Judge eyes sanctions in presidential yacht spat

DOVER, Del. (AP) -- A Delaware Chancery Court judge is weighing whether to impose sanctions on attorneys for owners of the former presidential yacht Sequoia in a lawsuit against a lender seeking to seize the vessel.

Vice Chancellor Sam Glasscock III said Tuesday that he was deeply troubled by the actions of the Sequoia Presidential Yacht Group and its attorneys, saying the case "reeks of fraud and malfeasance."

But the judge is weighing whether to decide on sanctions himself or to send the matter to Delaware's Office of Disciplinary Counsel, a court agency that handles attorney discipline.

The 104-foot Sequoia, built in 1925, is the longest-serving presidential yacht in American history. It was the official yacht for presidents from Herbert Hoover through Jimmy Carter. Designated a National Historic Landmark in 1987, the Sequoia is currently docked at a marina about a mile south of the U.S. Capitol and is available for rental, at about $10,000 per charter.

The Sequoia group filed the lawsuit in February to prevent FE Partners LLC from exercising an option to purchase the yacht for $7.8 million under the default provisions of a loan provided by FE Partners. Sequoia claimed that FE Partners reneged on a $5 million loan agreement in a "dastardly" plan to take control of the historic vessel.

But faced with mounting questions about their conduct and the conduct of Gary Silversmith, head of the Sequoia ownership group, the plaintiffs' attorneys recently threw in the towel and agreed to a default judgment in favor of FE Partners. Glasscock recently rejected Sequoia's request for continued confidential treatment of the default motion, suggesting that Sequoia was simply trying to avoid embarrassment over its alleged conduct.

FE Partners now wants Sequoia's attorneys punished for a litany of alleged bad behavior, including fabrication and destruction of evidence by Silversmith and witness intimidation.

At a hearing Tuesday, Glasscock expressed particular scorn for the conduct of Sequoia attorney Larry Hutcher in deposing Michael Cantor, a principal of FE Partners. In the deposition, Hutcher asked if Cantor had told a former captain of the yacht that a criminal action had been filed against him in Delaware.

Attorneys for FE Partners said the question was a deliberate attempt to scare the former captain so he would not come to Delaware and offer damaging testimony against the Sequoia group. The former captain had been accused by Silversmith in a Washington police complaint of removing an item from the yacht, but no complaint was ever filed against him in Delaware.

Glasscock said Hutcher's question seemed to be an implicit warning to the former boat captain not to come to Delaware and "participate in the search of truth," which the judge said was "very disturbing indeed."

John Reed, an attorney for FE Partners, said the conduct by the Sequoia attorneys could tarnish the image of Delaware's Chancery Court as a world-renowned venue for corporate litigation if left unpunished.

"They made a mockery of the system here, and they created a lot of harm along the way," Reed said.

Hutcher did not appear for the hearing, but Malcolm Taub, a law firm colleague, said he was "saddened" by the allegations of misconduct and that their law firm did nothing wrong. Taub instead tried to blame Silversmith.

"We forgot to tell him not to throw away his computer. We forgot to tell him not to destroy the hard drive," Taub said sarcastically.

"You cannot rise above your clients," he added. "When you sleep with dogs, sometimes you wake up with fleas, and I think that's what happened."

Hutcher did not return a telephone message.

Silversmith said he did nothing wrong and was disappointed that attorneys for the law firm he hired would try to blame him.

"I'm not happy with people saying things, throwing me under the bus," he said.