Leon Worden




Part I: The Greatest Treasure Ever Seized
S.S. Central America Gold Confiscated in Long Beach

By Leon Worden
COINage magazine • Vol. 43, No. 1
January 2007

A
lmost from the outset, it was inevitable that the eccentric deep-sea explorer Thomas G. "Tommy" Thompson and his attorneys would spend a lot of time in court.
    As soon as Thompson began pulling his sunken treasure from international waters off of South Carolina in 1989, representatives of the insurance companies that paid on property-loss claims 132 years earlier were standing on his dock. The federal courts were tied up for a decade.
    Less predictable was the success Thompson's old crew members would have in exploiting a quirk of U.S. maritime law just this year to seize some of his aureate bounty.
    "We were robbed!" said Adam Crum, vice president of Monaco Financial LLC of Newport Beach, who watched helplessly as a deputy U.S. Marshal and armed security guards packed up six gold bars and a $20 gold coin from Monaco's display case at the Long Beach Coin, Stamp and Collectibles Expo on Sept. 14.
    Unknown to Monaco, a federal judge in Los Angeles had ordered the seizure three days earlier of 63 ingots and 7,000 gold coins that Thompson had brought up from the wreck of the S.S. Central America, a sidewheel steamship that sank in 8,000 feet of water in 1857 with a cargo of California gold.
    Technically, the writ of garnishment applied to all persons in the federal Central District of California — everyone in seven Southern California counties — who possessed even the tiniest nugget of Tommy Thompson's treasure. Monaco had purchased a large part of that treasure.
    Monaco eventually got its gold back, but not without a fight. Now, after a month of uncertainty, all bona fide owners of treasure from the "Ship of Gold" can rest easy.
    Here is the bizarre story.
    In April, some of the people Thompson hired in 1986 to help him locate the lost shipwreck filed in a claim in federal court in Ohio. They alleged that Thompson made and subsequently broke promises to share percentages of the spoils.
    To prove their claim, Seattle-based International Deep Sea Survey Inc. and nine former employees produced documents purporting to bear Thompson's signature. The papers show the explorer agreed in 1986 to award them a combined total of about 2 percent of all future proceeds in exchange for their secrecy about the ship's location and their vow not to raise the treasure without him.
    Two percent split 10 ways might not sound like much, but the plaintiffs are estimating the value of the treasure at $400 million. With interest, they believe Thompson's companies owe them $11.8 million.
    The main case against Thompson is ongoing in Ohio, where his companies are headquartered, and in New York, where some of Thompson's partners' bank balances were seized.
    So far, Thompson has offered no evidence to suggest he paid IDSS or its workers any percentage of the profit. (No one disputes that Thompson paid their hourly wages and equipment rental fees at the time.)
    Complicating matters for the plaintiffs, Thompson no longer owns any of the gold. He sold all he owned several years ago for an undisclosed sum to an investor group headed by Southern California sports agent Dwight Manley.
    Manley told COINage he acquired the treasure "with clear title." By the end of 2003, Manley had sold it all to third parties. One of the biggest buyers was Monaco.
    Knowing Monaco would be displaying S.S. Central America treasure in Long Beach in September, as it had done in the past, the plaintiffs took their case to Los Angeles. There, they convinced a judge to take Monaco's gold and hold it in the custody of the court until their claim could be adjudicated.
    "I thought it was 'Ocean's Fourteen,'" Crum said. It was as if George Clooney was staging one of his elaborate heists. ("Ocean's Thirteen," due in theaters next June, had already finished filming.)
    "I didn't even believe the guy was a marshal," Crum said. "I told him, 'I don't know you're real. You've had six weeks to set this up, based upon media exposure that [the gold] was going to be here. This could be an elaborate hoax.'"
    After an hour of fact-checking phone calls with attorneys, Crum was satisfied it was no hoax.
    In all, the marshal seized $3 million to $4 million worth of gold, which was put in storage at a deputized armored transport company's facility in Pico Rivera, California.
    Clearly, the seizure fell far short of the number of ingots and coins in the court order. Monaco had sold most of the ingots identified in the writ of garnishment — and it never owned 7,000 coins from the S.S. Central America.
    The garnishment applied in name both to Monaco and to Manley's California Gold Marketing Group. Manley told COINage he didn't know about Thompson's alleged promise to International Deep Sea Survey (IDSS) or the crew members until after the Long Beach raid.
    "It was all news to me," Manley said. No attempt was made to confiscate any of Manley's assets, and though the order authorized the marshal to raid Monaco's offices and garnish its bank accounts, that did not happen.
    Monaco's gold (and the Thompson defendants' cash in New York) was seized under Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims. Rule B is invoked when there is a good chance the subject of a dispute — in this case, the gold — will disappear unless it is literally "arrested" at the outset of court proceedings.
    Rule B allows a claimant (the IDSS plaintiffs) to garnish any asset owned by the debtor (the Thompson companies) that is held in the physical possession of a third party.
    The seizure order was premised on the mistaken notion that Manley's group and Monaco were such third parties, selling the gold on Thompson's behalf and sharing the profits with him.
