SS Central America Gold Recovered Again After Wrongful Seizure by US Marshals

“This was not a garnishment, we were robbed!”

by Adam Crum

It was a Twilight Zone moment for me on September 14, 2006, to be sure.  Standing before me at Monaco’s $10 million California Gold Rush era exhibit at the Long Beach Coin, Stamp and Collectibles Expo were men who identified themselves as officers of the U.S. Marshals Service.  With the marshals were men dressed in official looking Brinks security guard uniforms . . . and some attorneys. 

They promptly served me with a notice of seizure, a seizure order signed by U.S. Magistrate Judge Jennifer T. Lum of the U.S. District Court for the Central District of California, a writ of maritime attachment and garnishment, and a number of other legal papers. 

An elaborate joke or an Ocean’s Eleven-style sting?

To say that I was incredulous is an understatement, and the paper badges the Marshals had flashed me did nothing to allay my skepticism. 

My brain went into overdrive as I tried to make sense of what was happening.  Was I being filmed by a television show?  Was someone playing an extraordinarily elaborate practical joke on me?  Or worse, was this an Ocean’s Eleven-style sting?  One thing I knew for sure: If this was real, it was a gross abuse of justice. 

Valued at over $3.5 million dollars in today’s dollars and owned by Monaco and its customers, the items listed for seizure were six rare and unique gold ingots (including 754-ounce Justh & Hunter and 662-ounce Kellogg & Humbert gold ingots) and an 1857 $20 gold piece.  These items were recovered nearly two decades ago from the 1857 shipwreck of the SS Central America, the legendary “Ship of Gold,” by famed underwater explorer, Tommy Thompson. 

“The greatest treasure ever found” Life Magazine March 1992

Between 1853 and 1857, once it had made its way from Panama City via rail to the Atlantic Ocean, nearly a third of the gold shipped from California to New York was carried by the side-wheeler, the United States Mail Steamship Central America.  In September 1857, on her 44th trip and carrying a fortune in gold rush gold and nearly six hundred passengers (many of whom were also carrying gold), the ship sailed directly into a hurricane of monstrous proportions as she rounded the Florida Keys. 

At 8:00 PM Saturday, September 12, 1857, having miraculously transferred every woman and child (except one) to another ship that had come upon them, the Central America rose bow-up, disappeared into the seething ocean and came to rest 8,000 feet below the surface about 160 miles off the coast of Charleston, South Carolina.  Over four hundred lives and twenty-one tons of California gold bullion and coins were lost. 

Historians say that it took the sinking of just one ship, the SS Central America, to trigger the Panic of 1857 and the failure of thousands of businesses nationwide.  Some believe that this chain of events may have helped to precipitate the Civil War. 

Fast-forwarding to the 20th century, Tommy Thompson and the Columbus-America Discovery Group, utilizing cutting-edge technology and an undersea robot, went searching for the mostly forgotten S.S. Central America and its treasure.  In September 1989, Thompson and his colleagues sailed into Norfolk Harbor with a priceless and historically-significant treasure in gold coins, ingots and gold dust from the California Gold Rush that they had recovered from the wreck of the Central America.  So carefully preserved by sea sediment, the find was designated in mint state.  Life magazine called it “the greatest treasure ever found.  It yielded more numismatic treasures, including Type I Double Eagle coins, than all other known recoveries to date. 

Recovered Again

After a number of phone calls to Monaco’s attorney, we still weren’t able to immediately confirm if this was a hoax or for real.  When our attorney asked me if they had guns, I realized that while I was willing to verbally and legally fight against a wrongful seizure, I wasn’t willing to take a bullet.  Since the collection was fully insured, our attorney told me to “let them have it.” It isn’t worth a life, he instructed.  If they are for real, well fight to get it back.  And, if it is theft, we’re insured.

As far as I was concerned, this was not a garnishment.  This was not an attachment.  We were being robbed!  This was, purely and simply, theft of private property. 

Wrongful seizure to which Monaco wasn’t even a partyq

The treasure recovered by Tommy Thompson and Columbus-America Discovery Group in the late 1980s had remained locked in vaults for more than a decade while ownership was resolved in Federal courts.  In December 1999, a Federal judge awarded the Columbus-America Discovery Group 92% of the find.  The remaining percentage was awarded to the insurers (or their successors) of the SS Central America.  Sotheby’s sold the insurer’s portion of the treasure in December 1999.

