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Everton Football Club’s suitor 777 Partners has called in turnaround and crisis management experts, as the investment firm wrestles with accusations of fraud and the unravelling of the reinsurance financing that underpinned many of its acquisitions.
The Miami-based group has appointed a team from B Riley Advisory Services to assist with “various operational challenges”, according to a 777 memo reviewed by the Financial Times.
“We have retained a team of professionals from B Riley Advisory Services (a division of B Riley Financial) to assist with managing through various operational challenges,” the memo said. It added that 777 is working to “rationalise” the business and “select the most profitable path forward for our investments”.
The advisory services company, which is part of Los Angeles-based B Riley Financial, does restructuring and turnaround work, forensic accounting and litigation support, and valuations.
The appointment comes after London asset manager Leadenhall Capital filed a lawsuit which alleged that 777 co-founders Josh Wander and Steven Pasko were “operating a giant shell game at best, and an outright Ponzi scheme at worst”.
According to the Leadenhall lawsuit, filed in a federal court in New York last week, Wander pledged more than $350mn in assets that “either did not exist, were not actually owned by Wander’s entities, or had already been pledged to another lender”.
777 has said it “vehemently refutes” the claims in the Leadenhall court filing.
777’s challenges have plunged Everton into uncertainty. British-Iranian owner Farhad Moshiri has been re-evaluating the sale of the Premier League side following the Leadenhall lawsuit, according to two people with knowledge of his thinking. 777 had hoped to complete the acquisition by the end of last year but the Premier League has not approved the deal.
Clubs in which 777 already has stakes have also been affected. This week, Belgian club Standard Liège said it had been hit with a transfer ban by football authorities “for failure to be able to provide all the requested proof of payment within the deadline”.
777 has also come under pressure because US regulators have pushed insurance group A-Cap to cut exposure to the group. A-Cap has set out a plan to take back control of assets ceded to 777 Re, the Bermudian reinsurer that funded the Miami group’s football deals.
Separately, 777-backed budget airline Bonza entered voluntary administration in Australia last month and cancelled its flights, forcing passengers to seek alternative travel arrangements.
Mark Shapiro, senior managing director at B Riley Advisory, is serving as interim chief operating officer at 777, according to the memo, which noted his “considerable experience as a financial restructuring adviser and CFO”.
B Riley Advisory co-chief executive Ian Ratner and senior managing director Ronald Glass are taking on “governance roles” at 777.
Ratner, who was the expert witness on behalf of the US Department of Justice in the BP Deepwater Horizon oil spill litigation, has experience in public and forensic accounting, business valuations, due diligence, corporate finance and bankruptcy consulting.
Glass is described as a “nationally recognised crisis manager, fiduciary, Chapter 11 trustee, chief restructuring officer and bankruptcy adviser” on B Riley’s website.
777 declined to comment on the appointment of B Riley. B Riley did not immediately respond to requests for comment.
Additional reporting by Josh Noble
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