Ocean Treasure Company Has a Murky History

WASHINGTON — A Florida company that claims to have raised tons of treasure from a sunken ship in the Atlantic Ocean has a legal history almost as murky as the deep-sea waters where its salvage equipment operates.

Odyssey Marine Exploration Inc. of Tampa announced May 18 that it had recovered the biggest collection of silver and gold coins ever salvaged from a shipwreck.

The company has not disclosed the identity or whereabouts of the wreck, but says its robotic ocean-bottom equipment hauled up more than 500,000 17th-century coins, which company officials said were probably worth over $500 million.

In recent years, Odyssey has attracted investments of tens of millions of dollars by some of the country's best-known financial institutions, such as Goldman Sachs, Vanguard and Merrill Lynch.

But public records map a bewildering trail of controversy over the way Odyssey and companies linked to it operate.

Odyssey's executives have been accused by the Securities and Exchange Commission of inflating the value of stock in a previous company by overstating the value of salvaged artifacts.

They and Odyssey are being sued in Charleston, S.C., for allegedly conspiring with that same previous company to steal valuable archaeological data — which led to Odyssey's discovery near Savannah several years ago of a Civil War-era ship and its cargo of gold.

Companies linked to Odyssey have been sued for failing to pay bills — one of them even had its own boat seized and sold at auction — after it said Odyssey failed to pay it for use of the vessel.

In "a business notorious for litigation," that's not such a bad record, an Odyssey spokesperson said in an exchange of e-mails.

John Morris, the company's CEO, and his business partner Gregory Stemm "have been careful to run their business affairs and relationships with their thousands of shareholders in a very forthright manner," said Natja Igney, Odyssey's manager of corporate communication.

Press reports of the company's salvage announcement have noted the financial involvement of Fortress Investment Trust II, a multibillion-dollar hedge fund in which Democratic presidential candidate John Edwards had previously disclosed investing over $11 million.

Edwards is routinely referred to as a "major" investor in the hedge fund, although his reported investment would amount to slightly less than one-thirtieth of 1 percent of the fund's value.

Therefore, if the new Odyssey find is worth the $500 million it's executives claim, Edwards' share of Fortress's share would be around $16,000 — before expenses.

"Avast, matey! Is John Edwards a pirate? The Spaniards say yes, and they want their plundered loot back," the New York Daily News said Friday.

The story evidently was prompted by a legal document filed in federal court in Tampa on Thursday by lawyers representing the kingdom of Spain, declaring that it did not intend to give up any of its undersea property.

"Such a move was anticipated by Odyssey and is considered normal in admiralty cases," CEO Morris said in a news release.

SEC investigators in the 1990s accused Morris and Stemm of causing potential investors in a now-defunct Tampa company called Seahawk Deep Ocean Technology Inc. to think the company was worth more than it actually was.

They did it, the SEC said, by using "false and misleading" television publicity and press releases to inflate the value of a shipwreck that Seahawk had discovered near Dry Tortugas, west of the Florida Keys, according to documents filed with the government agency.

Stemm and Morris were described as "major stockholders" in Seahawk when the purported stock value inflation occurred.

To settle an SEC lawsuit, Seahawk agreed in 1994 that it would no longer employ Morris or Stemm.

In an exchange of e-mails, an Odyssey spokesperson said Stemm and Morris had "stepped down voluntarily from employment from Seahawk" and that both had been "vindicated" in a civil suit brought against them by the SEC.

Seahawk later hired as consultants a company called Remarc International Inc., which was controlled by Stemm and Morris.

The story became even more tangled when Lee Spence, a Summerville, S.C., ocean archaeologist, went to Seahawk with a plan to try to salvage the S.S. Republic, which sank near Savannah in an 1865 hurricane.

Spence said in a telephone interview that he had studied weather logs maintained by scores of other vessels, as well as other data, to figure out where the Republic likely lay.

He said he approached Seahawk with a proposal for salvaging the ship and signed a contract that was to give him a share of the recovery.

But Seahawk never found the Republic. It eventually went out of business, buffeted by lawsuits and SEC actions.

In one case, it had leased its vessel, the RV Seahawk, to Odyssey for "certain marine survey services in the Mediterranean Sea." Odyssey was headed by Morris and Stemm, who had merged Remarc into it, according to SEC records.

Years before Seahawk leased its vessel to Odyssey, it had been sued by Morris and Stemm over a variety of issues, including the original SEC complaint about inflating stock prices.

Spence now charges in a lawsuit pending in Charleston, S.C., that to settle those suits Seahawk ended up giving Remarc — later to become Odyssey — copies of the confidential dossier he had prepared on the Republic.

He charges in the suit that the suit by Stemm, Morris and another former Seahawk officer were a "pretext" to get the information.

Igney, the Odyssey spokesperson, called the suit "a crazy claim for treasure."

"We'll let a South Carolina jury decide that," said Greenville, S.C., lawyer Carl Muller, who represents the two plaintiffs.

"We feel like we've got a very good case," Muller added. "We're not just chasing a rainbow here."

Odyssey announced in December 2003 that it had "commenced archaeological excavation and recovery" of money and artifacts from the Republic.

The announcement stated that National Geographic Television Film was recording the recovery operation.

"National Geographic has been here every step of the way covering the Odyssey Republic expedition," Stemm said in a news release. "We're excited about sharing the amazing story of the Republic and the in-depth coverage of our expedition with the public."