On Thursday, a New York state judge will hear from both sides in a legal tug-of-war over the fate of the vessel. The District-based owner of the yacht claims that FE Partners, a company controlled by a wealthy family in India, offered him a loan with the intention of seizing it for a “fire-sale price.” The company being sued says it agreed to lend the money to keep the yacht from ending up in Russia and that it discovered undisclosed problems with the vessel’s management.
Gary Silversmith, who lives in Bethesda, filed the suit in New York State Supreme Court asking for a temporary restraining order and preliminary injunction that would bar FE Partners from buying the yacht, which is normally docked at the Gangplank Marina off Maine Avenue in Southwest Washington.
The company “is attempting to squeeze me,” Silversmith states in the suit. “Moreover, this American icon will probably be moved overseas, and it will no longer serve the American public and many worthwhile charities.”
The company, FE Partners, called the suit “grossly inaccurate and without merit.”
The imposing 104-foot, four-stateroom yacht offered an escape from the White House for every president from Herbert Hoover through Gerald R. Ford. In 1977, Jimmy Carter, who saw the yacht as an unnecessary extravagance, had it auctioned off — but not without criticism. From his “White House Diary”: “I was quite surprised when this sale aroused public and media criticism that persisted long after I left office. Some historians, political writers and political opponents claimed I was failing to honor the history and legacy of the U.S. Presidency.”
Silversmith, who fell in love with presidential lore at the age of 8 when he wrote a letter to Truman and the 33rd president wrote him back, purchased the yacht for $1.9 million in 2000. He spent millions more renovating the vessel and now uses it to entertain world leaders, run a charter business (rental price: $12,500 for four hours) and host charity events for the Boy Scouts and injured soldiers.
All of that is now at risk, Silversmith maintains.
Silversmith, according to his lawsuit, accepted a loan last year for $5 million from FE Partners, but received only about half of the funds. Within weeks, he began receiving default notices for alleged incidents that could affect the operation of the yacht. More than 35 notices were sent, with one charging that Silversmith failed to pay his crew on time and another claiming that guests brought prostitutes on board.
“All of these purported defaults were either trivial in nature, overblown, outright false, or in the event they contained even a hint of legitimacy, were remedied immediately,” the suit says.
But they opened a legal loophole for FE Partners: Instead of purchasing the vessel for $13 million, the agreed-upon price in the loan documents, it now has the right to buy it for $7.8 million.
“We’re stopping someone who acted in the utmost bad faith,” Silversmith’s Manhattan-based attorney Larry Hutcher said of the case. “What I really think is, they tried to steal his yacht.”
In papers filed with the court Wednesday, FE Partners paints a different picture: one of a company that tried to help a man who considered selling to a foreign buyer and wasn’t candid about problems with the yacht.
Michael Cantor, who owns FE Partners along with the Timblo family of India, says in court documents that Silversmith sent him a copy of an unsolicited letter from a Russian firm saying it wanted to purchase the Sequoia for $20 million, which would also cover its delivery to St. Petersburg, Russia.
“Mr. Silversmith explained that he thought the offer appeared serious and indicated that if it were serious he was inclined to accept it,” reads Cantor’s statement. “But he asked me to put together an alternative investor group which would be interested in keeping the Sequoia in the United States and willing to provide him with certain investment capital.”
FE Partners stepped in to serve that purpose, Cantor states, but soon after the papers were signed, the company discovered undisclosed problems with the Sequoia, including a history of not paying the crew on time and unpaid debt.
Silversmith’s lawyer says he never considered selling the yacht to a Russian company and sent the letter only to show a third party’s evaluation of the yacht’s worth.
In the suit, Silversmith outlines his success at finding a new lender and his desire to pay FE Partners back in full with interest. But instead of the company being “overjoyed,” he says, he received notice over Thanksgiving weekend that it intended to purchase the Sequoia at the reduced price, with “a hectoring closing note stating, ‘Hope you had a nice Thanksgiving!’ ”
The suit mentions one other group that stands to lose if the yacht is sold: a group of mostly Latino high school students from the District. Silversmith recently paired up with the Boy Scouts to create a Sea Scout troop, and the students were set to start work on the Sequoia this year.
Staff researcher Jennifer Jenkins contributed to this report.