EXCLUSIVE: Kola Aluko plays ‘cat and mouse’ with US over seizure of his $80m yacht

The United States government is finding it difficult to seize Kola Aluko’s $80m yacht moored near Cancun, Mexico, despite a court order, TheCable can report.

The US District Court Southern District of Texas, Houston Division, had, on July 14, 2017, ordered the seizure of Aluko’s assets worth $144 million — including the 200-foot yacht famously used by Jay Z and Beyonce on vacation — in a money laundering case.

However, a company named Lightray, claiming to have bought over Aluko’s Henshaw Associates Ltd which owns the yacht, is stalling on the return of the vessel from Mexico for the order to be carried out, according to the US Justice Department.

The department has now returned to court, in Case No. 4:17-Cv-02166, to seek an order for the yacht, nicknamed Galactica Star, to be preserved and returned to US territory.

In court papers seen by TheCable, Deborah Connor, acting chief of the Money Laundering and Asset Recovery Section (MLARS), contended that the Galactica Star’s owner engineered a feigned or collusive Mexican lawsuit in an effort to keep the Galactica Star in Mexico and shield it from the Court’s arrest warrant.

‘SUSPICIOUSLY-TIME SUIT’

“Pursuant to 18 U.S.C. § 983(j), Plaintiff United States of America respectfully brings this application for a protective order to preserve and maintain the lead in rem Defendant in this action, the M/Y Galactica Star.  The Galactica Star, a 65-meter motor yacht originally purchased for more than $80 million, is currently moored near Cancun, Mexico,” the court papers said.

“As detailed below, the Galactica Star’s owner has, until recently, repeatedly failed to pay crew fees and other fees necessary to maintain the insurance and security of the vessel. By its own admission, this non-payment of fees has created an ‘imminent risk’ to the vessel. Even worse, there is strong circumstantial evidence that the Galactica Star’s owner engineered a feigned or collusive Mexican lawsuit in an effort to keep the Galactica Star in Mexico and shield it from the Court’s arrest warrant in rem.

“Notably, this is not the only time that a suspiciously-timed collateral suit has tried to encumber some of the assets that are at issue in this in rem action. On or about the same day that the Mexican lawsuit was filed, multiple bankruptcy actions were filed in the Southern District of Florida which had the effect of staying a foreclosure auction against an asset implicated in both this forfeiture case and a foreclosure action pending in New York state court. The bankruptcies, filed on or about July 3, 2017, were dismissed for cause on September 27, 2017, but not before the U.S. Trustee’s Office determined that they had been filed in bad faith and were “a fraud upon this Court.

“To protect and secure the Galactica Star in line with this Court’s arrest warrant in rem, the United States respectfully requests that Lightray Capital, LLC (“Lightray”)—the purported corporate parent to and sole director of the Galactica Star’s owner, Earnshaw Associates Ltd. (“Earnshaw”)—be ordered to cause Earnshaw to pay all necessary fees to maintain and secure the Galactica Star until it can be sailed into U.S. waters and placed in the custody of the Court. The United States further requests that Lightray be ordered to take all steps, through Earnshaw, to bring the Galactica Star into U.S. waters, including taking all available steps to overcome or dissolve the purported attachment in the Mexican lawsuit that supposedly forbids the Galactica Star from leaving Mexico.”

DISCHARGE DEBT

The justice department is of the opinion that Lightray, “as the purported sole director of Earnshaw”, is uniquely positioned to challenge or remove the order of attachment, which is the primary obstacle to bringing the Galactica Star to the United States.

“Lightray, as Earnshaw’s director, has—or should have—direct knowledge as to the legitimacy of the Mexican Lawsuit and the alleged debt that underlies it.  If the debt represents a real and valid obligation, Lightray, through Earnshaw, should discharge the debt so as to disencumber the Galactica Star and place it within the control and custody of this United States District Court. If the debt is not valid, Lightray, through Earnshaw, should take all steps to vigorously and swiftly contest the Mexican Lawsuit and, in particular, seek to lift or set aside the order of attachment,” they said.

“Alternatively, Lightray, through Earnshaw, could post a bond as security in the Mexican Lawsuit in lieu of the current attachment against the Galactica Star.  In short, Lightray, through Earnshaw, has multiple options for freeing the yacht and returning it to U.S. waters, and it should no longer be permitted to use the Mexican Lawsuit over a purported $6 million debt as an excuse to disregard the Court’s arrest warrant in rem against an asset purchased for $82 million, and which the United States alleges to be criminal proceeds. Rather, the Court should require that the company, in good faith, take all reasonable steps to defeat, set aside, bond around, or otherwise remove the order of attachment.”

The prosecutors are asking the court to order Lightray to “immediately pay all necessary fees to preserve, secure, and maintain the Galactica Star; and immediately take all available steps to bring the Galactica Star into the territorial jurisdiction of the United States, including providing a weekly accounting of its efforts to free the Galactica Star from the Mexican attachment.”

The suit was filed on January 9, 2018.

SEE FULL DOCUMENT HERE