To set the record straight, the items were wrongfully seized from the Monaco exhibit as security for damages in connection with a lawsuit filed against Columbus-America Discovery Group earlier in New York City by International Deep Survey, Inc., an underwater research company, and nine current and former employees of that firm, claiming they were still owed nearly $12 million by Columbus-America and others for sonar work performed two decades previously. 

Columbus-America Discovery Group had previously removed the case to the U.S. District Court in the Southern District of Ohio because a maritime contract is deemed a Federal and not a state question.  Additional proceedings have taken place in U.S. District Courts in New York and California, with the initial one located in the Eastern District of Virginia, where the SS Central America litigation has been continuing for nearly 20 years.

After finding the Central America, the group brought an “in rem” proceeding in Admiralty Court seeking to establish ownership of, and the right to salvage, the ship and its cargo of gold and other artifacts.  Under salvage law, the original owners still retain their ownership interests in such property. It competes with the law of finders, which, in contrast, expresses the ancient and honorable principle of finders, keepers.

Meanwhile, the sonar company claimed they received no remuneration and asked that the Court issue process for attachment and garnishment in the amount of $11,909,880 an erroneous sum concocted up from bad or no information and some verbal agreement involving two parties, some two decades ago.  Truly unbelievable!

A clear win for all collectors that rightful ownership will always prevail

It was clear to all of us Monaco that International Deep Sea Survey had absolutely no right to hold the private property that was seized as hostage for their claims against others.  After 20 years, for an attorney to exploit the courts in a manner where we, an innocent party, were unable to provide facts to thwart it, was absolutely outrageous.

After waiting for what seemed to us an excessive amount of time to be heard by the court (especially since we had nothing to do with the original case) Monaco Rare Coin and its president, Michael Carabini, brought an action to vacate the attachment and seizure orders.

On Carabini’s suggestion to end the “madness” immediately, lawyers for the Plaintiffs making legal claims against Tommy Thompson and The Columbus America Discovery Group agreed that none of the seized property was owned in any way by Thompson and the Discovery Group companies. 

The key issue at hand resulted from one prerequisite of a Rule B attachment: “Is the asset owned by the debtor?”

Monaco’s president stated aptly that, “Because the Plaintiff’s purported claims are against Colubus-America Discovery Group and not Monaco, the seizure was absolutely erroneous.  This is a win for all collectors who have doubts associated with government or third party seizures of their private wealth held in rare coins.  There is no question in my mind that the courts in the United States of America will uphold the rights of a bona fide purchaser for value, called a BFP, and that a BFP will ultimately prevail.

In fact, Monaco’s president demanded that part of the court order, which was signed by Judge Jennifer T. Lum on October 25, 2006, stipulate that Plaintiffs and their counsel acknowledge that they “are hereby precluded from asserting any claims against any bona fide purchasers of artifacts or numismatics recovered from the SS Central America.”

In order to speed up the return of the seized treasure to our customers and assist owners of any shipwreck treasure and numismatic items in general, Monaco agreed not to seek damages against the individual attorneys arising out of the attachment and seizure of property for malicious prosecution, abuse of process, wrongful seizure, wrongful attachment or Rule 11 sanctions.

I am thrilled to report that the seized items were recovered from the court on October 27 when the same U.S. Marshal and the attorney for the sonar company returned the sealed storage containers to Monaco.  We appreciated receiving an apology from the Plaintiff’s lawyer as well, and it was no surprise that the attorney who orchestrated this ill-conceived seizure actually asked if it would be too much trouble to have his picture taken with these amazing historical gold artifacts. I had to smile as I sat and watched him glow as his picture was snapped.

Unpacking the gold bars and the coin from the sealed containers was like greeting old friends.  How ironic that these historic treasures, recovered from the bottom of the sea in the 1980s, had to be “recovered” again in 2006!  But, they’re home now!  It’s like having my babies returned to me.  All the purloined items are now back with their rightful owners. 

This is a victory for all collectors and clearly demonstrates that rightful property ownership will always prevail.