US court to decide on auction of Russian oligarch's yacht for $300 million
Photo: The Amadea yacht may be sold in the US after the trial (ruyachts.com)
The United States has gone to court to prove that sanctioned billionaire Suleiman Kerimov is the real owner of a superyacht seized in 2022 after Russia invaded Ukraine, Bloomberg reports.
The yacht, which costs US taxpayers almost $750,000 a month to maintain and insure, is being held in custody in San Diego while the legal proceedings are ongoing. The government wants to sell it. But another Russian, who is not under US sanctions, claims to be the owner of the boat, and he is trying to get it back.
The 106-meter Amadea, which has six decks and a helipad and is worth between $230 million and more than $300 million, was arrested in Fiji at the request of the United States. The legal battle stems from the work of the Justice Department's KleptoCapture task force, which targets assets including yachts, planes, and luxury real estate of wealthy Russians who have been sanctioned over the invasion of Ukraine.
The case illustrates the legal obstacles that the US and other governments may face in trying to confiscate and sell yachts and other luxury assets linked to wealthy Russians who enabled Putin's 2022 invasion of Ukraine. The US, UK, and EU have imposed sanctions on oligarchs and others accused of helping the Kremlin, and Western governments are pursuing their yachts, private jets, and villas.
The United States claims that Amadea is owned by Kerimov, the 17th richest man in Russia, with a net worth of about $9.3 billion, according to the Bloomberg Billionaires Index. But Eduard Khudainatov, the former head of Russia's oil producer Rosneft, claims he is the real owner. Lawyers for Khudainatov and his Millemarin Investments claim that he spent $232 million to build the yacht and that it has belonged to him all along.
The Ministry of Justice argues that Khudainatov is only a fake owner designed to conceal Kerimov's ownership of the yacht and has no legal grounds to complain about what is happening to it.
Court case
US District Judge Dale Ho is holding a hearing this week on the Khudainatov case and the question of who owns the yacht.
In the government's opening statement, Justice Department lawyer Rachel Dowd told Ho that the evidence would show that Khudainatov ordered the Amadea and then sold it in 2021 to Kerimov through intermediaries, after which the Kerimov family used the yacht exclusively. The crew recognized the Kerimovs as the owners and the family had plans to refit the vessel, Dowd said.
The Justice Department often seizes property-including securities, artwork, cryptocurrency, and even homes and cars that it considers to be the proceeds of crime. But Amadea presents a unique challenge because maintaining the value of a superyacht is expensive.
The yacht, built in Germany with teak decks, has a swimming pool, eight suites, and a VIP cabin with an office and dressing room, according to yachtcharterfleet.com. It also has a beauty salon and a movie theater.
If the United States fails to confiscate the yacht, the cost of its maintenance will be lost. So far, the government has not been able to get court approval to sell the ship and avoid financial risk. Adding the $5.6 million in dry-dock repairs that the US planned to carry out last year, the total cost to taxpayers was about $20 million, according to a US statement early last year, and is now closer to $30 million.
“The government has not established that the Amadea’s maintenance costs are excessive so as to justify,” Ho ruled in June, noting that the costs represent only a small fraction of its value and are not unusual for such a yacht.
When the Amadea was arrested, the US estimated its value at $300 million or more. An independent appraiser estimated its fair market value at $230 million.
