777 Partners co-founder Joshua Wander pleads guilty to $500m fraud

Joshua Wander, co-founder and former CEO of 777 Partners, has pleaded guilty to wire fraud and securities fraud in a scheme involving more than $500 million, adding to scrutiny of the investment firm’s wider insurance-linked operations, including Bermuda-based reinsurer 777 Re.

Wander entered his plea before US District Judge J Paul Oetken in New York on October 15, agreeing to forfeit at least $500 million in proceeds from the illegal scheme. He pleaded guilty to one count each of wire fraud and securities fraud, both of which carry a maximum sentence of 20 years in prison.

The guilty plea follows years of scrutiny surrounding 777 Partners, whose activities extended into the reinsurance sector through Bermuda-based 777 Re, and comes amid continuing regulatory concerns over the financial condition of insurers controlled by Advantage Capital Holdings (A-Cap).

According to the US Attorney’s Office for the Southern District of New York, Wander orchestrated a multi-year fraud involving the misuse of restricted lender funds, the pledging of assets that had either already been pledged elsewhere or never purchased, and the falsification of financial records.

777 Partners initially focused on underwriting and financing structured settlements before expanding into other sectors, including airlines and professional sports teams.

Federal prosecutors said the firm lacked sufficient funds to finance these acquisitions, prompting Wander to divert restricted funds from lenders in its structured settlement business to cover acquisitions and operating expenses.

The scheme involved pledging hundreds of millions of dollars in structured settlement assets that 777 Partners did not own or had already pledged to other lenders.

Wander also directed employees to digitally alter bank statements to show millions of dollars in cash that the firm did not possess, prosecutors said.

Between 2021 and 2022, he raised more than $200 million from outside investors through preferred equity interests in 777 Partners and an affiliated entity, while misrepresenting the firm’s financial condition.

In a separate transaction in March 2022, Wander obtained a $20 million loan supported by falsified bank statements, concealing the misappropriation of funds, including millions spent on options trading.

The scheme began to unravel in March 2023 when a lender confronted Wander over allegations that 777 Partners had pledged the same assets to multiple lenders. Prosecutors said Wander falsely attributed the discrepancies to an outdated computer system and subsequently maintained that the double-pledging had been inadvertent.

Wander resigned as chief executive in 2024.

The developments carry significance for Bermuda, where 777 Partners operated 777 Re, a Class E reinsurer that became the subject of regulatory intervention by the Bermuda Monetary Authority (BMA) in 2023 following significant concerns about the reinsurer’s corporate governance, risk management and decision-making.

The regulator subsequently found that 777 Re had acted contrary to the prudent person principle in relation to investments in affiliated assets and had failed to meet its enhanced capital requirements after its parent did not make contractual capital contributions.

The BMA restricted the reinsurer from writing new business without its consent and directed it to reduce its exposure to affiliated investments through an asset sale and restructuring programme.

777 Re ceased conducting insurance business in May 2024, with its Bermuda insurance registration cancelled in September that year.

While Wander’s criminal case concerns fraud against 777 Partners’ lenders and investors, rather than specific criminal findings against 777 Re, the guilty plea adds to the scrutiny surrounding the investment group and its insurance-related activities.

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