A federal court in New York has rejected a Russian businessman’s challenge to the U.S. government’s efforts to confiscate a luxury superyacht that allegedly belongs to sanctioned Russian oligarch Suleyman Kerimov.
The decision brings the United States closer to taking ownership of the yacht — known as Amadea — through a legal procedure known as civil forfeiture.
The ruling likely represents the biggest victory so far in plans started under former President Joe Biden’s administration to seize assets of sanctioned Russian tycoons and use them to support Ukraine’s war effort.
On March 10, the U.S. District Court for the Southern District of New York ruled that Russian businessman Eduard Khudainatov did not have standing to challenge forfeiture of the yacht because he was not its owner.
And because no one else has claimed ownership, the U.S. Department of Justice will now pursue a judgment of forfeiture by default.
Khudainatov’s legal team plans to appeal the decision.
“The ruling is both legally and factually flawed, and we are confident it will not withstand appellate review,” Adam Ford, a lawyer representing Khudainatov and his company, said in a statement.
The DOJ declined to comment on the ruling.
U.S. prosecutors believe the 106-meter elite superyacht that is valued at over $230 million belongs to Kerimov, a senator, businessman and ally of Russian President Vladimir Putin.
The court also concluded in legal documents that the evidence suggests that after September 2021, Kerimov or his family exercised ownership of the vessel.
In 2018, the U.S. government imposed sanctions on Kerimov. The government later alleged he or people acting on his behalf made payments for repairs and upkeep of the yacht that passed through the U.S financial system — a violation of those sanctions.
U.S. law enforcement seized the Amadea in 2022. But the following year, Khudainatov, who is not under U.S. sanctions, claimed ownership interest, setting the stage for a legal battle that continues today.
The outcome of the case will be important not only for the true owner and Ukraine but also for American citizens.
As VOA reported in May 2024, U.S. taxpayers have spent more than $740,000 a month on the yacht’s maintenance. Last December, The Washington Post reported that servicing the yacht had cost the country roughly $30 million.
The court previously denied the DOJ permission to sell the yacht and convert it into cash, a move that would save the government money.
Battle for Amadea
In May 2022, a few months after Russia launched its full-scale invasion of Ukraine, the island nation of Fiji seized the Amadea at the United States’ request. It was later transferred to U.S. law enforcement.
The seizure appeared to be a major victory for Task Force KleptoCapture, a DOJ unit established by the Biden administration to enforce sanctions on Russian oligarchs.
But that victory turned out to be elusive.
Civil forfeiture allows law enforcement to seize assets — frequently drugs, cash, automobiles and houses — that have been used in or resulted from the commission of a crime. The legal procedure’s main advantage is that it does not require a criminal or civil judgment against the property’s owner.
But in the case of the Amadea, if Khudainatov is the yacht’s owner, then financial transactions made through the U.S. to service the yacht do not violate the sanctions order.
The DOJ considers Khudainatov a “straw owner” and alleges that he is the beneficiary owner of at least eight yachts and yacht projects — a fleet worth over $1 billion. Prosecutors say that stretches far beyond his financial means, and that the yachts belong to other people.
For example, the DOJ claims that Igor Sechin, the sanctioned CEO of Russian state-controlled oil company Rosneft, owns one of them.
Journalists have tied the Scheherazade, another superyacht from this fleet, to Putin. In May 2022, it was seized in Italy.
But proving that the Amadea belongs to Kerimov has been a challenge for the DOJ.
Prosecutors alleged that the yacht’s ownership was hidden behind several companies. They asserted that documents and testimony discovered during the DOJ’s investigation confirmed it was controlled by Kerimov.
Khudainatov’s legal team argued that U.S. law enforcement conducted a hasty, partial investigation before seizing the yacht. They alleged that the DOJ also pressured yacht personnel and witnesses to provide the testimony it wanted and selectively presented evidence to support its version of the story.
Among the evidence that Khudainatov’s legal team submitted is a sworn statement by Kerimov’s daughter Gulnara, claiming to have chartered the Amadea for a trip in early 2022 with her children, brothers and sisters, and their nannies and bodyguards. But she stated that her parents were not present on the yacht, and that she never owned it.
The U.S. government “resorted to desperate, strong-arm tactics to get the statements that fit their false narrative,” lawyer Ford said in a statement last month. “The government simply fabricated the allegations that Kerimov purchased the Amadea. It is owned by Mr. Khudainatov and always has been.”
Next steps
Stefan Cassella, a former federal prosecutor and expert on civil forfeiture, does not expect the case to be over anytime soon.
A month before the ruling on Khudainatov’s status, he told VOA that the standard strategy for resisting forfeiture typically consists of dragging out the proceedings for as long as possible to increase the costs for the government.
Cassella expected Khudainatov to appeal any ruling, a process he thought would take at least a year.
“Civil forfeiture is often mistaken to be a streamlined process,” Cassella said. “It is not. It is saturated with due process — and it should be.”
Additionally, DOJ priorities have changed since the start of the case.
On Feb. 5, Pam Bondi took office as the new U.S. attorney general. That same day, she sent a memorandum stating that the DOJ’s new priority would be the “total elimination” of drug cartels and transnational criminal organizations.
In the same document, she announced the dissolution of the KleptoCapture task force, the anti-kleptocracy team and the kleptocracy asset recovery initiative.
