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Growing and giving back Asset management and philanthropy for high net worth individuals

Volume 47


Trust the Volume 47

3 Editor’s Letter 4 Legal Briefs

News and views from the offices of Smith, Gambrell & Russell.

10 Trends in Family Philanthropy

How working with a specialist advisor can make family giving a more collaborative and harmonious process.

12 Smooth Sailing

Navigating the complex regulations surrounding yacht ownership and registration.

18 Supercar Acquisition

Practical solutions for financing or funding the acquisition of an exotic or supercar.

20 Finding Partners to Share the Private Jet

Options for overcoming the sometimes prohibitive costs of private aircraft ownership.

24 Blockchain in the Art World

The benefits and pitfalls of tokenizing premium-priced assets.

26 Finish Line: My Visits to America’s National Parks Japanese exchange attorney Shohei Suzuki’s personal travelogue.


&Russell, llp Attorneys at Law

1230 Peachtree Street, N.E. Promenade, Suite 3100 Atlanta, GA 30309-3592 Editor-in-chief

Dana Richens Editorial Advisory Board

Patrick Cain Brett Lockwood Jim Monacell Jim Porter SGR Marketing Team

Lee Watts Travis Robeson Jaleesa Smith Cheryl Walker Mollie Werner Sharon Williams Trust the Leaders is published on behalf of Smith, Gambrell & Russell, LLP by Fourth Element Creative. The information contained herein has been obtained from sources believed to be reliable. The content and information in this publication do not constitute legal advice, do not in all cases reflect the opinions of SGR or its attorneys and are not in all cases complete or current as of the publication date. This publication is not intended to and does not create an attorney-client relationship or provide legal advice or legal opinion. Legal advice should be obtained from one’s legal counsel.

Permission is granted to use and reproduce this publication in whole or in part for internal and personal reference, provided that proper attribution of authorship is given. Except for material in the public domain, this publication may not be further copied, modified, used or distributed, in whole or in part, in any form or by any means without the written permission of Smith, Gambrell & Russell, LLP. All other rights expressly reserved. © 2020 Smith, Gambrell & Russell, LLP. Leaders used with permission of Leaders Magazine, Inc.



Editor’s Letter Greetings! The editorial board had a great time pulling together this issue of Trust the Leaders. Upon thoughtful consideration of our magazine readership, we have come to appreciate that many of our clients have personal interests and face complex financial decisions unrelated to the critical legal issues they face with their company or organization. For this reason, our clients often also rely on SGR for legal advice in philanthropy, private wealth, managing assets and investments. We developed this issue with those clients in mind.

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Our attorney blogs cover the following SGR practices:

We begin with an important look at family philanthropy. Laura Wartner, the head of SGR’s Private Wealth Services, describes an emerging trend in family philanthropy away from the “peanut butter” approach of widespread giving in favor of targeted, deep financial contributions – a trend driven in part by the desire of the millennial generation to be impactful in their youth. Other features in this issue highlight some of the specialty practices of our lawyers. Walter Hinton and Jonathan Russell master the puzzle of yacht acquisition and financing. Jonathan, Pete Barlow and Pref Ramirez explain the financial and logistical challenges of purchasing exotic or supercars. Tom Stalzer and Chris Raymond address the concept of partnering to own a private jet. And Sasha Bau and Morgan Manley describe the growing use of blockchain in the purchase and tracking of fine art. Finally, if you find yourself in the winter doldrums, you’ll enjoy the Finish Line piece by Shohei Suzuki, an “exchange” attorney from Japan who recently spent seven months working with SGR’s Japan Team in Atlanta. Shohei recounts his visit to 10 U.S. national parks and other national monuments – an impressive feat by any standard but made all the more amazing in that he traveled mostly by car. Road trip, anyone? Enjoy the issue!

Appellate Construction Co-op Condo Estate Planning Franchise Health Care Insurance Intellectual Property Israeli Litigation Sustainability Technology

Dana Richens Editor-In-Chief





A New Tool in Going Private Make the open market stock repurchase program work for you SGR advised its client, SunLink Health Systems, Inc., in obtaining the first approval by the U.S. Securities and Exchange Commission TIM (SEC) of the use of an open ELDER market stock repurchase program under circumstances subject to the SEC’s “going private” rules. There are many reasons why it may make sense for a public company to go private, including to a) save legal, accounting and compliance costs; b) minimize the diversion of management time from operating matters and allow it to focus on long-term goals and objectives; and c) reduce or eliminate the obligation to



disclose competitive business information. However, many traditional methods of seeking to go private, such as tender offers, mergers and reverse stock splits, can have substantial financial and other costs without any assurance of success. The going private rules contemplate four distinct “going private transactions,” such as a going private transaction requiring (1) the filing of solicitation materials or an information statement (a merger, reverse stock split, short-form merger, etc.); (2) the filing of a registration statement; (3) a tender offer; and (4) any other going private transaction involving the purchase of securities not covered by (1) through (3). Historically, the SEC viewed purchases

pursuant to a stock repurchase program as individual transactions requiring the filing of a Schedule 13E-3 for each transaction and notice to shareholders. This requirement effectively eliminated the ability of an issuer to implement a stock repurchase program either as a tool to go private or under circumstances where the number of holders of record of the issuer is sufficiently low that one or more purchases of stock could be viewed as a “step” that could give the issuer the ability to go private, such as reducing the number of record holders below 300. While several issuers over the past two decades have attempted to obtain SEC approval for the use of a stock repurchase program in the context of a potential going private transaction, the SEC has not previously provided such approval. In the case of SunLink, SGR persuaded the SEC that, in the context of an open market stock repurchase program, the “transaction” for purposes of the going private rules should be viewed as the program rather than individual purchases in much the same way that a tender offer is viewed as the going private transaction and not the individual tenders. The new SEC position will allow issuers to implement open market stock repurchase programs either as part of a specific going private strategy or without fear that individual purchases under such programs will inadvertently violate the going private rules.

Tim Elder is a member of SGR’s Corporate Practice. He practices general corporate law with particular experience in corporate finance and securities, including IPOs, secondary offerings and tender offers.

REPRESENTATION AND LITIGATION SGR manages regional aircraft portfolio sale SGR served as lead legal counsel to Avolon, an international aircraft leasing and management company, in its sale of a portfolio of 49 regional jet aircraft to Falko Regional Aircraft Limited, an aircraft leasing and asset management company. The portfolio, which includes 28 Embraer EJet and 21 Bombardier CRJ aircraft, is on lease to nine separate airlines around the world. The SGR legal team consisted of members of the Global Transport Practice located in several offices, including Marc Latman and Jeremy Schara in New York, Mark Turnbull, Gareth Hawes and Jonathan Russell in the UK, Shani Fisher in Los Angeles, and paralegals Therese Callahan and Zara Evans.

