In court, an English fund accuses 777, owner of Vasco, of being a “house of cards” controlled by another company | Vasco

With 83 pages, the document explains that Leadenhall took legal action because it accuses 777 of providing as loan guarantee assets worth a total of US$350 million (R$1.8 billion) that did not belong to it or that had already been offered as a guarantee to other companies. The text in the New York court denounces accounting fraud and a possible pyramid scheme, putting the financial health of the company that bought Vasco in 2022 into question.

— Wander has already admitted several and fundamental violations of the agreement between the parties – The only question now is whether Leadenhall will be able to recover millions of dollars in losses caused by a house of cards on the verge of collapse — says Leadenhall in the text of the action.

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One of the central points of the document concerns the 777 decision-making process. According to the English fund, the group that currently controls Vasco is controlled by another American company, A-CAP. This happens, according to the lawsuit, because Josh Wander’s fund owes more than US$2 billion (R$10.1 billion) to A-CAP.

A-CAP denied to the English newspaper “Financial Times” that it controls 777 and called the accusations “unfounded and a desperate attempt by Leadenhall to seek payment from A-CAP while harming A-CAP policyholders.” Wanted by ge777 reported that it will not comment.

The story began when Leadenhall and 777 entered into an agreement on May 7, 2021. According to the contract between the parties, the English fund offered a line of credit to the American group between May 2021 and September 2024.

Under the agreement, 777 would have the right to borrow from Leadenhall during this period, with the obligation to pay the full amount after three and a half years. The contract provided that the American company would have to give the English assets in the form of a guarantee. These would have to equal the value of the loans, and Josh Wander’s group would have to update the guarantee situation every month and whenever they took out a new amount from Leadenhall.

The problem is that the English fund discovered that 777 pledged assets worth a total of US$350 million that never belonged to it or that had already been offered as collateral in another loan, which is prohibited. The investigation began following an anonymous email received on September 19, 2021 – 17 days after 777 took over Vasco’s SAF. The content of the message said the following:

— The assets given as collateral by SuttonPark (subsidiary of 777) do not exist. Josh Wander never purchased them or already gave them as collateral to another lender. You are at great risk, your investment is not safe. What he is doing is criminal.

Leandenhall, however, waited more than a year and a half before taking Josh Wander and company to justice. During this period, the fund met a few times with 777 in search of solutions and gathered evidence against the North American group — the meetings were recorded with Wander’s permission.

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Between receiving the email and filing the lawsuit, a decisive event occurred in March 2023. Executives from Credigy, which had also made a loan to 777, visited Leadenhall’s headquarters in London.

The group that bought Vasco was one of the topics of the meeting and, in the following days, Credigy sent an inventory of the assets that 777 offered them as collateral. Upon viewing the list, Leadenhall realized that 1,600 assets worth a total of $185 million had been given to the two companies as collateral.

In one of the meetings with Leadenhall, Josh Wander stated that he used the guarantee on two loans because of an error in the 777 system. At the meeting on March 28, 2023, he made promises to the English fund, including raising the “money of a possible sale of part of 777’s football assets”. In the conversation on April 3 last year, Wander added:

— We will do everything possible to sell businesses, raise money and take out loans from our main creditor (A-CAP) to resolve the problem.

In the action, Leandenhall says that 777 essentially depends on financing from A-CAP, an American fund that belongs to businessman Kenneth King, who is also a defendant in the case. Therefore, according to the document, King is currently the one calling the shots in Vasco’s football management.

Leadenhall calls 777 a “puppet” controlled by A-CAP and says Kenneth King is the “Wizard of Oz behind the curtain at 777 Partners.”

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On March 29, 2024, there was a principle of agreement between Leadenhall and 777 for the Americans to pay what they owe to the English through amortizations on pre-established dates. But the agreement was vetoed by A-CAP. In a meeting on April 2, according to the lawsuit, upon hearing that A-CAP currently controls 777, Josh Wander responded as follows:

— In practice, you’re right. They (A-CAP) control what we sign because they have the power of money now. And we need to keep the company running so we can solve our problems and handle our obligations.

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Over the last year, according to the lawsuit, 777 used A-CAP money even to pay its employees’ salaries. Therefore, all major decisions must receive the approval of Kenneth King’s fund, which regularly receives updates on the plans of the group that runs Vasco.

Leadenhall considers 777’s business a possible pyramid scheme because it believes that Josh Wander’s company does not have cash for investments. The fund says that the strategy consists of moving values ​​from one business to another within the company itself. This way, there would be no new money. What 777 would do, according to the English, is open credit lines with insurance companies and rotate the money between the group’s companies.

— Although 777 Partners, many of its operating companies and its professional football clubs are deeply in debt and behind on their obligations, Wander’s strategy has been one of continual expansion – using debt to acquire new assets that he can then use as collateral for more debts, which he then fails to pay on time, in an endless cycle of “robbing Pedro to pay Paulo” — says an excerpt from the action.

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Another blow to 777’s finances occurred in January this year, when the Bermuda Monetary Authority (tax haven in the Caribbean) blocked US$2.2 billion from 777 Re, the reinsurer of the group that bought Vasco and which is based in the Caribbean country. . The risk agency AM Best, specialized in insurance companies, downgraded the company from B to C-.

In part of the action, Leadenhall cites the consecutive losses of football clubs managed by 777 around the world. The process reproduces a quote from Josh Wander to the “Financial Times” on August 31, 2023, in which he says that the ultimate goal “is that one day we will not be selling hot dogs or beer to our fans, but selling insurance or financial services”.

Vasco is mentioned once in the action, when the English fund states that 777’s financial projections for its clubs are unrealistic. The company also manages Genoa (Italy), Standard Liège (Belgium), Red Star (France), Melbourne Victory (Australia) and Hertha Berlin (Germany), in addition to having a minority stake in Sevilla (Spain). The group has an agreement to buy Everton (England), but the deal has not yet materialized.

— The guarantees placed by 777 to continue operating Genoa are based on unrealistic projections of growth in all its revenue sources and reduction in operating costs, despite the fact that Genoa’s largest revenue, from television rights, will decrease by brief. 777 Partners also made financial projections for other clubs, including Standard Liège, Hertha and Vasco da Gama, predicting patterns of performance and participation in European leagues that are extremely unlikely – Leadenhall’s lawsuit says.

At Vasco, 777 is up to date with its obligations. In October 2023, there was a delay of a few days in the payment of R$110 million.

The largest contribution of all, worth R$270 million, is scheduled for September this year. Concerned about the news about 777’s financial health, the legal department of the associative club notified the company asking for guarantees that payment will be made on the scheduled date.

In 2023, according to the balance sheet published on the 30th, Vasco’s SAF had a loss of R$123 million.

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