By Promotion sealed. Championship secured. Paris suburban side Red Star FC will be playing Ligue 2 football next season for the first time in six years, but last week’s major fraud claim against the club’s owners 777 Partners has cast a perilous shadow of doubt over the future of France’s fourth-oldest club. Red Star’s manager, former Newcastle & Aston Villa defender Habib Beye will now officially leave the club, with RMC Sport citing concerns about the Saint-Ouen club’s sporting project heading into next season.
Perhaps it was perfect timing: the evening when Red Star supporter’s mobilised with fake bank notes depicting co-founder Josh Wander, it was reported by Bloomberg and the New York Times that London-based firm Leadenhall Capital Partners have brought a major fraud claim against 777 Partners.
The Miami-based investment firm allegedly borrowed $350m from Leadenhall by pledging assets that it either didn’t own, or didn’t exist. Bloomberg reports that co-founder of 777, Josh Wander, double-pledged assets backing loans to the firm, and admitted to breaches in agreements – according to the document filed in New York’s federal court, seen by Get French Football News.
“A house of cards of the brink of collapse”
“To induce Leadenhall to fund their operation, Wander, along with his group of alter ego entities, ‘pledged’ over $350 million in assets as collateral to Leadenhall, knowing all along that the assets either did not exist, were not actually owned by Wander’s entities,” reads the claim brought to New York’s federal court.
The accusation in the court claim document are nothing short of astonishing: 777 Partners are accused of running a “giant shell-game at best, and an outright Ponzi scheme at worst” where the Miami-based investment firm are allegedly taking money from investors and lenders, and move it around various “money-losing financial ventures”.
Of course, these financial ventures include owning five football clubs: Hertha Berlin, Genoa, Standard Liège, Vasco Da Gama, and Red Star FC. It means, in theory, that these clubs have been bought by 777 Partners, with finance provided by creditors at lower rates under the pretence of secured financing. It explains an astonishing rate of acquisitions from the period of 2021-2023, which saw all five clubs come under majority ownership. It also plays into their current bid to to buy Premier League side Everton, which has led to large amounts of scrutiny on the multi-club project’s operation and intentions.
“Wander has already admitted to rampant and fundamental breaches of the parties’ agreements,” the claimants say, crucially adding, “the only question now is whether Leadenhall will be able to recover millions of dollars in damages from a house of cards on the brink of collapse.”
Leadenhall’s final assertion is the most worrying, and has been confirmed by reporting from investigative outlet Josimar. There is a real possibility that the multi-club project crumbles sooner that expected; sources contacted by Get French Football News have recently asserted that 777’s house of cards could fully unravel before the end of the month.
At Standard Liège, the situation is increasingly desperate: Belgian journalist Sacha Taviolieri reports that the club’s bank account is currently empty and that players have been told they will not be paid until the end of the season. There has reportedly been no sign of communication from the American ownership, as some of the club’s officials are struggling to contact 777 Partners. Former owner Bruno Venanzi is reportedly beginning the process of re-seizing control over the club, triggering a buy-back clause of shares after 777 missed further payments to the club.
“The institution of Red Star is in danger”
Back in France, Red Star’s supporters are increasingly worried about the position of the club in the midst of an ongoing crisis which is beginning to hit all of 777’s clubs. “We are extremely worried, but also angry, because when 777 Partners wanted to buy the club, we immediately opposed the takeover,” said Vincent Chutet-Mezance, president of Red Star supporter’s Collectif Stade Bauer in an interview with Ouest-France this morning. “We’ve been saying for two years that 777 Partners’ practices are not clear and that this investment fund is certainly not there for the good of Red Star.”
“I didn’t think it would happen so soon, but it’s all the consequence of what this ‘mafia-like’ group represents,” said Chutet-Mézence. “We’re worried for the club because, above and beyond all this, the institution of Red Star is in danger.”
Former owner Patrice Haddad sold 100% of Red Star to 777 Partners in May 2022, to much resistance from the club’s supporters, who caused the abandonment of a 3rd tier fixture against FC Sète when talks with the American investment firm were announced. Since then their relationship with Haddad, who has been kept in place as president of the club, has been fraught.
“If we’re in this situation today and the club falls apart tomorrow, it will be Patrice Haddad’s fault,” said Chutet-Mezance on L’Étoile Rouge’s former owner. “We need to move on quickly because the club’s survival is at stake We urgently need to find new investors. Now is the time to do everything possible to ensure that 777 Partners goes. They need cash, so I’d like to say to them: Take a few million here to pay your lawyers, wipe out your debts and leave”.
“If Habib Beye leaves, it will be the first signal”
The next days and weeks will be decisive in deciding the future of Red Star at every level. An official club communiqué today confirmed that manager Habib Beye will leave Red Star after deciding not to renew his contract with the club. According to RMC Sport journalist Fabrice Hawkins, his departure was motivated by uncertainty over the club’s project, certainty over the club’s project.
“If Habib Beye leaves, that will be the first signal that things aren’t looking too good,” said Chutet-Mezance on the subject of Red Star’s current coach, who is finishing off his third season with the club. “It’s the same with the squad. Clubs and agents aren’t crazy. When a club’s owners are threatened with bankruptcy, it’s usually a bit of a sell-off. If 777 Partners goes bankrupt, they’ll take everyone down with them.”
What happens if 777 Partners goes bankrupt?
Now here’s the tricky part. If 777 Partners are so damaged from their fraud trail that they have to enter insolvency, what happens to Red Star? If the fraud claim is won by Leadenhall, and 777 can’t pay – they may also have a claim to the Miami firm’s clubs. Yet it isn’t sure whether A-CAP (the company that fund 777) will also have some sort of claim for the clubs. Patrice Haddad could also act to take back control in the club financially, yet it was his decision to sell the club which put Red Star in this position in the first place – and he doesn’t possess a buy-back clause as Venanzi does in Belgium.
Red Star have one thing going in their favour: the fact that 777 could sell the club for a reasonable margin, claiming that the Saint-Ouen side are now playing in Ligue 2 and their stadium is being renovated and has the potential to be a big force in the French capital. The trouble is that time is running out quickly for a potential buyer to come along…
Photo Credit: Bazil Fleury – @icietailleurs55 on Instagram.
GFFN | George Boxall