Shopping center acquisitions in Southeast

Employment claim defeated

Sean Altschul, Dexterrie Ramirez and Matt Moore of SGR’s Real Estate Practice served as legal counsel to Big V Property Group in three of its recent shopping center acquisitions. Joe Mandarino of the Tax Practice also provided assistance with the Harbison Court (Columbia, SC)

Pat Hill, Yash Dave and Ian Jones of SGR’s Labor and Employment Practice successfully defended an SGR client in a lawsuit by a former employee alleging age and race discrimination and retaliation in violation of Ohio law. The former employee alleged that his new manager discriminated against him on the bases of his race and age and that he retaliated against him by terminating his employment after he allegedly complained of discrimination. On the eve of trial, the court granted SGR’s motion for summary judgment and dismissed all of the former employee’s claims. The court held that there was insufficient evidence to support the age and race claims. In addition, the former employee failed to demonstrate a causal connection between his discrimination complaint and his termination as needed to support his retaliation claim, especially in light of his well-documented performance issues.

and Promenade at Northwoods (Charleston, SC) acquisitions. Eugene Bryant of the Real Estate Practice and Jonathan Hurt of the Corporate Practice assisted in the $35.9 million shopping center acquisition of Westside Centre (Huntsville, AL).




ATTORNEYS IN THE NEWS Bikoff appointed Chair of ABA Division Jim Bikoff has been appointed Chair of the Trademarks & Unfair Competition Division of the American Bar Association (ABA) Section of Intellectual Property Law (ABA-IPL) for the 2019-20 association year. A part of the ABA and the world’s largest organization of intellectual property lawyers, the ABA-IPL

Section is a very respected and influential voice of the IP bar. Section leaders provide thoughtful consideration on emerging issues that shape and influence the views and policies advocated, and encourage the development of relevant and timely programming and publications dedicated to those issues.

New SGR labor and employment seminars SGR will host Workplace 2020 “Going the Extra Mile,” its annual labor and employment seminars, in April. Employment law, ERISA and OSHA attorneys will speak to more than 400 employment law and human resource professionals to share updates and recent developments that affect the workplace. To sign up to receive more information about our complimentary employment law seminars, email us at: The schedule for the 2020 seminars is:

Late SGR partner honored by namesake award The State Bar of Georgia Environmental Law Section announced the renaming of its annual Lifetime Achievement Award to honor the late James H. Bratton, Jr. The award is given annually to one honoree for high achievement, professionalism and dedication in the area of environmental law. Mr. Bratton, a partner with SGR for more than 50 years and founder of the State Bar’s Environmental Law Section, passed away last year at the age of 87.



• Jacksonville – Thursday, April 16 • Los Angeles – Wednesday, April 22 • Atlanta – Thursday, April 30

In Brief... Members of SGR’s Intellectual Property Practice in Atlanta recently hosted a pro bono clinic for solo inventors. Dr. Sarah Sharman, Matt Warenzak and Michael Riesen worked with staff from Georgia PATENTS to conduct intake interviews, prior art searches and informative discussions with inventors regarding their inventions and the patent process at the U.S. Patent and Trademark Office. Laura Miller Andrew, a member of United Way of Northeast Florida’s Tocqueville Society and Community Investment Council, has been appointed as a Stein Fellowship mentor to a member of United Way’s young professionals group, Atlantic Circle. Laura will also supervise the mentoring of a middleschool student through Achievers for Life, a collaboration between United Way and Big Brothers Big Sisters of Northeast Florida. Laura is a member of SGR’s Executive Compensation and Employee Benefits and Health Care practices.


Contractor dispute settled

SGR team guides successful transactions SGR’s Mergers and Acquisitions Practice attorneys Jay Schwartz, Nick Rueter, Julie Sebastian and Nick Flint, along with Brandon Sherlinski of the Employee Benefits and Executive Compensation Practice, represented GigaMonster, a leading fiber-based internet provider in the multifamily industry, in a substantial capital raise for its parent company. Jay Schwartz, Julie Sebastian, Nick Rueter and Nick Flint, along with

Eric Mandus and Michael Tyner, Jr. of the M&A Practice, also represented The Adecco Group, a leading provider of temporary staffing, in connection with its definitive agreement to sell Soliant Health, its U.S. healthcare staffing business, to Olympus Partners for $612 million. Tom Hong and Jonathan Hurt handled the Hart-Scott-Rodino filings. Joe Mandarino of the Tax Practice and Brandon Sherlinski also assisted.

Pinnacle Cranes acquisition deal SGR served as legal counsel to Tecum Equity Partners in its purchase of Pinnacle Cranes. Tom Hong, Nick Rueter, Audria Crain, Nick Flint and Heiko Gruenwald of the M&A Practice, and Brian Hall, head of the Finance, Banking and Restructuring Practice,

served as counsel. Brandon Sherlinski of the Employee Benefits and Executive Compensation Practice, Phillip Hoover of the Environmental Practice, Matt Warenzak of the IP Practice and Matt Moore of the Real Estate Practice also assisted in the deal.

Peter Crofton of Atlanta’s Construction Practice and Steven Vickery of the Atlanta Litigation Practice recently helped an elderly homeowner recover her money from a contractor who kept it without repairing her home. When Peter and Steven first got involved, the contractor not only refused to return the benefits of the homeowner’s insurance claim, but the contractor’s lawyer even demanded that she owed the contractor money. Ultimately, Peter and Steven filed suit on behalf of the homeowner, seeking punitive and statutory treble damages under several theories. The contractor moved to dismiss the complaint, but the court quickly ruled in favor of the homeowner, denying the contractor’s motion to dismiss in its entirety. After all counts of the complaint survived the contractor’s motion to dismiss, the contractor sought to settle the case. Peter and Steven successfully negotiated a refund of the entire amount sought from the contractor. Thanks to SGR’s attorneys, the homeowner can now repair her home and get back to enjoying family in the comfort of her home.




SGR attorneys appointed to INTA committees Six SGR attorneys have been appointed to International Trademark Association (INTA) committees for the 2020-21 term. INTA appoints committee volunteers to carry out trademarkrelated initiatives and programs. ⊲ Jim Bikoff (Washington, D.C.) – Data Protection Committee ⊲ Elizabeth Borland (Atlanta) – Brand Restrictions Committee ⊲ Holly Lance (Washington, D.C.) – Public Information Committee ⊲ Richard Rivera (Jacksonville) – The Trademark Reporter Committee ⊲ Kate Rowe (Jacksonville) – Brands for a Better Society Committee ⊲ Scott Woldow (Washington, D.C.) – Trademark Office Practice Committee & United States Patent and Trademark Office Subcommittee Chairperson


Erin McCallum The SGR attorney talks community, family entrepreneurialism and the evolution of drone law

