News & Politics

Former Presidential Yacht the Sequoia Tossing in a Legal Storm

The vessel may be changing hands due to a court ruling in Delaware.

Photograph by Michael Kulik/courtesy of the Sequoia.

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