Betsy DeVos's Family Yacht Caught Flying A Foreign Flag

Department of Education Secretary Betsy Devos recently made news when it was discovered that someone untied her family's $40 million yacht, and sent it adrift in Lake Erie with the crew on board.

In the end, it only ended up suffering about $5,000 to $10,000 in damage and no one was hurt.

But, what you probably didn't know, since it wasn't really reported on, was that the yacht wasn't flying the American flag. In its place was a foreign flag, and what's even more important are the reasons behind it.

Why was the yacht flying a flag from the Cayman Islands?

(Andy Ouriel/Sandusky Register)

For one, the yacht was docked in Huron, Ohio. Last time we checked, you couldn't get to the Cayman islands docked there. Not by water, anyways. You'd have to physically transport the vessel via land and even then it'd be a long trip. The Cayman Islands are located south of Cuba and barely recognizable on a map in comparison to neighboring Jamaica.

We think we know why: Betsy Devos, a prominent member of President Trump's cabinet, and her family decided it would be in their best interest to fly the flag for tax considerations.

In fact, that's exactly what federal records show, too. After this story was published, the record was de-listed by the U.S. Customs and Border website, but here is the information anyway: The yacht is shown to be owned by RDV International Marine, an affiliate of the company that controls DeVos family fortune.

It might be her family's yacht, but when you're rich, and you want to save on federal taxes, you have to hire an expensive tax attorney. And, DeVos's investment portfolio includes Cayman holdings. Ahh, so there's the link. We get it now.

Per Newsweek: "When buying a vessel or cruising in U.S. waters, American yacht owners like the DeVos family could face state sales or use taxes like those most non-yacht owners face on everything else. However, registering a yacht in a locale like the Caymans— under what has come to be known as a “flag of convenience”—allows those American yacht owners to effectively characterize themselves as foreigners for tax purposes, thereby avoiding the obligation of paying the standard levies."


"If you want to come in and use the waters of a given state of the United States, the question is how can you how can you insulate yourself from getting hit for the use tax?" maritime attorney Michael T. Moore told Capital & Main. "The answer is: close and register offshore. If you close and register offshore, you aren't subject to either a sales or a use tax. You are simply visiting the United States, and you are visiting under a privilege that is granted to certain countries in the world under what is called a cruising permit. Those countries grant the privilege to U.S. flagged vessels, and the United States offers that reciprocal right to vessels flagged by those countries. In practice, it means the permit allows you to go from port to port in different states without having to officially make entry and pay taxes to the states of the ports you visit."

Now - since the yacht isn't anywhere near the Cayman Islands - that still doesn't seem to matter. Because the yacht is registered under the Cayman Islands and is flying its flag, the DeVos family gets to avoid a 6 percent use tax in Michigan even though it still cruises through the Great American Lakes. That is estimated to have saved her family $2.4 million, money that would have gone to the local police department that investigated vandals untying her yacht, and thereby causing it damage.

Other families in the area had to pay the tax, but not the DeVos family. Their tax lawyers are more qualified and better trained with the U.S. tax code.