Everton’s prospective owners 777 sued in alleged ‘Ponzi scheme’ fraud case

The US investment firm trying to take over Everton has been plagued by controversy – Getty Images/Robbie Jay Barratt

Everton’s prospective new owners have been accused of using “an outright Ponzi scheme” to buy the club and of borrowing “fraudulently” against circa £280 million of assets.

Josh Wander and Steve Pasko of 777 Partners are at the centre of a lawsuit in which the former and “his group of alter ego entities” are alleged to have “pledged” as collateral more than $350m in assets they did not control or “did not exist”.

An 82-page complaint filed in New York by Leadenhall Capital Partners LLP and Leadenhall Life Insurance Linked Investments Fund PLC on Friday branded 777 “a house of cards on the brink of collapse”, adding: “Everton is the latest shiny object of Wander’s fraudulent scheme.”

The lawsuit is the latest to engulf the US investment firm, which already owns several football clubs worldwide.

The latest claimants against 777 are seeking unspecified damages and a court order barring it from violating its obligations, alleging in their complaint: “To induce Leadenhall to fund their operation, Wander, along with his group of alter ego entities, ‘pledged’ over $350 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.

“Wander has already admitted to rampant and fundamental breaches of the parties’ agreements – the only question now is whether Leadenhall will be able to recover millions of dollars in damages from a house of cards on the brink of collapse.”

Claiming those accused had been running “an illegal and unsecured personal piggy bank that an individual like Wander could use to finance risky private equity investments in aviation, media, and sports including professional football (soccer) teams”, it went on: “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’.

“Upon information and belief, Wander and Pasko are operating a giant shell game at best, and an outright Ponzi scheme at worst, that takes money in from investors and lenders and shuffles it around to various money-losing alter egos in the enterprise to disguise their true financial condition.”

A spokesperson for 777 told Telegraph Sport it did not typically comment on litigation.

The lawsuit was filed at the end of a week in which 777’s airline portfolio shrunk twice as Premier League approval for its takeover of Everton continued to evade the firm.

Days after Australian budget airline Bonza entered voluntary administration, sister Canadian company Flair said other backers would take up shares owned by 777.

The situation at Bonza is likely to be scrutinised by the Premier League, which could require guarantees that no other companies in the 777 stable are in trouble.

Everton owner Farhad Moshiri agreed a deal to sell his 94.1 per cent stake in the club to 777 in September, but the takeover approval process has been fraught.

This week, 777 Partners made a last-minute payment of around £16 million towards working capital at the Premier League side, to ease alarm shortly after Bonza abruptly ceased flying.

But the events of the week will merely compound doubts over its ability to raise enough funds to complete a £500 million purchase of Everton, who it also emerged had begun talks with debt-restructuring experts in a move that raised further questions about the protracted takeover.

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