Everton FC buyer accused of fraud and double-pledging assets

Lenders to 777 Partners claim the US investment firm borrowed against €325m of assets that it didn’t own, didn’t exist, or were already promised to someone else

Everton's Youssef Chermiti (left) and Luton Town's Gabriel Osho battle for the ball during their Premier League match at Kenilworth Rd, London, on Friday. Picture: Bradley Collyer/PA 

Lenders to 777 Partners have accused it of fraud, claiming that the US investment firm borrowed against $350m (€325m) of assets that it didn’t own, didn’t exist, or were already promised to someone else.

The Miami-based fund’s finances have been thrust into the spotlight after it moved to take over English 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. 

However, the bid for the Liverpool-based football club has since faltered. 777 recently sought the extension of a deadline to repay a £158m (€184m) stadium loan, and Everton has held talks with restructuring advisers as it risks tipping into administration.

According to the complaint filed late last week in New York federal court, 777 Partners co-founder Josh Wander doubled-pledged assets backing loans to the firm and admitted to breaches of agreements.

The allegations revolve around 777’s relationship with New York-based insurance company Advantage Capital, known as A-Cap.

Plaintiffs Leadenhall Capital Partners and Leadenhall Life Insurance Linked Investments Fund said the two entities are so entangled that A-Cap had effectively blocked efforts by 777 and a related entity to restructure its loans with Leadenhall.

The plaintiffs are seeking unspecified damages and a court order barring 777 from violating its obligations. A representative for 777 didn’t respond to requests for comment outside of normal business hours, while a representative for A-Cap said the claims made by Leadenhall are “sensational and unfounded”.

The claims represent “yet another desperate attempt by Leadenhall to elevate its collateral seniority and seek payment from A-Cap while undermining A-Cap policyholders”, the A-Cap representative said.

“A-Cap, similar to Leadenhall Capital, serves as a lender to 777 — there are no ownership ties. The distinction lies in the fact A-Cap holds senior rights to collateral associated with 777.”

• Bloomberg