    In an unusual October hearing in Los Angeles that saw attorneys take the witness stand, plaintiffs' attorney James T. Shirley Jr. stated his reasons for thinking Monaco and Manley were agents for Tommy Thompson.
    Shirley told of a Monaco sales brochure that identified Monaco as "an authorized S.S. Central America ingot dealer" — suggesting that Monaco was "authorized" by someone else, perhaps Thompson or Manley, to market the treasure. (Had Shirley viewed Monaco's Web site, zoomcoin.com, he also would have seen this language: "Monaco Financial is the primary authorized dealer for the most precious items of the treasure, the unique gold ingots.")
    As to the Manley group, Shirley cited a 1999 asset purchase agreement that transferred title to the gold from Thompson to Manley "free and clear of any liens and encumbrances" — but left Thompson with an interest in the property.
    Monaco's litigator, Richard K. Howell — who had earlier represented Manley during 18 months of complex negotiations to purchase Thompson's treasure — showed that the 1999 purchase agreement was superseded in June 2001. The 2001 amendment wiped out Thompson's reversionary ownership interest in exchange for "a lump sum of cash" from Manley's group, Howell said.
    With the 2001 agreement, Manley's group had purchased all of Thompson's numismatic items outright — just as Monaco later bought many of Manley's gold bars (and about 400 gold coins) outright through a separate purchase agreement, testimony revealed.
    Under intense grilling from Howell, Shirley could produce no evidence to show that Manley was anything other than, in Howell's words, "a bona fide purchaser in good faith" of Thompson's gold.
    Certain details of Monaco's and Manley's purchase agreements are not known. U.S. Magistrate Judge Jennifer T. Lum concealed their contents from this writer.
    From the witness stand, Thompson's attorney, Richard T. Robol, said Thompson's companies do not receive "an income stream from any assets from the S.S. Central America" today.
    Evidently, "authorized dealer" was simply a clever marketing term. Or, considering the confusion it caused, not so clever.
    Shirley said if it's true Monaco bought the gold outright and was not funneling any money to Thompson, his clients would be willing to vacate the seizure order.
    "We have no desire for treasure that our clients have no [legal] interest in," Shirley said.
    By day three of the scheduled hearings, the plaintiff's attorneys were satisfied it was true: Manley, then Monaco and others, had purchased the gold outright.
    Ironically, Monaco no longer owned most of the gold that was seized. It owned the 1857-S $20 double eagle, but it had already sold five of the six ingots to its customers. Monaco was merely displaying them in Long Beach.
    (The sixth ingot, a mammoth, 754.95-ounce bar by assayer Justh & Hunter, was in the personal collection of Monaco President Michael A. Carabini. Following the seizure, the nervous owners of two of the ingots sold them back to Monaco, Carabini said.)
    Today, Monaco buys and sells items from the shipwreck in the aftermarket. Everything it bought from Manley, Monaco had sold by the end of 2004.
    In a further touch of irony, Monaco had purchased one of the seized ingots — a 622.28-ounce Kellogg & Humbert bar — in a Sotheby's auction of S.S. Central America gold that had been awarded in the 1990s to various insurance companies (see separate story). It never officially belonged to Tommy Thompson.
    "This has affected me emotionally and physically," Monaco's Adam Crum told COINage. "I have customers who obviously are concerned. They purchased something in good faith; we purchased something in good faith. It is appalling to me that laws even exist that would allow what has happened. No one even knows if they have a claim against the defendants, and the court allows the seizure of property that doesn't even belong to them? It is unbelievable to me."
    All was well in the end — and not only for Monaco. In court on Oct. 18, Howell and the plaintiffs' litigator, Michael J. Frevola of New York City, hashed out a settlement agreement. The seizure had "put a chill on the treasure as a whole," Howell told Frevola. Now it was lifted. Monaco got everything it was seeking. In exchange, Monaco promised not to sanction the attorneys or sue their clients for wrongful seizure and malicious prosecution.
    The seizure order was dissolved in its entirety. Monaco got the gold back, and the plaintiffs stipulated that they "will not assert any claims against any bona fide purchasers of artifacts recovered from the S.S. Central America."
    People who have purchased S.S. Central America treasure from Monaco or anyone else need not fear the long and invasive arm of U.S. maritime law — at least, not from these plaintiffs.
    For its part, Monaco is free to go about its business as the chief seller of S.S. Central America treasure. The company has carved a niche for itself, helping countless collectors and investors realize the childhood dream of owning sunken treasure — which Monaco avails in every form, from little packages of gold dust for only $49 to big ingots in the high hundreds of thousands of dollars.
    "It's the greatest thing that has ever hit the market," Crum said of the treasure. "It has done a tremendous amount of expansion to the collector base. People who never considered owning a coin bought one, and then they fell in love with the idea of coins. They became either investors or collectors or people who are just looking to store wealth in interesting items. Not just our company, but our entire industry has had a huge benefit as a result of the S.S. Central America."


©2007, MILLER MAGAZINES INC./LEON WORDEN. RIGHTS RESERVED.
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