The historic USS Sequoia, the former presidential yacht that hosted JFK's last birthday party, is caught in a legal fight that threatens to hand the iconic American-owned ship moored in Washington to a wealthy Indian mining and shipping family.
In a move dubbed "dastardly" by lawyers for ship owner Gary Silversmith, representatives of the Timblo family, which last year agreed to lend the Sequoia $5 million, have seized on a legal technicality to grab the ship for nearly half of what it's worth. Unclear: What the family plans to do with the slice of Americana sold off by former President Carter during a frenzy of frugality.
Not so, says the family's representative, Richard Graf, a lawyer for FE Partners LLC. He claims Silversmith has mishandled the loan and as a result the Timblo family is exercising its right to buy the Sequoia outright for $7.8 million, or 60 percent of its value of $13 million.
At issue: a $5 million loan Silversmith needed to pay off liens and debt and repair the ship. In return for the loan, Washington-based FE Partners would receive interest of 3.75 percent over five years and 12 $10,000 charters a year for free. If Silversmith went into default during that time, FE Partners would be able to buy the ship for cheap.
Silversmith's lawyer, Larry Hutcher, filed papers in New York claiming FE Partners has only paid half the loan, putting the ship in financial distress and possibly triggering the sale clause. Hutcher suggested that was the plan all along.
FE Partners dismissed the claim late last week, calling Hutcher's charges "grossly inaccurate and without merit." A court hearing to evaluate the situation and potentially stop the ownership transfer is set for Thursday. The Sequoia's owners, who have another investor ready to step in, have offered to pay off FE Partners.
On Sunday night, they issued a lengthy statement that hinted of their complaints with the Sequoia's owners:
FE Partners, LLC, is a U.S. company headquartered in Washington, D.C., that was formed to provide capital to preserve assets of significant importance to the history of the United States. As such, we were delighted to loan funds to The Sequoia Presidential Yacht Group, LLC, the owner of the U.S.S. Sequoia.
FE Partners provided its first funds for the Sequoia in July 2012. Almost immediately after its initial funding, however, Sequoia crew members and employees notified FE Partners of liabilities and other matters that had not been previously disclosed as required under the loan documents. While looking into these matters on our own, and with the assistance of forensic accountants and other professionals we subsequently retained, we uncovered a troubling pattern of financial, tax and other irregularities.
FE Partners documented these findings and informed the owner of the Sequoia. Additionally, in order to preserve its rights under the loan agreements, FE Partners issued loan default notices--more than 35 to date--as allowed under the loan agreements.
Despite this behavior, Mr. Gary Silversmith and The Sequoia Presidential Yacht, LLC, filed a complaint against FE Partners, LLC, earlier this month in New York. The complaint is grossly inaccurate and without merit, and we intend to vigorously defend ourselves in court. FE Partners believes it has lived up to all its obligations under the loan documents, and is disappointed that Mr. Silversmith and Sequoia LLC have repeatedly failed to comply with the most basic terms of the loan agreements. In addition, FE Partners is even more disappointed that Mr. Silversmith and Sequoia LLC have resorted to litigation and the press to try to bully FE Partners into forgoing bargained-for rights, instead of simply rectifying their numerous ongoing defaults.
The Sequoia, built in 1925, is a familiar sight on the Potomac, now as a private charter boat often used for political fundraisers and entertainment for wounded veterans.