing all along that the assets either did not exist, were not actually owned by Wander’s entities, or had already been pledged to another lender,” according to the complaint.

The Miami-based fund’s finances have been thrust into the spotlight after it moved to take over UK football club Everton FC last year. The acquisition was held up by a Premier League owners’ and directors’ inquiry into 777’s funding, though the league has since said it was “minded” to approve the deal subject to a number of conditions.

But the bid for the Liverpool-based football club has since faltered. 777 recently sought the extension of a deadline to repay a £158 million ($300 million) stadium loan, and Everton has held talks with restructuring advisers as it risks tipping into administration.

“If these allegations are true, that would vindicate the Premier League’s caution in endorsing 777 and Josh Wander as fit and proper owners of Everton FC,” said Kieran Maguire, a football business expert at the University of Liverpool.

A-Cap and its chairman and chief executive officer, Kenneth King, are also named as defendants in the lawsuit. A-Cap, the lawsuit alleges, has funded much of 777’s investments through loans and a complex reinsurance arrangement.

By the end of 2023, Leadenhall claims, A-Cap was owed more than $US2.2 billion by entities affiliated with 777, an amount that’s more than double what’s been cited in previous news reports.

During conference calls in the spring of 2023, Leadenhall says that Wander disclosed that A-Cap had a first-priority “all asset lien” over all of 777’s assets.

Anonymous Tip

Leadenhall says it first grew concerned over the assets backing its loans when the London-based investment manager received an anonymous tip in 2022 that the assets didn’t exist or had been pledged to another lender. “You are at great risk... your investment is unsecured,” the tipster said, according to the lawsuit.

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Leadenhall’s lawsuit revolves around a credit facility that its entities made to subsidiaries of 777 Partners and 600 Partners, a firm led by Josh Wander’s co-founder, Steven Pasko. The borrowers were required to secure it with collateral that was “free and clear” of any other interests, according to the complaint.

By 2023, Leadenhall said it had learned that 1600 assets worth about $US185 million that had been pledged to it by 777 Partners had also been pledged to a third-party lender named Credigy. When confronted, the lawsuit alleges, Wander admitted to the breach and attributed it to a “recording glitch.”

A-Cap

To prevent a lawsuit, A-Cap offered Leadenhall a fourth-priority position on assets of a 777 holding company, which Leadenhall declined, according to the complaint.

An insider revealed “an express agreement with 777 Partners which granted A-Cap the right to control all facets of 777 Partners’ operations,” Leadenhall alleges in the complaint. The insider also alleged that 777 had forged financial statements to cover up the collateral issue, according to the complaint.

A-Cap prevented 777 Partners from committing to repay the obligations owed to Leadenhall and Wander allegedly admitted that A-Cap control their operations.

“They [A-CAP] control what we sign because they have the power of the purse right now, and we have to keep the organisation going and operating so we can solve all of our problems and deal with all of our obligations,” the lawsuit cites Wander as saying. “And they are the ones that are doing that.”

Bloomberg

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