THE ownership of Leeds United was thrown into chaos this morning after reports that prospective owner Massimo Cellino had been found guilty of tax evasion by an Italian court.
The court ruled on allegations regarding non-payment of more than £300,000 in import duty on a luxury yacht Cellino purchased in 2010 - and he now looks likely to fail to satisfy the Football League’s Owners and Directors Test to take over United.
The league had been waiting until the outcome of the trial before deciding whether to ratify Cellino’s 75 per cent takeover of United. A further announcement is likely from them this week.
The Owners and Directors test, formerly known as the fit and proper person’s test, prohibits people with unspent convictions for dishonesty offences from being directors, 30 per cent owners or from exercising control over one of its clubs.
The court in Cagliari was reported to have fined Cellino 600,000 euros and ordered the yacht, named Nelie, be confiscated.
Cellino’s defence lawyer Giovanni Cocco, announced that Cellino, who was not in court, planned to appeal against the court’s ruling.
“This verdict is absolutely unjust and we will appeal,” he told the Guardian after the brief court session.
Cellino, 57, heads Eleonora Sports, who agreed to buy Leeds from Gulf Finance House Capital on February 1.
Miami-based Cellino, currently the owner of Cagliari, denies that he was seeking to evade import duty on the yacht.
He told the court in December that he had planned to have it sailed to the United States, where he had bought it, but was unable to due to damage to the yacht.
Cellino, who exchanged contracts with current Leeds owners Gulf finance House Capital to buy 75 per cent of the club’s shares at the beginning of last month, has already provided considerable funds to cover running costs at Elland Road.
The businessman has covered the club’s staff wage bill for the last two months and has paid off a loan from shirt sponsors Enterprise Insurance to stave off a winding-up order.
Since the takeover deal with GFH Capital was agreed, Leeds have also signed Stoke goalkeeper Jack Butland and Sunderland striker Connor Wickham on loan until the end of the season.
Cellino’s lawyers started talks with the Football League at the end of January and the Cagliari owner met with the governing body on February 12.
Bahrain-based investment firm GFH Capital has been searching for major investment since buying the club from Ken Bates in December 2012.
A rival consortium to Cellino, headed by Andrew Flowers, chief executive of Enterprise Insurance, withdrew from the race to take control at Elland Road at the end of January, but a third group, Together Leeds, fronted by former Manchester United International managing director Mike Farnan, has been waiting in the background.
GFH Capital has so far refused to enter into serious talks with Together Leeds after rejecting a “derisory” offer from them in November.
Miami-based Cellino has twice been previously convicted of fraud and is currently contesting a separate charge of embezzlement.
He received a 15-month suspended prison sentence in 2001 after being convicted of false accounting at Cagliari.
A previous conviction in 1996 for fraudulently claiming EU agricultural subsidies was overturned in 2012, while in February 2013 he spent 16 days in jail after being arrested for embezzlement - a charge he denies - in relation to the redevelopment of Cagliari’s Is Arena stadium.
But Cellino’s two previous convictions, nearly 13 and 18 years old, are considered “spent” in English law and it is understood they cannot be taken into consideration under the League’s “owners and directors’ test”.
In relation to his outstanding charge, Cellino is assumed innocent until it can be proved otherwise.
But after now being found guilty for failing to pay tax on his luxury yacht, it would appear his bid to take control at Elland Road is in serious doubt.
Cellino, long considered one of the most charismatic owners in Italian football, was shown around Leeds’ Thorp Arch training ground for the first time in October.
He verbally agreed to a 75 per cent takeover with GFH Capital at the end of January and tried to sack manager Brian McDermott and install friend and former Middlesbrough defender Gianluca Festa as team boss.
That bid sparked outrage among Leeds fans, who attempted to barricade Cellino at Elland Road on the eve of their home game against Yorkshire rivals Huddersfield on February 1.
McDermott stayed away from the game, which Leeds won 5-1 under the stewardship of assistant Nigel Gibbs, while GFH Capital released a statement before the game had ended overruling Cellino and stating McDermott was still manager.
McDermott returned to work as normal the following Monday and Cellino attempted to distance himself from the controversy, claiming it was the current owners who wanted to sack the manager.
Cellino has since said he is willing to work with McDermott if his takeover gets the go ahead, but voiced his frustration last week when revealing he would no longer bankroll the club until the League approved his takeover.
Leeds managing director David Haigh insisted last week that there is “no chance” of the club going into administration.
The League board met last Thursday to discuss the matter, but had delayed any decision until after the current court case.
A Football League spokesman said: “The Football League has noted the outcome of the Court hearing earlier today regarding Massimo Cellino. We are engaged in an ongoing dialogue with his legal representatives in this country and cannot comment further at this time.”
A Leeds spokesman said the club would not be commenting at this stage and were waiting for the Football League’s decision on Cellino’s proposed takeover before issuing a statement.