What did you study in college and why? I majored in public relations at the Grady College of Journalism and Mass Communication at the University of Georgia. I’ve found the skills that I learned during my public relations training to be helpful in my law career. I learned how to organize and synthesize complicated information in a manner that is clear and easy to understand. I practiced different methods of communicating and working with clients, including how to identify their specific needs. I also learned the importance of being nimble and flexible in this age of rapidly evolving information and technology. These are all skills that translated well into my corporate and transactional law practice, and especially into my growing drone law niche practice. Why did you go to law school? I wanted to learn more about the “rules” of our society, and how to help people and businesses navigate those rules. I also saw law school as a great opportunity to learn new skills. I chose the University of Georgia School of Law not only because it is one of the best law schools in the Southeast (Go Dawgs!), but also because of its impressive selection of clinics and externships, unique class offerings, and close connection with the Atlanta legal and business market. What is the best career advice you have received? The advice that has been the most beneficial to my career so far is this: get involved



with your community with the purpose of developing meaningful relationships. There is only so much you can learn and so far you can grow if you focus only on your day-today tasks. Instead, you should take the extra time to put yourself out there and meet new people. Find trade associations or local events relevant to your work. Try to connect with each person that you meet and don’t let yourself leave without scheduling at least one follow-up meeting with someone new. Ask thoughtful questions and listen carefully to the answers that you receive. By building a network of relationships outside of your everyday bubble, you feel more enriched and connected with your work. As an example, I chose to become involved with the Unmanned Aerial Systems (UAS) Working Group hosted by the Georgia Department of Economic Development to connect with the local drone law community. I’ve developed several important relationships with other members of this group who are engaged with the FAA, start-up technology companies and UAS

Changes to U.S. drone law will help reduce the risk of collisions with aircraft.

consulting businesses. These relationships have taught me more than I could learn on my own about the drone community, and have added depth to my drone law practice. If you were not an attorney or couldn’t practice law, what would you want to do? I come from a family of successful entrepreneurs and believe it would be an exciting experience to start my own business. Entrepreneurs are a unique type of people who are able to think big and think differently. They are able to identify a problem and make it their mission to solve that problem. Entrepreneurs who are willing to take a risk are often the ones who change our society for the better. I believe what draws me to the drone law community is the opportunity to work with people who are finding ways for drones to improve our society. Some examples of this include enabling a contractor to use drones rather than people to inspect dangerous construction sites. Or, equipping a city with a fleet of drones that could be immediately dispatched in an emergency to evaluate the situation while rescue vehicles are in transit. Tell us about the most interesting drone law question you’ve handled. The most common question I receive about

Entrepreneurs who are willing to take a risk often are the ones who change our society. drones is whether it is legal to shoot down a drone flying over your property. The quick answer is no. However, the most interesting question I’ve received is whether it is legal to use a drone to fly around a banner advertisement promoting e-cigarettes. It was interesting to consider a society in which drones carry advertisements and other messages right outside your window. Other than complying with the Part 107 regulations (i.e., not flying a drone over people, flying within the operator’s line-of-sight, etc.), I did not find anything in the current drone regulations that would prevent the client from moving forward with its plan. How will drone law evolve in the future? Drones are such a rapidly developing technology that drone law is still like the Wild West. Drones operated for commercial purposes are currently regulated first by the FAA (i.e., Part 107), with applicable state and local regulations filling in the gaps. Part 107 has been beneficial in addressing some safety concerns with drones, but there are

still several open questions regarding privacy, management of airspace and how to reduce overall operational liability. Per the FAA, the next big change will be a central database that will track the flights of each drone along with other aircraft operating in the airspace. This should address some of these open questions because it provides transparency as to when and where drones are operated, helps to manage the flight path of competing aircraft, and can prevent potential collisions or other disasters. Commercial operators will likely be interested in learning how to comply with the requirements of this database, as well as understand how to reduce other liability unique to drones. What have you most enjoyed about working at SGR? I have been at SGR since the beginning of my legal career. It is a great place to learn and grow. SGR provides all of the resources its attorneys need to pursue a new practice area or build on an existing one, with our clients’ evolving needs as the top priority. I look forward to developing my practice at the firm. Erin McCallum is a member of the Firm’s Corporate and Global Transport practices, with a particular focus on drone law.



Trends in Family Philanthropy The role of the philanthropic advisor and the search for impact



Family Philanthropy


Donors are increasingly focusing on charitable giving that goes deep, not wide.

any families, especially those with high net worth, are deeply interested and involved with philanthropy. Over the last several years, such families have transformed their vision of philanthropy from giving to a number of charitable organizations to strategic philanthropy – funding particular projects for charitable organizations. One of the primary reasons for this transformation is that project-specific giving is more meaningful for donors and the impact of such giving is easier to measure. Donors increasingly want to know that their gifts are making an impact. For example, a few years ago, I had the privilege of assisting a client in making a major gift through her family foundation. Prior to his death, my client’s husband received wonderful care from a palliative care physician at a local hospital. My client was so impressed that she wanted to help make palliative care more readily

available. In consultation with the hospital and the chief of the palliative care department, she received information about a number of projects that would help the hospital transform its palliative care practice. The client chose to make a large donation for the specific purpose of enabling the hospital to expand its outpatient programs for palliative care. According to Bruce DeBoskey, founder of The DeBoskey Group, a national philanthropic advisory team based in Denver, many donors are shifting away from the “peanut butter” approach to giving – spreading donations thinly over a wide variety of charitable causes. Instead, donors are increasingly focusing on charitable giving that goes “deep, not wide.” They are narrowing their focus to a limited number of causes that fit within carefully selected charitable goals. I recently had the opportunity to speak with Bruce about this trend and what may have influenced this shift.

He believes a number of factors have contributed to it, including:

The information age: The accessibility of the internet means more information about charitable causes and organizations is readily available than ever before, leading to more transparency. The involvement of younger generations: The oft-maligned

millennial generation does not want to wait until they are old and gray to get involved in charitable giving. They want to get involved now and become personally engaged, not just write a check. They want to do something that has an impact. Laura Wartner is head of SGR’s Private Wealth Services. She specializes in family business and wealth transition planning, charitable planning, and estate planning and probate administration, including preparation of wills and trusts and the preparation and filing of federal estate and gift tax returns.

THE ROLE OF A PHILANTHROPIC ADVISOR How do donors, particularly families with multi-generational members who have different philanthropic goals and ideas, decide what organizations and projects to support? Philanthropic advisors can provide assistance in the following ways:


Help donors understand the difference between “peanut butter” giving and “deep, not wide” giving. By helping donors focus on a limited number of causes, they have the ability to be transformational, not only for the charitable organization, but for the donors themselves.


Particularly in multigenerational families, the

advisor can assist the family in setting a philanthropic “table” where everyone is welcome, has a voice and can be heard. The advisor facilitates discussions about charitable goals and values, helping the family find causes in common they all care about and can get excited about supporting.


Assist donors and their families in developing a mission statement that fits the whole family and helps define its philanthropic goals. The mission statement serves two important purposes – guidance for the donors about what projects to say “yes” to, and guidance about what projects to say “no” to.


