Feb. 2 (Bloomberg) -- The owners of the former presidential yacht Sequoia sued a lender it accuses of wrongfully attempting to seize the 88-year-old vessel in a dispute over a loan.
Lawyers for the Sequoia Presidential Yacht Group LLC filed a lawsuit in Delaware Chancery Court yesterday asking a judge to bar FE Partners LLC, whose investors include an Indian business family, from laying claim to the 104-foot vessel as part of a disagreement over a $5 million loan. The yacht’s owners filed a similar case in New York state court last month. A judge dismissed that complaint Jan. 24 on procedural grounds.
“Defendant’s actions are motivated by nothing more than overwhelming avarice and the malicious desire to wrest the Sequoia” from its rightful owners, lawyers for Gary Silversmith, president of the partnership that bought the vessel in 2000, said in court filings.
FE Partners, based in Washington, is controlled by the Goa, India-based Timblo Family, which has mining and shipping interests, Silversmith’s attorneys said in the complaint.
“The complaint filed by the owner of the Sequoia in Delaware is grossly inaccurate and without merit, and we intend to vigorously defend ourselves in court,” Richard Graf, a Washington-based lawyer for FE Partners, said in an e-mailed statement.
Built in 1925, the Sequoia served as the official presidential yacht for 50 years before former President Jimmy Carter, a Democrat, sold the vessel in 1977 as part of an effort to cut governmental expenses. The wooden-hulled yacht was designated as a National Historic Landmark in 1987.
Silversmith, an attorney, sought the $5 million loan from FE Partners last year to help cover the Sequoia’s maintenance costs. Under the terms of the loan, FE Partners had the option to buy the vessel, according to court filings.
Silversmith said in the filings that while a Russian company had offered $20 million for the Sequoia, he had “no intention of entertaining or following up on this offer.”
The Sequoia’s owner contends FE Partners only funded about half the loan and then “manufactured” defaults in an attempt to wrongfully seize the yacht, according to the filings.
Michael Cantor, a director of FE Partners, said in a Jan. 23 affidavit in the New York case that the partners uncovered a series of problems in connection with the Sequoia’s operations and Silversmith’s dealings that led the group to file default notices on the loan.
Cantor said he learned the Sequoia’s crew was owed more than $28,000 in back wages and Silversmith owed more than $100,000 on another loan, according to the affidavit.
Because Silversmith had defaulted on the loan, Cantor said the agreement allowed FE Partners to buy the Sequoia for $7.8 million, according to the affidavit.
Anju Timblo, a director of FE Partners, said in a statement this week that the family’s interest in American history prompted them to loan Silversmith the money for the Sequoia, once known as the “floating White House.”
“When my family learned that the Sequoia might be sold to a Russian firm and moved to St. Petersburg, we were delighted to invest funds to preserve the Sequoia and keep it where it belongs -- in the United States,” Timblo said.
The case is the Sequoia Presidential Yacht Group LLC v. FE Partners LLC, CA 8270, Delaware Chancery Court (Wilmington).
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