Syed Rahman summarises a case that focused on the cost of maintaining a superyacht.
A judge in the United States has rejected a request by the Department of Justice (DOJ) to sell a superyacht suspected of being owned by a sanctioned Russian oligarch.
The 348-foot Amadea was seized more than two years ago on suspicion that it belonged to Suleiman Kerimov.
The court heard that maintaining and insuring the yacht is costing the US government at least $743,750 a month. But US District Judge Dale Ho ruled that these costs did not justify selling the boat before a federal court hearing decides a forfeiture case related to it.
Last October, the DOJ filed a forfeiture complaint against the Amadea, alleging that Kerimov bought the luxury vessel through various shell companies and then violated US sanctions by paying more than $1 million in US currency to maintain and upgrade it. Four months later, prosecutors sought permission to sell the Amadea before the forfeiture case was resolved, arguing that the cost of maintaining the vessel was excessive compared to its market value.
Judge Ho stated that the Amadea’s maintenance costs were “quite sizeable”, but added:
“Because the government has not established that the Amadea’s maintenance costs are out of the ordinary for motor yachts like the Amadea or that these costs are not inherent in seizure of this type of property, the Court declines to order interlocutory sale.”
The decision largely hinged on the meaning of “excessive”, which is used in a federal rule that allows the government to sell seized property because of the cost of maintaining it. The DOJ had argued that “excessive” referred to the absolute amount of maintenance costs. But lawyers for former Rosneft president Eduard Khudainatov, who claims to be the Amadea’s true owner, said the word should be interpreted in relation to the vessel’s market value.
In his ruling, Judge Ho said that, given the absence of sufficient legal precedent, “excessive’’ should be taken to mean “more than what is usual or proper”. He added that the government had not produced evidence to show the Amadea’s expenses were “atypical” and had not identified a similar yacht to be used as a comparison.
Judge Ho stated that while the Amadea’s maintenance costs were large “this seems a natural consequence of seizure’’. He said that approving its sale because of such high costs would allow the government to sell any seized property with substantial maintenance fees.
