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How an historic sea booty slipped through Odyssey’s fingers

A US treasure-hunting company recently failed in its attempt to claim ownership of the $500 million treasure trove it discovered off the Spanish coast. The dispute over the booty of the ‘Mercedes’ had drawn in Spain's government, a US court and Washington lawmakers.


With the “Mercedes” treasure safe in Spain, the five-year legal battle over an estimated 594,000 silver and gold coins recovered from a 19th-century shipwreck finally came to a close earlier this month. Not only was it a costly public dispute for all parties engaged, but it involved a canny behind-the-scenes ruse blending greed, deceit, political intrigue and even mutiny within Odyssey Marine Exploration, which eventually saw all the half-million historic minted pieces plucked from its hands after losing one court battle after another.

The Tampa-based underwater salvager fought hard to keep the trove, but to no avail. On May 14, the US Supreme Court rejected Odyssey’s final appeal in the company’s last-ditch hope not only to remain with the coins but also to set a precedent in international finders-keepers litigation.

The sinking of the 'Nuestra Señora de Mercedes'.

The 1804 sinking of the 'Nuestra Señora de las Mercedes' as painted by Francis Sartorius.

Odyssey made a global splash in May 2007 when it announced it had recovered what it billed as the biggest shipwreck treasure in modern history – a 17-ton trove of artefacts plucked from the Atlantic, including silver and gold pieces valued at about $500 million. But while it lodged a tooth-and-nail fight with Spain – which always insisted that the treasure belonged to the government because it came from a navy shipwreck – to keep possession of the discovery, it made generous political contributions to US congressmen with the hope of persuading them to change the law before the courts made their final ruling. The company even backed a criminal complaint against one of the discoverers of the treasure who tried to make money on the stock market on the back of the find.

Records from the US Federal Elections Commission and the US Security Exchange Commission during this period show that Odyssey was actively engaging in covert strategies to keep others from profiting from its discovery.

But in the end, Odyssey, a publicly traded firm listed on the NASDAQ, lost all the legal arguments. The coins and other artefacts, including cannons, gold boxes, wooden fragments, pottery and jewellery, were put on two Hercules C-130 cargo planes sent by the Spanish military and transported to Torrejón air force base in late February. The entire booty is being guarded at a secret location by the Civil Guard under orders from the Cultural Ministry, which hopes to put it on display soon.

‘Nuestra Señora’ and Napoleon

Odyssey officials were devastated after the US Supreme Court on February 3 denied their last-minute stay to keep Spain from taking the goods until the justices could consider whether to take their arguments up for review. The treasure had come from the remains of Nuestra Señora de las Mercedes, a Spanish frigate that was sunk in 1804 by the British navy as it approached the port of Cadiz. Along with four other frigates, the Mercedes was returning from the Spanish-American colonies. The surprise attack drew neutral Spain into the Napoleonic wars and was to signal Spain’s eventual demise as a world power. The Mercedes contained silver and gold, mostly mined in Peru for the Crown, that wouldn’t make it home for another 208 years.

From the beginning, Odyssey was coy when it came to the ship’s identity, giving the working name of the “Black Swan” for legal purposes. But US federal court filings now show that Odyssey had identified the ship when it found the wreck in 2007. An export license submitted in Gibraltar, from where the treasure was secretly airlifted on a private cargo jet back to Tampa, showed that the coins were indeed Spanish.

From there, the Tampa firm embarked on the legal argument that the ship – if it was indeed the Mercedes – was actually a private mail courier ferrying passengers and other goods from the Spanish colonies when it was attacked. If this were true, the Spanish government would have no claim and would not be covered under the 1976 Foreign Sovereign Immunities Act (FSIA), which establishes limits as to whether foreign governments can face litigation in US federal courts.

At the same time, Odyssey was also hedging on giving Spain sufficient information in the discovery phase of the dispute, which took place in US District Court in Tampa, including descriptions of what it found and the location of the ship, insisting that they were trade secrets. But the presiding judge ordered the treasure hunters to be transparent.

In the end, on December 22, 2009, the court found that Spain was indeed protected under the act and therefore was entitled to the shipwreck. And last September, Odyssey lost its appeals before the 11th US Circuit Court of Appeals in Atlanta. The judges sided with US Justice Department lawyers, who later joined the case as “friends of the court” arguing that the shipwreck was also protected under the 1917 Spanish American Treaty of Friendship that still remains in effect.

Exhausting appeals

But while all the legalese was being tossed around in federal court, Odyssey was quietly embarking on a lobbying strategy in Washington to entice lawmakers to make a moderate change to the shipwreck law. The liberal political magazine Mother Jones was first to report in April 2011 that Odyssey was employing the influential Washington lobbying firm Jenkins Hill to convince lawmakers to change the wording in a clause included in the defence spending bill that addressed sunken shipwrecks. The story was expanded in The Washington Post in December, which stated that Odyssey had hired Jenkins Hill to get lawmakers to include “two commas and two words” in the law to help shore up its argument in the courts before company lawyers exhausted all their appeals.

A search of FEC records shows that a host of Odyssey executives gave thousands of dollars in political campaign contributions to Republican lawmakers who voted for the provision. Among them are Marco Rubio, the Florida Republican senator who is now being eyed as a potential running mate for Mitt Romney, and Connie Mack, a Republican in the House of Representatives.

