The U.S. goes to court Tuesday to argue that a sanctioned billionaire is the owner of a superyacht it seized and must now forfeit it, as the government goes after the assets of wealthy Russians behind the war in Ukraine.
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The yacht, which costs almost $750,000 a month to maintain and insure, has been in U.S. custody in San Diego as the legal battle drags on. The government is seeking to make sanctioned billionaire Suleiman Kerimov forfeit it. But another Russian, who isn’t under U.S. sanctions, claims he’s the owner of the boat, and he’s trying to get it back.
The 348-foot (106-metre) Amadea, which features six decks and a helipad and is worth between $230 million and more than $300 million, was seized in Fiji in April 2022 at the request of the U.S.. The legal fight springs from the work of a Justice Department task force, KleptoCapture, that targets assets including yachts, planes and luxury real estate of rich Russians sanctioned over the invasion.
The U.S., which is trying to win forfeiture of the vessel, claims Amadea’s owner is Kerimov, the 17th-richest person in Russia, with a net worth of about US$9.3 billion, according to the Bloomberg Billionaires Index.
But Eduard Khudainatov, the former head of Russian oil producer Rosneft, argues he is the true owner. Lawyers for Khudainatov and his Millemarin Investments Ltd. claim he spent 24 million euros (US$232 million) to build the yacht and that it’s been his all along.
The Justice Department has told U.S. District Judge Dale Ho that Khudainatov is just a straw owner set up to disguise Kerimov’s ownership of the yacht. The US claims he sold it in September 2021 and therefore lacks the legal standing to complain about what happens to it.
Ho is holding a hearing this week on Khudainatov’s standing and who owns the yacht, a mini-trial with opening arguments scheduled for Tuesday morning. Neither Kerimov nor Khudainatov is expected to testify. The government told the judge it had made “Herculean” but unsuccessful attempts since June to arrange court-ordered testimony from Khudainatov.
Adam Ford, Khudainatov’s lawyer, called the seizure “unlawful” and “a failed political stunt” and says the government hasn’t proved its case.
The Justice Department frequently seizes property — including securities, artwork, cryptocurrency and even homes and cars — that it considers the proceeds of a crime. But the Amadea presents a unique challenge, in that maintaining the value of a superyacht is an expensive business.
If the U.S. doesn’t succeed in securing forfeiture of the yacht, that money would be lost. So far the government has failed to win court approval to sell the boat and escape the financial risk. Adding in $5.6 million in dry dock repairs the government planned to make last year, the total cost to U.S. taxpayers was about $20 million, according to a U.S. filing early last year, and would be closer to $30 million by now.
“The government has not established that the Amadea’s maintenance costs are excessive so as to justify” the craft’s immediate sale, Ho ruled in June, observing that the costs are a fraction of its value and not unusual for such a yacht.
When the Amadea was seized in April 2022, the U.S. estimated its value at $300 million or more. An independent appraiser in October 2022 put its fair market value at $230 million.
The case is US v. M/Y Amadea, 23-cv-09304, US District Court, Southern District of New York (Manhattan).
— With assistance from Stephanie Baker, Alexander Sazonov and Jonathan Browning.