Help the family find nonprofit organizations they may want to support that fit within their mission statement, and then work with the donors to develop a strategic partnership with the selected organization. Such a partnership helps provide clarity so both the donor and the donee organization know what to expect.


Assist donors to evaluate and measure the impact of their contributions and determine what has been accomplished. The processes used by a philanthropic advisor in assisting donors – especially multigenerational families – are usually not quick and easy.

An advisor will often spend a lot of time with the family and interview each member individually. They seek to get to know the family and understand its dynamics. They will hold meetings, encouraging the family to explore what is important to them and what they want to accomplish. This may take many weeks or even months. Those families who have used the services of a philanthropic advisor, however, generally believe the time and effort is worth it because of the results achieved: more impactful giving, the opportunity for transformational change for both donors and donees, and greater satisfaction for all.





Yacht Acquisition

Smooth Sailing Navigating the potentially turbulent waters of yacht acquisition, ownership and financing


acht acquisition entails many decisions, including how to finance and register the newly acquired vessel. Any owner must take various considerations into account, including the manner of documenting the yacht. For beneficial owners who are U.S. citizens, federal documentation through the U.S. Coast Guard is often the most favorable option, but there are alternatives.

U.S. Coast Guard Vessel Documentation JONATHAN RUSSELL

USCG documentation is based in the first instance on measurement of the vessel’s tonnage. Vessels under five net register tons are not eligible for USCG documentation. Vessels of five NRT or greater that engage in the coastwise trade or fisheries in U.S. waters are required to be federally documented. The “coastwise trade” includes carriage of passengers or goods for hire between points in the U.S. including its territorial sea and exclusive economic zone, as well as engaging in towing, dredging and salvage work in the U.S. A yacht that is chartered out with crew is deemed to be engaged in carriage for hire and needs a coastwise endorsement to engage in such activity domestically. But a U.S.

vessel may conduct crewed chartering between U.S. and foreign ports with just a “registry” endorsement. The “registry” trade means, roughly speaking, transport of passengers or cargo between U.S. and non-U.S. destinations. Generally, to obtain U.S. documentation with a coastwise or fisheries endorsement, a vessel is required to have been built in the U.S. For the coastwise passenger trade, the Maritime Administration may waive the U.S. build requirement if no more than 12 passengers are carried. Vessels used solely for recreational purposes are not subject to this U.S. build requirement. For a vessel to be federally documented, generally all of its owners must qualify as “citizens of the United States” – a term defined under varying criteria depending on the persons and entities involved, as well as equity ownership and control. However, entity-owned vessels with solely recreational or registry endorsements appearing on the Certificate of Documentation (COD) may be owned beneficially by up to 50% non-citizens for partnerships and 100% for corporations, subject to requirements regarding entity representatives and limits on power to



Yacht Acquisition



Any vessel is subject to local regulation by the nations where it travels – the “port states.” determine the use and control of the vessel.

Superyacht Registration in the U.S.

Generally, U.S.-documented vessels over 300 gross register tons (GRT) in use outside inland waters are required to undergo annual USCG inspection under safety rules developed for merchant vessels over 500 GRT. This requirement is difficult or impossible for yachts to meet. Further, U.S. law requires U.S.-documented vessels used in coastwise or fisheries service to be commanded and crewed by U.S. citizens – a more expensive proposition compared to international manning. Faced with these rules, U.S. owners registering large yachts have mainly used foreign, “open” registries that do not impose such restrictions. However, effective in 2019, Congress enacted a partial exemption to the inspection requirement, applicable only to recreational-use vessels.


WHAT IS THE RED ENS IGN GROUP? The Red Ensign Group is made up of the international shipping registries operated by the United Kingdom, three Crown Dependencies (Isle of Man, Guernsey and Jersey) and nine U.K. Overseas Territories (Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, St Helena and the Turks and Caicos Islands). These collectively form the British Register.


Consequently, yachts over 300 GRT used solely for recreational purposes may be documented under U.S. flag without having to comply with the more onerous inspection or manning rules. The vessel must comply with specialized safety rules for large yachts to be adopted by the USCG; in the meantime, compliance with the existing Large Yacht Code of the U.K. Maritime and Coastguard Agency (MCA) will suffice. For superyachts over 300 GRT, timechartering or voyage-chartering in U.S. waters would impose the more onerous inspection and manning rules (bareboat chartering – i.e., without crew – should not trigger those rules, as it is consistent with recreational use). Also, an owner’s desire to engage in chartering in locales outside the U.S., such as the Caribbean or the Mediterranean, would militate in favor of choosing an open registry, because of the applicability of the U.S. Passenger Vessel Safety Act of 1993 to chartered, U.S. documented vessels wherever located, and favorable VAT treatment of open registry vessels in EU waters under the “temporary admission” regime.

Open Registries

Over the years, the manning

⊲ U.S. Flag Financing – Preferred Mortgage Often another reason for documenting a yacht with the USCG is greater availability of loan funds for the acquisition. Creditor liens can outrank a lender’s security interest in a vessel. But owners of U.S. vessels may grant an enhanced mortgage lien called a Preferred Ship Mortgage, which outranks maritime liens for “necessaries” supplied to the vessel by trade creditors, as well as all nonmaritime liens such as tax liens and judgment liens. With this enhanced security available, lenders often can be more readily attracted to making loans on U.S. documented yachts than State-registered or open registry yachts. ⊲ Financing – Open Registries Unlike the U.S. and the Republic of the Marshall Islands (RMI), there is no “preferred” mortgage in the Red Ensign countries, and after-arising maritime liens will rank higher than a registered mortgage. But it should be noted that a mortgage will usually have priority over statutory liens – that is, unless a claim has been made and proceedings issued against the vessel that predate the mortgage. As for financing sources, there are a number of banks with specialist departments who are very active in yacht finance. Key players in the market include Lombard Asset Finance (though not for yachts over 40m in length), Credit Suisse AG, BNP Paribas, Close Brothers, Bank of America and Zenith Bank.



requirements of the U.S. and other major nations, along with other issues affecting costs of operating merchant vessels and yachts, have motivated some maritime nations to open their shipping registries to foreign nationals, for example, Liberia and Panama. Today the open registries have large fleets of merchant vessels and yachts, which each open registry regulates as the “flag state.” Any vessel also is subject to local regulation by the nations where it travels – the “port states.” In the North Atlantic basin, most maritime nations belong to the Paris Memorandum of Understanding on Port State Control. The objective of the Paris MoU is to assure that vessels visiting member states comply with international standards on safety, security, environment and crew working conditions. The Paris MoU publishes white-, gray- and black-lists of flag states. To minimize risk of one’s yacht being boarded and detained by a port state, it is advisable to register with an open registry that appears on the Paris MoU white-list. Open registries on the


white-list include the Isle of Man, the Bahamas, the Republic of the Marshall Islands, the Cayman Islands, Gibraltar, Malta and Bermuda. Selected open registries are discussed at right.

The puzzle of yacht acquisition and financing does have logical solutions, but those solutions are not one-size-fits-all.


