Though it’s a crazy and sometimes complicated story, it probably wouldn’t make many waves—except that it involves the former presidential yacht, the Sequoia. Unlike the presidents who enjoyed her for sunset cruises, cocktail parties, and dinners, she has not been able to find ease of ownership in her recent post-presidential years. The latest chapter involves a $2.5 million loan, a lawsuit, a lot of allegations, and a court ruling.
The principal players are Gary Silversmith, a Washington environmental lawyer and most likely soon the ex-owner of the yacht, and FE Partners, a financial investment group based in Washington. FE Partners is run by Michael Cantor, who has partners in India, members of the Timblo mining and hotels family. Most of the drama has taken place not on the gleaming, varnished decks of the 104-foot, John Trumpy-designed gem built in 1925, but instead in the Delaware Court of Chancery, considered the highest level of equity court in the country, where many large takeover battles are litigated.
Silversmith, who has owned the Sequoia since 2000, secured a loan last July from FE Partners. The $5 million was to be dispersed immediately in halves of $2.5 million, with a default option to purchase for $7.8 million. The first $2.5 million was dispersed on July 3, 2012, but before the second half was dispersed, the captain of the yacht approached FE Partners with allegations of serious problems in the management of the vessel, said a representative of FE Partners, who spoke to us on background. Reportedly, the captain warned FE Partners that the money was going not to the boat but to pay off debts unrelated to Sequoia or her operation. There were other accusations, including malfeasance involving the liquor license and taxes.
Silversmith, in a phone interview, said, “Some accusations have been made that are not proven. A lot of hocus pocus.”
The relationship between Silversmith and FE Partners soured quickly. In January 2013, Silversmith filed suit against FE Partners for violation of the loan agreement, first in New York and then in Delaware. The judge in Delaware ruled on August 29 that Silversmith was in default on the loan from FE Partners and ordered him to pay back the $2.5 million plus interest, expenses, and FE Partners’ legal fees, and basically make way for FE Partners to take ownership of the yacht.
Silversmith says what happened was that he dropped the lawsuit “because we can’t afford to keep litigating. We won’t have the wherewithal to keep fighting. It’s a huge amount of legal fees. Therefore FE Partners, if they want to buy it, can exercise their option to buy it.” He says the handover won’t happen until December and in the interim he plans to keep doing charters, which cost a base of $12,000 for 42 people for up to four hours. “Charter business is quite good,” he says, adding that the Sequoia is “the only historic landmark on the waterfront.”
FE Partners disputes Silversmith’s claim that the lawsuit was dropped. In a statement sent to us, Richard Graf, legal counsel for FE Partners, wrote, “Mr. Silversmith has been stating that he voluntarily withdrew his lawsuit because of the legal fees. While we don’t know Mr. Silversmith’s true motives, we note that he and his lawyers threw in the towel soon after we sought a default judgment against Mr. Silversmith.”
How does Silversmith feel about the turn of events with FE Partners and the court’s verdict? “I think it’s unfair because of all these unfounded charges that were brought,” he says. But he says he will meet his obligation. “We have the money to pay off the lender; we have the funding ability. We’ve been a good steward of the yacht. I’ve spent millions rehabbing her and keeping her in good condition.” He says he bought the yacht because he felt it needed to be preserved and because he thought it would be a good investment. Does he still think that? “Yes. It’s costing a lot of money, but yes.”
The representatives of FE Partners indicated the boat would be kept in Washington, or at least the United States, and denied rumors that it would be shipped over to India.