A disaster at sea that cost one man his life and left three others missing early Tuesday may have been a failed human smuggling attempt, federal Public Safety Minister Vic Toews says.

Nine men were on the SV Tabasco 2 when it was crippled in rough seas on Nova Scotia's southwest coast about 148 kilometres south of Cape Sable Island, military officials said.

Three men were rescued by a nearby tanker, FSL Hamburg. Three others — including the man who later died — were hoisted from the stricken boat by a Cormorant helicopter.

The military search for the three missing men was called off on Tuesday night and the case was turned over to the RCMP as a missing persons case.

Toews said several survivors of the SV Tabasco 2 had claimed refugee status, and the incident is being investigated as a human-smuggling attempt.

"I thank the men and women of the Canadian and U.S. Search Rescue teams who put their lives at risk to make this dangerous rescue," Toews said in a statement from Ottawa. "There is an enormous and unnecessary risk involved with the act of human smuggling. Our government's message is clear to those contemplating a human smuggling operation — don't do it."

Map of search area off Nova Scotia. (CBC)

Officials with the Halifax Joint Rescue Co-ordination Centre said the men had been in the water since 12:30 a.m. AT on Tuesday and "any hope for their survival has diminished significantly due to the frigid water conditions."

Dramatic rescue

Lt.-Col. Guy Leblanc, one of six crew aboard the Cormorant, said there were wind gusts of up to 70 km/h and waves 10 metres high when they arrived on the scene.

The crew spotted flares and headed toward the yacht.

"One survivor was waving frantically at us," Leblanc told CBC News.

Sgt. Norm Penny, a search-and-rescue technician, was lowered to the yacht to organize the rescue. A second technician ferried back and forth between the yacht and the helicopter with the survivors.

'One survivor was waving frantically at us.'— Lt.-Col. Guy Leblanc

Penny, the team leader for 413 Squadron in Greenwood, said his concern was to get aboard the yacht as quickly as possible.

"Get my fins on board that boat and get ahold of these guys as quick as we can to start the extraction process, because the weather we were dealing with, the vessel could have easily capsized at any time," he told CBC News.

"We were dealing with 45 knot winds, sea states that are almost three storeys high, smashing into a vessel that has no power in the middle of the night and snow squalls hitting you."

Leblanc said the three men were hypothermic and injured. He said one of them was very weak and died on the way to Yarmouth Regional Hospital.

'Rolled a few times'

Leblanc said the sailboat had been "tossed pretty severely" in the waves.

"We could tell that it was rolling from side to side almost in 90 degrees," he said. "It was apparent based on the damage reported by the search-and-rescue technicians that the boat likely had rolled a few times."

Sub-Lt. Tania Meloni, a spokeswoman for the navy, said the sailors were wearing life-jackets.

The Canadian Coast Guard ship Earl Grey, a CH-149 Cormorant helicopter, a CC-130 Hercules aircraft and a U.S. coast guard jet were involved in the search for the missing men.

The FSL Hamburg was en route from New York to Saint John, N.B. It's not known when it will arrive at its destination.

Fraser Mooney, a hospital spokesman, said two men who were hoisted from the yacht were in fair condition, but didn't give any other details about them.

Leblanc said the men were all from eastern Europe. He didn't know where the boat was headed.

The Cormorant involved in the rescue has returned to Greenwood. The overnight rescue was its second in a matter of hours.

With files from The Canadian Press