Mark Gordon, then Odyssey president, gave at least $750 to two other Republicans for Congress between 2009-2010, while Roger Kurt, a marketing executive for the company, contributed $2,000 two years ago to the campaign of Senator Mel Martínez, another member of that party, FEC records show.

Filings also reveal that the string of generous donations were not only made by Odyssey executives, but by some closely affiliated with the firm, such as individuals connected to the Numismatic Guaranty Corp. of Sarasota, Florida, which helped store and preserve the Mercedes coins during the court fight.

In the end, the House passed the changes in the defence spending bill but that version was later defeated in Senate. Odyssey had chalked-up another loss, this time on Capitol Hill.

A silver-and-gold “anomaly”

But while the international battle was raging, there was mutiny within Odyssey’s own ranks. On January 17, 2008, the US Security Exchange Commission filed a criminal complaint for insider trading against one of the firm’s oceanographers – the one who first spotted the Mercedes. Ernesto Tapanes, a Canadian citizen who had been hired by Odyssey the previous year, was on board the company’s marine ship Ocean Alert “surveying the ocean floor off the coast of Gibraltar” on March 30, 2007, when he discovered the “anomaly” which turned out to be the Spanish shipwreck. By the first week of April, Odyssey had sent in its excavation ship, the Odyssey Explorer, and soon began recovering more than 17 tons of coins and artefacts from the site.

As the excitement mounted, Odyssey executives began obligating all their employees and consultants to sign confidentiality statements, with clauses that forbade insider trading.  When the announcement was finally made on May 18, 2007 “of the largest find of its kind in history,” Odyssey’s stocks closed at $8.32 per share, having soared almost 81 percent in a single day. Tapanes unloaded his entire stock in little more than a month, making a killing of more than $107,000, according to the SEC filing. Tapanes reached a plea agreement and “consented, without admitting or denying the allegations in the complaint,” to pay back the money, plus a civil penalty for the same amount – in other words double what he had profited – with an additional $2,151 in interest. It was the only broil that Odyssey appeared to have won.

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Published: May 29 2012
Category: Culture, Featured, Spain News
Republication: Creative Commons, non-commercial
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2 Comments for “How an historic sea booty slipped through Odyssey’s fingers”

  1. It is rather amazing to me that Spain and the Catholic Church were willing to put forth a challenge to Odyssey for these artifacts. I thought they would have been too embarrassed to admit how much silver and gold they stole from South American indigenous people. Too bad Spain isn’t as aggresive trying to recover all their ships that carried tons of mercury currently polluting the oceans.

  2. Greg Stemm, the co-founder and current CEO of Odyssey. Marine Exploration, and John C. Morris, the co-founder of Odyssey Marine Exploration, were both sued by the Securities and Exchange Commission.

    It appears that Neptune Minerals is insolvent.

    Oceanica is extremely unlikely to get an environmental permit.

    Oceanica’s cofounding shareholder, DNA Ltd, Inc, is tied to a Panamanian entity whose principal members are connected to a number of alleged financial crimes – why did Odyssey Marine Exploration structure it this way?

    Isn’t it weird that Odyssey Marine Exploration has been unable to address any of the serious questions posed by concerned shareholders?

    It’s concerning that John Morris, the founder of Odyssey Marine, is currently being sued by members of Seagrass Recovery.

    Odyssey Marine Exploration and Neptune Minerals have been tied to brokerage firms with many FINRA sanctions, this is very alarming – would you invest in this company? Buyer beware.

    Odyssey Marine Exploration has disappointed 100% of the time on its estimated project recoveries, can you trust anything they say?

    Why does Odyssey Marine Exploration have opaque and unexplained offshore subsidiaries in the Bahamas and Panama? These are completely unnecessary for Odyssey’s operations.

    Based on its current cash reserves and negative cash flow Odyssey Marine Exploration could very well go bankrupt in 2014.

    Odyssey Marine Exploration was held in contempt of court after it lost the Blackswan case.

    World-class phosphate mining companies have previously evaluated and passed on the Oceanica asset – Odyssey is the only company interested in this uneconomic asset.

    Didn’t Odyssey’s chairman Brad Baker get exposed for signing on both sides of a deal?

    Why does Odyssey Marine Exploration use an auditor that has been sanctioned multiple times by the Public Company Accounting Oversight Board?

    Based on accurate historical records, there was never any secret army gold aboard the SS Central America.

    It’s alarming that Odyssey Marine Exploration started as a shell purchased by Timothy Brasel, who was later cited by an SEC civil action for stock manipulation.

    It’s shocking that the predecessor of Odyssey Marine Exploration, Seahawk, went bankrupt – but it’s even more shocking that every other reverse merger treasure hunting company (six in total!) have also gone bankrupt.

    It’s alarming that Odyssey Marine Exploration has lost nearly $200,000,000 of shareholder capital while insiders have personally made millions – how much longer can this continue?

    Isn’t it ironic that Odyssey Marine Exploration has posted enormous financial losses but CEO Greg Stemm makes enough money to afford five houses for himself and his family? That doesn’t seem fair at all.

    Why does Odyssey host closed conference calls in which only their investment bankers get to ask questions? Why won’t Odyssey answer questions from other shareholders? Are they hiding something?

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