Parties acquiring and financing yachts face choices that may seem bewildering. But good assistance is available from seasoned brokers, consultants and other professionals on all fronts, including selection of the vessel type and size,


Recreational vessels are not subject to the U.S. build requirements.

pre-owned or newbuild, ownership structures, flag state, crew complement, part-time chartering or private use only, financing options, berthing location, and tax management. Ultimately, the owner’s purposes for the vessel, as well as the regions where it will be operated, should mainly drive the selections to be made. The maze of yacht acquisition and financing does have logical solutions, but solutions are not one-size-fits-all.

Walter Hinton is a member of SGR’s Global Transport Practice, where he specializes in aviation and maritime transactions. Jonathan Russell is a member of SGR’s Global Transport Practice. He specializes in the sale, purchase, financing and ownership of corporate and private aircraft, and superyachts.

Yacht Acquisition

Economic Area (EEA). In general, there are no nationality restrictions for officers on Bermudian vessels.



n alternative to U.S. Coast Guard Vessel documentation, the Red Ensign Group offers safety and quality across the British fleet. Along with the United Kingdom registry, several of the registries in this article belong to the “Red Ensign Group” of British shipping registers. The Red Ensign jurisdictions are popular choices based on political stability, reputation for efficient management and application of British maritime rules. A significant benefit is the ability to seek assistance from any British Embassy or Consulate in the world. ⊲ THE U.K. FLAG The U.K. flag is not as popular as many of the other Red Ensign registries, mainly because it does not afford the same potential tax efficiencies as many of the other Red Ensign flags. The U.K. Register is open to individuals and bodies corporate from Britain, its Crown Dependencies and Overseas Territories, EU member states, and the Commonwealth, among others. ⊲ BERMUDA Bermuda operates a Category 1 register (unlimited vessel size). For Bermuda registration, at least 33/64ths of the vessel interests must be owned by individual citizens of Britain or British dependent territories, or bodies corporate registered in the U.K., a U.K. dependent territory, the EU or the European

⊲ BRITISH VIRGIN ISLANDS BVI is tax neutral and outside the scope of EU VAT. Eligible for BVI registration are citizens of and bodies corporate formed in, among others, the BVI, the U.K., Crown Dependencies and Overseas Territories, and EU and EEA countries. ⊲ CAYMAN ISLANDS According to statistics from the Cayman Islands Shipping Registry (CISR), a Category One British Registry, it has the largest register in the flagged superyacht market. The CISR permits companies formed in, and individual citizens of, the EU and EEA as well as the U.S. and Canada to register Cayman vessels. Yachts registered with the CISR as pleasure yachts may be granted a license to cruise in United States waters. Owners sometimes change their Cayman registrations between commercial and pleasure depending on whether U.S. private cruising or foreign chartering is being pursued.

A superyacht displaying a Red Ensign flag.

A private yacht may be chartered out for up to 84 days in any calendar year, subject to compliance with certain safety and manning rules. Commercial yachts must comply with the RMI commercial yacht code. Private yachts are eligible to obtain U.S. cruising licenses.

⊲ MALTA Malta is a popular EU flag for superyacht registration, in part because its registry has been developed in tandem with tax legislation aimed at encouraging owners to choose the Maltese flag. Yachts under the Maltese flag may be registered by bodies corporate or entities irrespective of nationality, or by EU citizens. ⊲ MARSHALL ISLANDS The RMI is a U.S.-style jurisdiction whose registry maintains 28 offices in many parts of the world. Owners of yachts registered in the RMI may be business organizations formed under RMI law or “foreign maritime entities.” Yachts are registered as either “private” or “commercial.”



Supercar Finance

Supercar Acquisition Structuring the finance for the purchase of an exotic or supercar




cquiring an exotic or supercar can involve a substantial financial commitment. As with any high-value asset, there are many specialist companies seeking to provide assistance, especially financial assistance. This abundance of resources can be beneficial for potential purchasers, who can take advantage of the breadth of choice and competition in a congested marketplace. Finance providers have developed new products with a host of useful features, but they also come with conditions of which purchasers need to be aware. One might think that owners of supercars don’t require the use of finance to acquire such trophy assets, but these purchases frequently are financed. After all, why tie up large amounts of cash in a potentially depreciating asset when you could be using that money to generate returns that cover the repayments? According to the podcast This is Money, JBR Capital, a leading prestige car finance provider in the U.K., says that by financing their luxury vehicles, the uber-rich can avoid spending large lumps

of cash. According to JBR Capital, “In many cases, these are entrepreneurs and business owners who have strong asset wealth but don’t necessarily meet the tick-box approach of lenders, as they may keep a relatively low cash flow or continually put their readily available cash into investments and assets.” SGR regularly advises its high net worth clients about the ins and outs of acquiring high-value cars, whether purchasing to add to a collection or to invest and eventually “flip” the vehicle. Financing commonly takes the form of hire purchase or lease purchase.

Hire Purchase

An installment plan, the amount financed is the difference between the deposit paid and the purchase price. Repayments are calculated based on the number of months over which the debt is to be repaid. Title passes to the buyer once the final installment of the financed amount is paid. This finance method is popular given its straightforward nature and the relatively large number of finance providers.

Lease Purchase

This finance method is commonly used for classic car finance and is characterized by a low monthly repayment profile and a balloon payment at the end of the finance period. If the purchaser has chosen wisely, a quality classic car can be expected to gain in value, such that the balloon payment at the end of the term is covered when the car is flipped. ⊲ SGR also assists clients in other facets of a vehicle purchase transaction. These include purchasing options to acquire limited edition supercars, structuring the acquisition to minimize or defer tax (such as VAT), finding advantageous storage venues (such as tax-free zones or freeports), and making shipping arrangements. Jonathan Russell is a member of the Firm’s Global Transport Practice. Pete Barlow heads SGR’s Global Transport Practice. Pref Ramirez is a member of the Corporate and International practices.


SECURING A FINANCIAL INTEREST IN AN INTERNATIONAL VEHICLE SALE The logistics of acquiring and registering an exotic car can be complex, as demonstrated by a transaction that SGR’s Jonathan Russell recently handled on behalf of a New Zealand-based financier. Early in 2018, I was contacted by a financier from New Zealand whose client had borrowed against a very rare Aston Martin. The client was looking to sell the car and had determined that to obtain the highest sale price, the car should be transported from New Zealand to London for sale in London’s


Mayfair. The financier was very concerned that, by allowing the car to leave New Zealand, it would be jeopardizing its ability as a secured lender to repossess the car should the owner default under the terms of its financing. Or, even worse, the owner could potentially sell the car and fail to repay the debt.  SGR advised the financier on how to take a security interest in the car while it was in the U.K., provided guidance on registering its interest under the terms of various insurance policies, and established an escrow payment mechanism to ensure the


outstanding debt was repaid at the time of sale. Seemingly all quite simple … except for the fact that the legislation in the U.K. was slightly out of date, to put it mildly, with respect to securing highly mobile, high-value assets. The security instruments available to the financier were contained in the Bills of Sale Act (1878) and an 1882 amendment. As the principal legislation was more than 140 years old, it did not easily translate to a security interest in a multi-milliondollar supercar being transported from New Zealand to London for

sale. The provisions of the Act were so archaic they required that all documents had to be signed in London before an officer of the court (legislation to amend and modernize the Bills of Sale Act 1878 had been delayed to due to the ongoing legislative meltdown caused by Brexit). This requirement meant the car owner had to fly to London to sign the security documentation. Once all obstacles had been cleared, the car arrived in the U.K. and sold for well above its expected asking price. The owner and financier parted company on good terms.

