The U.S. Attorney’s Office has charged Josh Wonder, CEO of 777 Partners, with fraud and a number of other crimes that resulted in more than $500 million in losses to investors and lenders. The investigation revealed that Josh Wonder, together with the company’s CFO Damien Alfalla, provided lenders with fictitious structured settlements. Upon receipt of the funds, Wonder would withdraw them to the accounts of another of his companies, SuttonPark Capital. The charges against both co-defendants carry a maximum sentence of up to 20 years in prison for financial crimes in the United States. Almalla will be able to count on a lighter sentence, as he initially pleaded guilty and agreed to cooperate with the investigation.
Wonder founded 777 Partners in 2015 with financier Stephen Pascoe. In the early years, the company focused on financial services, later expanding into other areas – mass media, aviation and sports. According to Forbes, the owners managed to raise $237 million from 13 different investors who were provided with false information about the company’s condition. The investigation found that on the day the funds were received, Wonder withdrew $25 million to his own account.
777 Partners began investing in soccer in 2018 when it acquired a minority stake in La Liga club Sevilla. This was followed by controlling stakes in clubs Genoa (Italy), Hertha (Germany), Melbourne Victory (Australia), Standard (Liege, Belgium), Vasco da Gama (Brazil) and Red Star (France). Colossal investments in the soccer business raised his profile for Wonder, who seemed to be building a multi-club empire similar to that of the owners of England’s Manchester City. He was even elected to the board of the European Clubs Association (ECA) as a representative of Belgian Standard.
With each passing year, the stream of accusations against Wonder grew, but he assured investors that the company’s assets amounted to $10 billion and “there is no reason to doubt the financial stability of the company.” As the indictment revealed, Wonder pledged more than $350 million in assets to private lenders, knowing that 777 Partners either did not own the collateral or had already pledged it to other lenders. The 44-year-old businessman is also accused of misusing lenders’ funds, including buying stock in soccer teams and covering expenses related to the loss-making airline.
Wonder himself has not pleaded guilty. He was detained, but secured his release on $15 million bail. Most of the assets of 777 Partners after the bankruptcy went into the ownership of the U.S. group of insurance companies A-Cap. It was the largest creditor of the bankrupt company.
The 777 Partners story serves as a stark warning to investors about the global trend of owning multiple soccer clubs. UEFA sees this as a threat to the “Fair Play” of the soccer transfer industry, which is worth more than $10 billion a year.
There are more than 100 MCOs around the world that own the rights to 380 soccer clubs. With such a huge demand for soccer clubs, driven by significant interest from investment funds, one of the main requirements for buyers has been to have legal funds to purchase the assets. As the case of 777 Partners shows, investors’ concerns about the financial integrity of the owners of investment companies are not unfounded.
