The co-founder and CFO of a Miami investment firm that once bought stakes in prominent sports teams around the world are now facing federal charges.
According to an Oct. 16 announcement from the FBI, 777 Partners Co-Founder Joshua Wander has been charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit securities fraud and securities fraud.
FBI officials said that Wander and others allegedly coordinated a scheme to defraud 777 Partners’ private lenders and investors out of over $500 million.
Meanwhile, 777 Partners former CFO Damien Alfalla on Oct. 14 pleaded guilty to an unspecified charge in connection with his participation in the alleged scheme. FBI officials said that Alfalla is cooperating with the government in the case.
“As alleged, Wander used his investment firm, 777 Partners, to cheat private lenders and investors out of hundreds of millions of dollars by pledging assets that his firm did not own, falsifying bank statements, and making other material misrepresentations about 777’s financial condition,” said U.S. Attorney for the Southern District of New York Jay Clayton in the FBI’s news release.
Both Wander and Alfalla are also named as defendants in a lawsuit brought by the Securities and Exchange Commission. That suit, filed on the same day as the FBI’s announcement, alleges that the pair fraudulently solicited investments in a preferred equity offering that raised $237 million from 13 investors.
The SEC’s suit was filed in the U.S. District Court for the Southern District of New York. In a complaint, the SEC said Wander, Alfalla and 777 Partners’ other co-founder Steven Pasko led investors to believe that their business would earn “substantial positive net income.”
“In truth, Wander and Alfalla knew or recklessly disregarded, and Pasko knew or should have known, that [their companies] were in a severe and worsening liquidity crisis and had no realistic prospects of earning net income sufficient to pay the dividend,” according to the SEC’s complaint.
The complaint goes on to say that Wander directed the misuse of a credit facility, as well as the concealment of an overdraft, while Alfalla “helped carry out these activities.” The three men are accused of violating securities law.
The charges and suit come after 777 Partners bought stakes in sports teams from Brazil to Germany and Australia, including a minority stake in the Melbourne Victory Football Club. The New York Times reported earlier this month that the firm had purchased soccer teams on three continents. The company had also tried and failed to buy the Everton Football Club in Liverpool, England.
The firm’s troubles began many months before the accusations by the FBI and the SEC. In May of last year, a lender to 777 Partners had accused the firm of “running a yearslong scheme,” according to the Times.
A lawyer for co-founder Wander told the newspaper that the matter is “a business dispute dressed up as a criminal case. … We look forward to setting the record straight.”