Why tie up large amounts of cash in a potentially depreciating asset when you could be using that money to generate returns that cover the repayments?



Private Jet Ownership



Finding partners to share the private jet Navigating Federal Aviation Regulations to find partners to share the significant costs of owning a private jet



wning a private aircraft is a wonderful time-saver and can be an effective business tool, but the cost of ownership can be significant or even prohibitive. Broadly speaking, aircraft costs can be categorized as either fixed or variable. Fixed costs are those that will be incurred regardless of the level of aircraft utilization, such as costs for hull and liability insurance, hangar space, maintenance tracking software and ad valorem property taxes, as well as periodic costs, such as engine overhauls and hot section inspections, airframe repainting, interior refurbishment and cabin upgrades. Variable costs are those that tend to vary depending upon use, such as fuel and oil costs, catering expenses and airport fees. When evaluating an aircraft purchase, buyers typically consider, among other things, an aircraft’s projected total fixed cost per hour of operation, the hourly rate of which is determined by dividing the projected annual fixed costs by the number of flight hours the buyer expects to accumulate on the aircraft during the year. For many buyers, this expected level of annual utilization is an important factor in deciding whether to purchase an aircraft. And for many owners, after the aircraft is acquired this usage number plays a key factor in

deciding whether to retain the aircraft. One rule of thumb is that purchasing an aircraft generally makes economic sense if the annual utilization is at or around 400 hours, or roughly 30 hours per month. If the anticipated usage is well short of those levels, a prospective purchaser might lean toward chartering or “dry leasing” (i.e., without fuel or flight crew) an aircraft from an existing operator, or perhaps participating in a fractional program. For those determined to own, an alternative might be to “partner” with one or more other persons to share fixed and other costs so as to achieve a combined total usage that keeps the “total fixed cost per hour” at a reasonable amount per partner. An existing owner whose aircraft usage is declining, either suddenly or gradually over time, may similarly find itself looking for a partner. The Federal Aviation Regulations (the “FARS”) accommodate those who want to increase cash flows by bringing in other owners or operators. Still, there are limits on one’s choices.

FAA Restrictions and Limitations One primary concept to bear in mind whenever considering multiple owners or operators is that, as a general rule,

only FAA-certificated air carriers may receive compensation in exchanges providing both the aircraft and any crewmember to another person. Thus, whenever a person who is not a certificated carrier (that is, a “Part 91 Operator”) provides both aircraft and crew to others for compensation (which, by the way, includes expense reimbursements relating to a flight), the flight operation will likely be illegal and may result in FAA penalties and, worse, the loss of insurance coverage. However, so long as nothing is charged for the transportation, under FAA regulations a Part 91 Operator may lawfully provide its aircraft and crew to transport, for example: (i) “guests” aboard its aircraft; (ii) an “athletic team, sports group, choral group, or similar group having a common purpose”; and (iii) persons in furtherance of a business, for “the purpose of selling them land, goods, or property.” There are several exceptions to this rule, but the exceptions limit the compensation that one may charge for the transportation and, as such, are not very helpful to those wanting to find a “full paying partner.” Consequently, whenever one wants to generate cash by increasing aircraft utilization, it may not simply charter its aircraft to others,



either directly or indirectly. Instead, in such situations, most Part 91 Operators will turn to joint aircraft ownership and/or multiple dry leases as possible solutions.

Sale Options

Sale of Interests in the Aircraft The regulations allow two or more persons to own undivided interests in an aircraft pursuant to a “joint ownership agreement” so long as each joint owner is registered with the FAA. Thus, if you were to examine the FAA registry of a jointly owned aircraft, the name of each joint owner would appear. From a legal perspective, joint owners own the aircraft as tenants-in-common, and not as partners or joint venturers. Joint ownership offers two distinct benefits to an owner looking to generate cash and increase aircraft utilization. First, undivided interests in the aircraft may be sold at fair market value as determined by the parties, without any dollar limitations imposed by the FAA. Second, the current owner may use its crew to operate the aircraft for the other joint owners. Being able to provide the pilots ensures crew consistency and helps to avoid duplicative pilot costs. This structure requires that the joint owners share the charges associated with the aircraft as set forth in a joint ownership agreement. Typically, this is a fairly detailed document that sets out the various agreements of the parties relating to the ownership and management of the aircraft, including cost-sharing, scheduling and usage, pilots, “operational control” of the aircraft, insurance, hangarage, and, importantly, procedures for selling or otherwise disposing of the aircraft and/ or the individual joint interests. A joint ownership structure, however, does not come without some “costs.” For instance, from a tax perspective, the sale of undivided interests will be a taxable event for the seller, which may result in taxable income, especially if the aircraft has been heavily depreciated for tax purposes. Another concern is the potential for state sales and similar transfer taxes, which may be material (and unavoidable) depending on the tax


rate of the applicable jurisdiction and the price of the interests. Moreover, from a liability perspective, a joint owner that provides its crew to the others could have exposure for thirdparty liability resulting from the crew’s negligence. Although the risk is insurable, a joint owner that furnishes the crew could have liability exposure if the insurers have a successful defense to honoring a claim or the loss exceeds the applicable policy limits. Lastly, from an operational perspective, a joint owner may be unable to use the aircraft under a time-sharing agreement or an interchange agreement. Nevertheless, if these costs or disadvantages do not pose significant obstacles for the parties in a particular transaction, a joint ownership arrangement is worth close consideration.


Private jet ownership can be a wonderful business tool.

It may not be necessary to sell interests in the aircraft or the entity that owns the aircraft.

Sale of Equity Interests in the Company that Owns the Aircraft If the joint ownership structure is unworkable, another option that might be considered is the sale of equity interests of the company that owns the aircraft (“HoldCo”), assuming that, at the time of sale, the sole or primary asset of HoldCo is the aircraft. Under this approach, HoldCo would then dry lease the aircraft to each of the equity owners (or their respective affiliates) under nonexclusive dry lease agreements, and each lessee would hire or engage pilots to operate the aircraft on its flights. This option involves a change in the ownership of HoldCo, and not a change in the ownership of the aircraft. As such, there would be no change in the registered ownership of the aircraft and no need to file bills of sale or registration applications with the FAA. In terms of generating cash, the owner of HoldCo may charge fair market value for the equity interests of the company it sells. And as for the sharing of aircraft costs and other matters relating to the aircraft, typically the parties will set out their agreements in the

Private Jet Ownership

company’s operating agreement or in a separate written agreement. With this structure, each lessee must employ or engage the pilots on its flights. Careful planning with respect to pilot services is important to avoid being viewed by the FAA and others as a potential illegal charter operation.

