Russian Yacht Valued at $300 Million Now Faces Forfeiture
(Bloomberg) -- The US moved closer to auctioning off sanctioned Russian billionaire Suleiman Kerimov's superyacht, one of the most glittering prizes in its asset seizure efforts, after a judge ruled that a second Russian who claims ownership has no legal standing in the case.
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Monday's ruling that the US has won forfeiture of the boat comes after a legal fight over the 348-foot (106-meter) Amadea, following a Biden administration program to target wealthy Russians linked to President Vladimir Putin's war on Ukraine.
The yacht was seized in Fiji in 2022 at the request of the US, which claimed that Kerimov is the owner. But a wealthy Russian who isn't under US sanctions, former Rosneft head Eduard Khudainatov, said it really belonged to him. The government contended that Khudainatov was just a straw owner masking Kerimov's true role to help him dodge the sanctions.
The Amadea is one of the most visible trophies for the Joe Biden-era Justice Department's KleptoCapture task force, established in March 2022 to go after overseas assets linked to Russian tycoons in Putin's circle. But the fate of the government's efforts to enforce Russian sanctions through such asset seizures is now unclear, after President Donald Trump's attorney general, Pam Bondi, disbanded the group shortly after Trump took office.
Straw Owner
In the meantime, government lawyers continued to pursue the case. A Justice Department spokesperson said on Monday that the US continues to litigate existing forfeiture cases and that a law permitting money seized under the sanctions to be provided as aid to Ukraine expires in May and is at the discretion of the attorney general.
In his ruling, US District Judge Dale Ho in Manhattan said the evidence showed the Amadea's ownership was transferred to a company tied to Kerimov following a payment of €225 million ($244 million). That's enough to conclude that Khudainatov isn't the yacht's true owner but just held title to it for another party, and therefore lacks standing to contest forfeiture, Ho said. He also dismissed Khudainatov's claim for his repeated failure to provide pretrial testimony in the case.
The judge ruled in the government's favor on forfeiture.
Adam Ford, a lawyer for Khudainatov, said the judge got it wrong and that his client plans to appeal.
'The court misapplied the law governing standing in forfeiture proceedings, disregarding well-established principles that protect the rights of claimants in such cases,' Ford said in a statement. 'Moreover, the court improperly relied on speculative and unreliable assertions from the government while failing to give due weight to the extensive evidence we presented in support of our claim.'
High Maintenance
The German-built yacht has cost US taxpayers almost $750,000 a month to maintain and insure as it remains in custody in San Diego pending the conclusion of the legal battle. It has a beauty salon, a swimming pool, eight suites and a VIP cabin complete with study and dressing rooms, according to yachtcharterfleet.com. One estimate valued it at $300 million or more, while an independent appraiser later put its fair market value at $230 million.
Kerimov is the 17th-richest person in Russia, with a net worth of $8.9 billion, according to the Bloomberg Billionaires Index.
During a hearing, Justice Department lawyer Rachael Doud told the judge that evidence showed Kerimov had bought the yacht through intermediaries in 2021, after which his family used it exclusively. Ford argued that the government had no evidence that his client is a straw owner, calling the seizure 'unlawful' and 'a failed political stunt.'
The case is US v. M/Y Amadea, 23-cv-09304, US District Court, Southern District of New York (Manhattan).
(An AI summary previously at the top of this story was removed because it misstated the year the yacht was seized.)
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