777 Partners and A-CAP: The Reckoning
Red Star FC's ownership situation has been in a state of limbo since the multi-club project of 777 Partners went bust, but US regulators are acting to take control after claims against insurers A-CAP.
Remember 777 Partners? Yeh, those guys that bought seven football clubs in the space of 18 months, claiming to be one of the most ambitious Multi-Club Ownership projects that world football had ever seen. Red Star would suddenly be embroiled as a small part of the complex but depraved financial story of 777’s meteoric rise and spectacular fall in only a period of three years.
“Is there anyone in the world that's been more serious about buying football clubs in history than Josh Wander?” said Red Star’s American owner, Josh Wander, unironically referring to himself in the third person during an interview in August 2023 with the Financial Times. Only a year later would a major double-pledging fraud claim begin to topple the 777 Empire, which saw their football clubs eventually placed in the hands of insurers, A-CAP.
They, too, are now the subject of legal proceedings from governing bodies in the United States - several months after Josimar revealed that money from thousands of insurance policyholders was put at risk funding 777 Partners’ investments. The latest legal petition comes from Jonathan Pike of the Utah Insurance Department. It’s a document I spent several hours trying to get my head around. But Josimar have perfectly decrypted it in their latest article by Philippe Auclair and Paul Brown.
US Regulators could soon own Red Star FC and former 777 clubs
The petition from Mr Pike is a stunning read. It lays out and accuses in clear terms that current de-facto owners of Red Star, A-CAP and their CEO Kenneth King were clearly implicit in funnelling millions into loss-making and debt-ridden clubs.
King has been accused of “years-long history of self-dealing, conflicts of interest, and obfuscation,” being directly involved and activity facilitating 777 Partners’ activities on a huge scale. This is all the whilst reaping the benefits individually, with the petition accusing King of having taken a $3m bonus whilst several of his investments were floundering. It states that A-CAP employees have also “directly and improperly benefitted from those investments”via management fees, a Miami condo (as previously reported by Josimar) , mortgage loans and “compensation paid directly to A-CAP”
On page 66 of the petition you can find this flow chart which visualises the sheer scale of A-CAP’s involvement in 777 Partners’ activities:
You can therefore start to visualise a whole web of loans and insurance policies with eye-watering interest and which ballooned out of proportion. For example, Utah’s insurers (owned by A-CAP) funded a $23m loan to Nutmeg Acquisitions, the 777 affiliate company whose purpose was to “support investments in certain European football clubs.” According to the petition, A-CAP “amended the loan more than 12 times including extending the maturity dates, deferring/capitalizing interest, and increasing the outstanding balance which now exceeds $350 million as of December 31, 2024.”
Kenneth King effectively took control of 777 Partners, and has now been accused of effectively being the secret mastermind behind the project. According to Josimar, the Utah petition looks set to be followed up by a petition from the South Carolina commissioner. If won, these two regulators will have effective control over the football clubs - not with a view to running them - but in order to recuperate money which is owed to their policy holders.
What next for Red Star?
At Red Star, the situation is ‘as you were’ living under the chaotic financial umbrella of multi-club ownership. Contrarily to other clubs there are no ongoing criminal proceedings (like at Genoa), and the club itself is still effectively on sale for potential buyers.
The club really has de-facto been on sale for several months now. There have been various interested parties in the club, with the closest being Dallas-based property developer Todd Interests who entered into exclusivity with the club and development project of Stade Bauer last August. A deal didn’t emerge neither for the club nor development project, before Boston Celtics and Atalanta owner Steve Pagliuca entered exclusive talks to buy the club which didn’t reach any significant point of conclusion.
Red Star president Patrice Haddad is still in his position at the club, and still hasn’t answered the key questions being posed of his decision to sell the club behind the backs of supporters. What’s worse was that it was to an investor who has involved one of France’s most historic clubs in one of the most nefarious networks of fraud that football has ever seen…
Go follow me on Twitter to stay up to date with all things Red Star!
red star fc is for sale?