Fuel and insurance costs may be lower when purchased through the air carrier. remit such taxes attributable to the rents received under the leases.

Leasing Options

Dry Leasing to Other Part 91 Operators Depending upon an owner’s desired financial results, it may not be necessary to sell interests in the aircraft or the entity that owns the aircraft. Instead, because fair market rents may be charged under a dry lease, additional rental income alone may be enough to meet the owner’s needs. If that is the case, having one or two additional nonexclusive dry leases in place with others is possible, with a few caveats. First, one can have “too many” leases such that the leasing structure begins to take on the appearance of a disguised charter operation. While there is no bright-line test, many advisors recommend a limit of three or four leases with unrelated parties. Second, it is imperative that each lessee employ or engage the pilots who will operate its flights, and that the lessor not designate or furnish the pilots, either directly or indirectly, to the lessee. Lastly, each lessee needs to know that, in connection with its flights, it will have exclusive operational control of the aircraft and understand the legal implications of having that control. Aside from these FAA considerations, in most jurisdictions dry leasing may trigger an obligation on the part of the lessor to register as a dealer for sales or use tax purposes, and to collect and

For many buyers, the expected level of annual utilization is an important factor in deciding whether to purchase an aircraft.

Dry Leasing to a Part 135 Air Carrier Another option sometimes considered to generate cash without selling interests in the aircraft or the company that owns the aircraft is to dry lease the plane to a Part 135 air carrier for use in its charters operations. These arrangements can be structured in a couple of different ways. For example, under some agreements, the Part 135 air carrier is the only person entitled to use the aircraft during the lease term. In those instances, an owner may elect to fly on the aircraft as a charter customer of the air carrier. Under other agreements, the owner and the air carrier will share the use of the aircraft during the lease term, with the owner operating the aircraft on its flights under Part 91 and the air carrier using the aircraft on its charter flights under Part 135. Although the economics of these air carrier agreements vary, it is common to see the owner and the air carrier splitting the flight revenue resulting from the air carrier’s use of the aircraft on an 85/15 basis. Typically, the owner will receive, as additional revenue, 100% of any fuel surcharges charged to the charter customer and will be responsible for 100% of all aircraft and pilot costs (other than those passed on to the charter customer). This approach should result in increased utilization of the aircraft and generate additional cash for the owner, but a detailed budget is needed to evaluate the projected expense side of the equation. For example, the owner may need to add or replace certain equipment to conform the aircraft to the “higher” equipment safety standards of Part 135. In addition, under Part 135, pilot recurrent training is required every six months, as opposed to every 12 months under Part 91, so greater pilot

training costs should be expected. The Part 135 alternative may have two other advantages. First, if properly documented and implemented, the Part 135 air carrier, and not the owner, will have exclusive operational control of the aircraft on its charter flights and the adverse legal consequences that may arise from that control. Second, in many states, including Georgia, there may be certain sales and use tax advantages when leasing an aircraft to an FAAcertificated air carrier. On the other hand, fuel and insurance costs may be lower when purchased through the air carrier. In any event, all of these factors, along with the cost of additional wear and tear on the aircraft, need to be evaluated in deciding whether the Part 135 option will meet the financial expectations of the owner or prospective owner.


In sum, FAA regulations are broad enough to provide an owner or prospective owner with a few options when attempting to find partners to utilize, and pay for, available time on an aircraft. However, advance planning is needed to help stay within the bounds of the rules and, at the same time, find a tax-efficient solution. All of this planning, of course, will be for naught if the “right” partner cannot be found, meaning not only someone who is credible, trustworthy, etc., but also someone whose flight missions, expected travel days and required hours of usage are compatible with the other joint owners or co-users of the aircraft. Although the search might be time consuming, it is achievable and something that, based on recent experience, is becoming more common in the market.

Tom Stalzer is a member of SGR’s Corporate and Tax practices. He handles all legal aspects of corporate aviation, including contract preparation and negotiations, FAA regulatory advice and compliance, and federal, state and local tax advice. Chris Raymond is a member of the Global Transport Practice.





Blockchain and Art

Blockchain in the Art World Blockchain technology has facilitated the tokenization of premium-priced assets, including rare and expensive pieces of art. But while the benefits associated with selling portions of an object are plentiful, the concept is not without legal and logistical pitfalls.



ollowing the opening of the renowned art fair, Miami Basel, to blockchain in 2018, Miami Art Week 2019 featured several blockchain-related events. For many collectors, galleries and art dealers, however, the use of blockchain and technology in the art world remains a foreign concept. At its most fundamental level, blockchain is a public digital ledger. This ledger is decentralized – i.e., not controlled by any one individual or group – allegedly making it more secure and reliable. Blockchain is most widely known for its use in transfers of Bitcoin and other cryptocurrencies. Galleries are now experimenting with sales in cryptocurrencies, such as in June of 2018, when Dadiani Fine Art offered for sale works by famed artist Andy Warhol in cryptocurrency, offering only “tokens” of certain works. In other

cooperation of the art world where words, portions or percentages of a anonymity is valued, is also only as good given object were sold, the ownership as the information originally provided. rights therefore being an investment The potential for abuse is obvious. The rather than a physical piece to hang on majority of the companies hosting these the owner’s wall. websites have user agreements with Beyond its use as a currency, fine print disclaiming the accuracy or blockchain has the potential to help thoroughness of any of the information combat the stolen art and antiquity available on the websites. Further, while trade, by tracking domestic and Congress has introduced 21 bills to transnational sales of art, and to end address blockchain policy that may be authenticity, or “provenance,” issues considered this year, presently there is that plague the art world. In fact, little to no regulation of blockchain and several other industries have already its users. successfully experimented with Some companies are providing blockchain as a means of tracking the “certificates” for “verified” artwork. supply chain of certain products such These certificates raise a host of as Italian wine, olive oil, tuna and additional issues. For example, conflict minerals (used to influence other research groups unrelated to and finance conflict) by recording the blockchain have provided certificates movement of each good through its for artwork that were meant to show supply chain. Instead of a supply chain, that a search indicated the piece of stolen antiquities could be flagged artwork was not stolen, but there have on a blockchain and, if that object been incidents where those certificates is offered for sale, that object would proved worthless and those works were ideally become unmarketable no matter indeed stolen. Moreover, to the extent where the object is located. In addition, that specific art galleries, companies blockchain can be used to document or agents are hired to perform the provenance as works are moved verification process, from one collection to provenance research another. In order for Blockchain has could be monopolized the transaction to be by a select group with recorded and to help the potential significant financial ensure the blockchain to help combat ainterest in the art is tamper resistant, a the stolen market. consensus by a network While collectors of peers must agree that art and should be cautious, the transaction is valid. antiquities the benefits of this Several companies have trade. technology should not already begun to use be dismissed. As the blockchain to facilitate use of blockchain continues to develop, provenance research and artwork collectors and other interested tracking through an online database constituents are encouraged to stay and, in some cases, by partnering with informed on the progress of the use of auction houses. this technology in the art world. For the foreseeable future, collectors should be cautious about uploading their entire collection to such Sasha Bau is a member of SGR’s Corporate databases or relying exclusively on the Practice, where he specializes in corporate, information on those platforms. Like real estate and intellectual property law. any other digital medium, blockchain – and therefore the information Morgan Manley is a member of the recorded on blockchain – is subject to Litigation Practice, where she specializes hacking. The information recorded by in trial work as well as arts and entertainment. blockchain, which requires the unlikely



