777 co-founder Wander pleads guilty to $500m+ scheme to defraud lenders and investors

Josh Wander, one of the co-founders of investment firm 777 Partners, has pled guilty to wire fraud and securities fraud in connection with a $500 million plus scheme to defraud lenders and investors of the company.

As part of that plea, Wander has agreed to forfeit at least $500 million in proceeds from the illegal scheme, United States Attorney for the Southern District of New York, Jamie McDonald announced.

Recall that, 777 Partners and its co-founders, including Wander, faced fraud charges filed against them by the US Securities and Exchange Commission (SEC), in a lawsuit that alleged misuse of funds and collateral, including the double-pledging of assets that should have backed a lending facility.

This case became relevant to us, when back in 2024 Leadenhall Capital Partners LLP, the London-headquartered specialist insurance-linked securities (ILS) and reinsurance linked investment manager, filed a lawsuit accusing 777 Partners, its co-founders and related entities of fraud, a case that is still ongoing today.

Leadenhall Capital Partners’ case stated that collateral pledged by 777 Partners for a lending agreement it provided was double-pledged or did not even exist.

Through its Life Insurance Linked Investments Fund, Leadenhall entered into a secured credit facility agreement with a group of limited liability companies owned by 777 Partners and other entities managed by its co-owners Josh Wander and Steven Pasko.

The borrowers (777 Partner entities) were supposed to have pledged collateral that was “free and clear” of any other security interest. But Leadenhall accused the entities of fraudulently misrepresenting that collateral was still supporting the facility and of double-pledging it at the same time.

Now, Wander has pled guilty to exactly this and agreed to forfeit proceeds from the fraud.

“This Office, together with our law enforcement partners, will continue to protect investors and lenders and to ensure that those who threaten our financial markets are held accountable,” explained U.S Attorney Jamie McDonald. “As he has now admitted, Josh Wander used his company, 777 Partners, to steal hundreds of millions of dollars from private creditors and investors. Wander double-pledged assets, pledged fictitious assets, lied about the financial condition of his company, and even falsified bank statements, all to gain access to his victims’ funds.  He then put those funds to uses that his lenders never permitted, including footing the bill for 777’s collection of professional soccer teams.  Whether perpetrated in the private or public markets, such brazen conduct undermines the integrity of our financial system and will not be tolerated.”

The United States Attorney for the Southern District of New York stated yesterday, “WANDER, the co-founder and former CEO of 777 Partners, a private investment firm, orchestrated a multi-year scheme to defraud 777 Partners’ lenders and investors of more than $500,000,000. 777 Partners’ initial and primary business model was to underwrite and finance structured settlements. Over time, WANDER began investing capital in new sectors, including airlines and professional sports teams. 777 Partners lacked the funds to pay for these new acquisitions, and WANDER directed that restricted funds from 777 Partners’ lenders in its structured settlement business be used to cover the firm’s acquisitions and expenses. To steal these funds from lenders, WANDER pledged to his lenders hundreds of millions of dollars of structured settlement assets that 777 Partners had never purchased or had previously pledged to other lenders. To conceal the fraud, WANDER directed employees to digitally alter bank account statements to reflects millions of dollars in cash on hand that the firm did not have.

“In 2021 and 2022, WANDER raised more than $200 million in outside investments in 777 Partners through the sale of preferred equity interests in 777 Partners and an affiliated entity. WANDER misrepresented the financial condition of the firm in soliciting these investments. In addition, in March 2022, WANDER solicited a $20 million loan from a lender. WANDER provided the lender with dozens of doctored bank account statements to conceal that WANDER had misappropriated the funds, spending millions of dollars of options trades.

“By March 2023, WANDER’s scheme began to unravel. One of the firm’s lenders confronted WANDER about allegations of double-pledged assets, and WANDER falsely claimed there had been an error caused by 777 Partners’ antiquated computer system. A few days later, WANDER again falsely assured the lender, among other things, that the double-pledging had been inadvertent. In 2024, WANDER resigned as CEO.”

In pleading guilty to one count of wire fraud and securities fraud, Wander faces in each count a maximum sentence of 20 years in prison. He is scheduled to be sentenced by U.S. District Judge Oetken on March 1, 2027.

Luca Albertini, CEO, Leadenhall Capital Partners LLP said in a statement provided to us that, “Today’s guilty plea reinforces the claims Leadenhall brought to light more than two years ago regarding the alleged years-long pattern of fraud by Wander, 777, A-Cap and the other defendants.

“Our primary consideration from the beginning has been maximizing returns for our investors and today’s development will support those efforts as we continue to pursue recovery through the litigation process.”

Leadenhall Capital Partners has been fighting its case for more than two years, a time-consuming endeavour as it continues to strive to protect itself and its investors.

Wander’s guilty plea and the agreed forfeiting of proceeds from the fraud suggests the chance of making a recovery may have strengthened in the ILS manager’s favour.