What Actually Happens To Seized Russian Assets After Uncle Sam Snatches Oligarchs’ Toys?
Hopefully, we get to find out what the market is like for a slightly used Russian oligarch’s yacht.
Around the world, people have taken a pretty keen interest in one of the more novel aspects of the sweeping international sanctions slapped on Russia for invading Ukraine. A number of Russian oligarchs — the fiscally bloated beneficiaries of Russia’s corrupt system of cronyism — have been personally sanctioned. This means that their ridiculously expensive toys are up for grabs (for the right government authorities, anyway, but somewhat unfortunately not yet for private adventurers).
The U.S. Department of Justice finally got its hooks into one of these oligarchs with its first coordinated seizure under the new Task Force KleptoCapture. Following a joint effort between Spanish Guardia Civil officers and FBI agents, officials are now in possession of the 255-foot luxury megayacht Tango, owned (for the time being) by sanctioned Russian oligarch Viktor Vekselberg. Tango is reportedly worth upward of $90 million.
Of course, the burden of proof in a forfeiture proceeding is on the government, and unlike some stoner who gets caught with a thin brick of bills hidden behind the hubcap of his Toyota Camry, Russian oligarchs have the resources to fight back against forfeiture using the legal system. Expensive lawyers’ fingerprints are already all over this deal in the labyrinth of shell companies set up in an attempt to obfuscate Vekselberg’s ownership interest in the Tango.
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But let’s assume for a second that the DOJ successfully beats back the army of high-dollar legal mercenaries who are no doubt already waiting in the wings. What then? Does the U.S. government just get to keep a $90 million yacht, and if so, what does it actually do with it?
For the time being, it does not seem like any of these Russian superyachts are actually really going anywhere. Once “seized,” sanctioned Russians’ vehicles are typically impounded where they are, with their owners unable to access them or sell them, but with title remaining in the hands of the owners pending years of likely legal wrangling.
The government can, in theory, eventually take ownership of an oligarch’s impounded yacht though. To do so, prosecutors must prove that the yacht was used to commit a crime or represents the proceeds of illegal activity. This can be very difficult. Yet, there is hope: although the scope and breadth of the current sanctions against Russia are somewhat unprecedented, a number of previous high-profile and high-dollar forfeiture cases have been successfully prosecuted, albeit over the course of more than a decade in some instances.
If prosecutors can slog through a nearly indefinite legal fight and come out on top, the U.S. government becomes the proud owner of what is technically referred to in the maritime world as “one big-ass boat.” Presumably, the authorities would subsequently try to sell it. In the typical forfeiture case, the proceeds of sales of seized property go to law enforcement. However, there is a bipartisan bill presently working its way through Congress called the “Yachts for Ukraine Act.” If passed, this bill would allow the government to sell property seized from sanctioned Russians, and valued at more than $5 million, and then send the proceeds directly to Ukraine as cash aid.
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Hopefully, we get to find out what the market is like for a slightly used Russian oligarch’s yacht. Myself, I’m not so sure I’d want to be cavorting around on the open ocean in a craft yanked away from a presumably angry Russian who still has access to billions of dollars. Just don’t know that slapping a new name on the side is really going to be enough to disguise the origins of your new sea-phallus. Fortunately, even if the Tango’s $90 million MSRP is steeply discounted for a future forfeiture sale, this is not likely a problem I will have to spend a great deal of time thinking about.
So, the basic lifecycle for a Russian oligarch’s floating asset that is discovered by the authorities is sit there for years, hopefully be cleansed of barnacles while government lawyers battle the oligarch’s hired guns in court, and maybe someday get sold. If these yacht sales don’t work out though, I say we put the formerly Russian luxury vessels to use as part of the Staten Island Ferry fleet. Something about that feels really right.
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.
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