Monument Valley

Photos by the author, Shohei Suzuki

My Visits to America’s National Parks (And the Loooooong Drives In Between) The author, Shohei Suzuki, at Yosemite National Park


Editor’s Note: Each summer, the SGR Japan Team welcomes “exchange” attorneys from Japan. These are talented attorneys from esteemed law firms in Japan – typically with five or more years of practice – who are in the U.S. to obtain their LL.M. degrees and experience a year of training at U.S. law firms. Shohei Suzuki was just such an individual, and it was our privilege to have him as an integral part of our Japan Team for seven months. We appreciated not only his legal acumen, but also his love for America’s great outdoors.



y first long-distance drive in the U.S. – actually of my whole life – was a round trip from Austin to Key West in the summer of 2017. It was soon after I came to the U.S. to study at the University of Texas School of Law. Unfortunately, because I did not know very much about the national parks at that time, I missed my chance to visit Everglades National Park. Nevertheless, the long bridges toward Key West at sunset were beautiful and the scenery of the west coast of the Florida peninsula was breathtaking. While in Key West, I encountered an interesting scene in a karaoke bar, where people sang on stage. Many Japanese people like singing karaoke – the word actually originates from Japan – but they sing only with friends or family and are usually too shy to sing on such a stage in public. I enjoyed the songs but also found it interesting how customs are imported and adapted to the local culture. My second long drive was a nine-day trip in May 2018 with my two brothers and a sister around the Grand Circle, mainly in Arizona and Utah. It was my first time driving an RV. Departing from Las Vegas, we took the old Route 99 to the Grand Canyon, where we hiked 12 miles down to

Plateau Point next to the Colorado River. In Monument Valley, we saw many rock formations from a Jeep driven by a guide from the Navajo tribe. The guide played a Navajo flute in the valley and, to return the courtesy, my sister, a professional flutist, played the handflute. We also visited Horseshoe Bend and Antelope Canyon. We enjoyed Zion National Park the most, though, where we did the Angels Landing hike. The hike of this 1,488-foot rock formation included narrow, rocky paths surrounded by steep drop-offs, but brought us to a magnificent panoramic view. After living in Texas for more than a year, it was time to get to Washington state for a one-month internship in Seattle. Of course, I knew that an airplane would be faster than my Toyota RAV4 but flying never once crossed my mind. I knew that driving such a long distance – 3,460 miles – would give me unforgettable experiences. My 10-day journey in September 2018 started from my house in Houston. I first drove west to El Paso. On the way, parked on the roadside, I watched on my cell phone as Naomi Osaka won the U.S. Open – the first Japanese tennis player to win a Grand Slam title. After sightseeing in El Paso, I visited White Sands National Monument in New Mexico – a decision I have not regretted. White Sands is a desert made only of white gypsum sand. It was sunny and the contrast of the white dunes and the blue sky was so beautiful. However, clouds gradually moved in and, within an hour, it became difficult to ascertain the boundary between the white sky and the white desert – the view of White Sands National Monument

Finish Line

Skyway Bridge

which was mystical. After driving west to Phoenix through rocky, red-colored mountains in Arizona, I headed north, stopping at Sedona to climb one of the huge red rocks. My next stop was Bryce Canyon National Park. Almost no Japanese know this park, but the strange pillars of rock lighted by the setting sun were amazingly beautiful. One advantage of a long drive is that you can feel the geographical changes along your route. The farther north I drove, the more trees and fewer rocks I saw. After visiting Salt Lake City and its famous lake, and driving hundreds more miles, I reached the famous Yellowstone National Park. A herd of American bison grazing in a huge meadow, dynamic geysers, many colorful springs – all of these images were what I had been dreaming to see someday. After I drove through Idaho and Washington, enjoying the scenery of countless wind turbine generators, I finally arrived in Seattle. During my month-long stay, I visited Mount Rainier National Park and Olympic National Park, both of which are just a short drive from Seattle. (Before coming to the U.S., I had not imagined I would someday describe a three-hour drive as “short.”) I will never forget the time I spent sitting on a rock at Ruby Beach in Olympic National Park and seeing the sun setting over the Pacific Ocean. The grilled salmon I had in the park was the best I had ever tasted. After my stay in Washington, I had to go back to Houston for another internship. I drove south along the West Coast. The scenery of the Pacific Coast

One of the advantages of a long drive is that you can feel the geographical changes along the route. was breathtaking. On the way to San Francisco, I visited Crater Lake National Park. It was sunny before I drove into the mountains, but by the time I arrived at the visitor center, a snowstorm had begun. It was still October! I could not see the lake, so I hesitate to include this park in my number of visited parks, but at least I entered the visitor center and bought a pin of the park! I then enjoyed wine in Napa Valley and, of course, stopped at the Golden Gate Bridge, which I saw from three different viewpoints because I liked it so much. I also visited the headquarters of Google, the Computer History Museum and Stanford University. I then headed to San Diego, where I visited the USS Midway Museum and some other attractions. After San Diego, all I had to do was drive east. Just when I was about to get bored with driving, Saguaro National Park welcomed me, with countless cacti spread as far as I could see. After the internship in Texas, I moved to Atlanta to begin my internship at SGR. While living in Atlanta, I made trips to Great Smoky Mountains National Park by car and Yosemite National Park by plane. These trips brought to 10 the number of national parks I had visited. The total distance I drove during my two years in the U.S. was 26,631 miles – more than the equatorial circumference of the earth. I will never forget these long drives and the beauty of the country’s national parks. I like the uniqueness of each national park, city and state of the U.S. I like how large the U.S. is. And I like how Americans are proud of their cities and states, from which I think we Japanese can learn something. Now I am back working in Tokyo. We do not have parks as large as the ones in the U.S. But we have many good Japanese restaurants, where I hope to entertain some of the many new friends I made during my American adventures.

Saguaro National Park

Olympic National Park

Bryce Canyon National Park



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Trust the Leaders - Issue 47  

Trust the Leaders - Issue 47