NEWS

777 Partners Face Fraud Allegations From Leadenhall Capital Partners Amid Uncertain Everton Acquisition

Miami-based investment firm 777 Partners, known for its recent high-profile sports deals, has been hit with allegations of fraud from one of its lenders. Leadenhall Capital Partners, a London-based asset manager, filed a lawsuit in federal court in New York on Friday, accusing 777 Partners of running a years-long scheme that involved borrowing against $350 million of assets that the firm allegedly did not actually own.

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"To induce Leadenhall to fund their operation, [777's founders], along with [their] 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 [777's] entities, or had already been pledged to another lender," the complaint alleges.

Also named in the suit is Advantage Capital Holdings, LLC, or A-Cap, a New York-based insurance firm with close ties to 777’s reinsurance business. Leadenhall says that when it attempted to restructure outstanding loans to 777, A-Cap’s murky relationship with the debtor allowed it to effectively block Leadenhall from its efforts.

“Through these attempted restructuring negotiations, 777 Partners has admitted time and again that it does not control its own operations and ability to perform,” claims Leadenhall.

An A-Cap representative told Bloomberg that the allegations are “yet another desperate attempt by Leadenhall to elevate its collateral seniority and seek payment from A-Cap while undermining A-Cap policyholders.”

The lawsuit follows a string of legal actions against 777 Partners in recent months over disputed loans and payments. Norwegian football outlet Josimar reported in 2023 that 777 was facing allegations of financial impropriety at its sporting assets, including fraud and unpaid bills, which the firm condemned as "wholly misleading." The firm has also been accused of improper related-party loans, failure to fund portfolio company employee pension obligations, and has had its assets seized by Bermudan authorities.

Separately, the Justice Department opened an investigation last November into potential 777 violations of U.S. money-laundering laws, as first reported by Semafor. This February, the firm’s CFO abruptly resigned.

The allegations come at an inopportune time for 777 Partners, with the firm's long-pending bid to acquire English Premier League club Everton on the verge of collapse. The deal, agreed in principle last September, would see 777 purchase current owner Farhad Moshiri's 94.1 percent stake. Initially stalled pending league approval, the acquisition now depends on 777’s ability to repay a £158 million loan to MSP Sports Capital as part of the takeover.

The repayment deadline had been set to April 15th, though 777 requested a last-minute extension as it works to secure funding. Everton is struggling under a $500 million debt burden, including the MSP loan, related to the construction of a new stadium. The club has hired restructuring advisors and could cede ownership to MSP if the 777 deal fails to close.

For its part, 777 Partners has declined to comment on the Leadenhall lawsuit or the status of its bid for Everton, stating that it does not discuss ongoing litigation. The firm has previously touted its "patient, long-term approach" to investing and its ability to "create value by fortifying team rosters with new talent." Other key value creation strategies include the “strengthening [of] earnings potential via … NFTs and Web3.”

Founded in 2015 by Steven Pasko and Joshua Wander, 777 Partners has quickly built a portfolio of investments across sports, media, and aviation. The firm holds a number of majority or minority stakes in prominent soccer clubs, including Italy's Genoa, Belgium's Standard Liège, France's Red Star, Brazil's Vasco da Gama, Germany's Hertha Berlin, and Spain's Sevilla.

The firm’s aviation assets include ultra-low-cost carriers Flair Airlines in Canada and Bonza in Australia—both of which have faced recent operational and financial turbulence. In March, four of Flair's leased aircraft were seized by lessor Airborne Capital over missed lease payments. This week, Bonza entered voluntary administration and suspended all flights after its entire fleet was repossessed.

Sam Hillier

Sam Hillier is a reporter at Transacted covering private equity and investment banking. He previously spent time as an investment professional focused on direct buyouts, as well as an earlier strategic advisory stint.