Saturday, January 22, 2005

 

Battle over found gold

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St. Petersburg Times
By Scott Barancik
January 22, 2005

Odyssey Marine Exploration struck it rich in a shipwreck, but now competitors claim they're due a piece of the prize.

Since spotting a missing shipwreck off the coast of Georgia 18 months ago and scooping up more than 50,000 Civil War-era coins from its belly, Odyssey Marine Exploration has prospered.

Coin sales pushed the Tampa company's revenues well beyond $14-million last year, up from zero in 2002. A National Graphic article and TV special about the S.S. Republic's discovery provided unprecedented buzz.

The company ditched its small, rented offices in Tampa for a $3.3-million, 23,500-square-foot headquarters nearby.

And long-suffering CEO John C. Morris cashed in enough bulked-up stock to buy a $525,000 waterfront home in Pass-a-Grille, a 2004 Lincoln Navigator and a 2005 Mercedes Coupe, according to public records.

It's a remarkable reversal of fortune for a company that survived by paying some bills with stock rather than cash, selling stakes to investors like St. Petersburg millionaire Jim MacDougald, and skipping annual shareholder meetings to save money.

But a new lawsuit might toss cold water on the celebration.

In a complaint filed with the South Carolina Circuit Court in Charleston, maritime researchers claim Odyssey used some of their confidential data to find the Republic but did not share the treasure or the credit. The plaintiffs argue they are entitled to some of both and punitive damages.

Odyssey called the claims "outlandish." "People can claim wild fantasies in a lawsuit," the company said in an e-mail Friday. "They don't have to have any proof or evidence."

But the stakes are significant. Having to share the riches of the shipwreck could tamp down Odyssey's stock price and starve future missions of necessary capital.

After years of preparation and legal wrangling, for example, the company is poised to begin recovering the wreck of the HMS Sussex, a 17th-century British warship that sank in the western Mediterranean with a cargo of coins potentially worth more than $1-billion.

Whoever is right, the dispute illustrates that even success can be perilous in the uncertain world of treasure hunting.

Both sides claim a lengthy pursuit of the Republic.

Odyssey co-founders Morris and Greg P. Stemm say their search efforts date to 1991; at the time, they were managing a publicly traded Tampa company called Seahawk Deep Sea Technologies Inc., which is a named defendant in the suit. The plaintiffs, Republic & Eagle Associates Inc. of Summerville, S.C., and Sea Miners Inc. of Baltimore, say their key officers were hunting the ship as far back as 1980.

The group includes Alan Riebe, author of a 762-page book titled Chronicles of Shipwrecks and Sunken Treasure, 900-1900 A.D.: A Guide for Undersea Explorers; Mark Hylind, who profited handsomely from a 1985 shipwreck discovery off the Florida coast by the late treasure hunter Mel Fisher; and Lee Spence, who began hunting the Republic, which sank in a storm en route to New Orleans in 1865, 25 years ago.

Both parties agree that all three companies, Seahawk, Sea Miners and Republic & Eagle, signed a contract in 1995 to share research on the elusive shipwreck, then code named "Golden Eagle." A July 1995 St. Petersburg Times article described the deal and quoted the principals.

"It makes sense to join forces and minimize the risk to investors," Sea Miners president Hylind said. "This should get Seahawk's offshore team back on the water with some competent partners," Seahawk CEO John Lawrence added.

But by then, Morris and Stemm were no longer employed by Seahawk. They had left the company in 1994 and signed a three-year noncompete agreement.

The key dispute, it appears, is whether Odyssey somehow obtained the research Sea Miners and Republic & Eagle helped generate in the mid 1990s and used it to find the Republic on June 3, 2003.

In Friday's e-mail, Odyssey denied the allegation. Because Morris and Stemm were gone by the time Seahawk signed the joint venture, it said, they never got access to the group's research.

"Odyssey did its own research," it said. The article published in National Geographic's September issue called the shipwreck search a "tenacious 12-year research effort" by Stemm and Morris.

The plaintiffs, in turn, claim Morris and Stemm got hold of the data and used it. They allege the pair, who remained Seahawk shareholders after leaving the company, conspired with Seahawk spokesman Dan Bagley to sue Seahawk, gain access to its confidential joint-venture research, and fold the information into the computer model Odyssey used to find the ship.

Bagley is one of three other former Seahawk officers who were named as defendants but have yet to be found by the plaintiffs. "(Morris and Stemm) have had no influence over the business of Seahawk since the date of their resignations," Odyssey officials said in the e-mail.

As the plaintiffs await a response to their lawsuit, Odyssey continues to probe for treasure from the Republic.
Its search of the ship is complete. But because it has found only 25 percent of the coinage its research suggests was on board, Odyssey is scouring the ship's debris field.

Also in the works are two traveling and one permanent exhibit for showing off some of the Republic's other artifacts - including bottles, religious items and domino sets - and Odyssey's wreck-finding methodology.




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