777 Partners, a US based investment company, is currently weighing up plans to buy Everton Football Club, which could now be put into jeopardy.

Co-owners of 777 Partners, Josh Wander and Steven Pasko, along with the company and its partner entities are accused of offering assets as collateral in a $600m (£480m) deal. 

An estimated $350m (£280m) of these assets were already being used as collateral in other deals, with some of the assets not even existing according to Leadenhall Capital Partners’ lawsuit.

‘To induce Leadenhall to fund their operation, Wander, along with his group of alter ego entities, “pledged” over $350m 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,’ the lawsuit said.

A year and a half after the deal was made and Wander confirming the assets were owned and not pledged into another agreement, Leadenhall received an email from an anonymous source claiming this was not the case. One email stated, ‘what he is doing is criminal’, according to the lawsuit.

This tip-off sparked the initial investigation, which found the claims to be true. In March 2023 a third-party lender to 777, Credigy, told Leadenhall that $185m (£150m) in assets were pledged to both companies. This accounted for over 1,600 individual assets.

Wander described the situation as ‘embarrassing’ and a ‘mistake’ in conference calls recorded by Leadenhall, blaming the issue on a recording glitch.

Leadenhall also claimed that another company, Advantage Capital Holdings LLC (A-CAP), was propping up the company as its ‘Wizard of Oz behind the 777 Partners’ curtain’.

Wander informed Leadenhall that ‘A-CAP had a first-priority “all asset lien” over all assets of 777 Partners’.

A-CAP offered Leadenhall a fourth-priority position in 2023 on 777 assets in a bid to prevent the lawsuit from being brought, but this offer was declined.

Described as the ‘silent partner’ behind 777, CEO of A-CAP Kenneth King provided up to $1bn (£797m) in loans to secure deals made by 777.

Questionable financial statements were also submitted to Leadenhall by ‘Wander-affiliated borrowers’, disclosed by the anonymous tipster, as well as the borrowers, which appeared to cover up the extent of the double pledged assets. 

Additionally, the whistleblower claimed that A-CAP had ‘dictated an express agreement with 777 Partners which granted A-CAP the right to control all facets of 777 Partners’ operations’ meaning that anything that was double pledged all parties would have been aware of.

The lawsuit alleged: ‘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.’

Lawsuit, Leadenhall Capital Partners LLP v. Wander (1:24-cv-03453), 3 May 2024