Arggg! U.S. Court Orders The Return Of 500 Million Dollars Of Gold Coins To Spain

An appellate court has upheld a lower court decision that ordered American treasure-hunter Odyssey Marine Exploration to return to Spain some 594,000 gold and silver coin valued at roughly $500 million recovered on the ocean floor from a sunken Spanish Galleon. The United States government supported the Spanish in the claim and the coins are supposed to be returned to Spain within ten days.

Here is how the Court described the case in an earlier ruling:

Odyssey is a deep-ocean exploration and shipwreck recovery business. In 2006, Odyssey began what it called the Amsterdam Project, researching ships that sank in a heavily-traveled area, which included an area off the coast of Gibraltar. Odyssey developed a list of target vessels to search for, one of which was the Nuestra Senora de las Mercedes (Mercedes), a Spanish vessel that sank in 1804. According to Odyssey, it “recogniz[ed] that Spain may have had a cultural (if not legal) interest in vessels that may be located within the Amsterdam area, [and] invited Spain to participate in the project.” Odyssey’s Resp. to Spain’s Motion to Dismiss, Dkt. 138 at 3. Odyssey’s CEO and counsel then met with a representative from Spain’s Ministry of Culture. What occurred at the meeting is disputed, but both Odyssey and Spain agree Spain did not give Odyssey approval to salvage any sunken Spanish vessels.

In March 2007, while Odyssey was surveying the Amsterdam area, Odyssey discovered a shipwreck in international waters 100 miles west of the Straits of Gibraltar at a depth of 1,100 meters. The remains of the shipwrecked vessel were spread over the seabed in an area 368 meters long and 110 meters wide. Odyssey conducted a detailed survey of the shipwreck before disturbing any artifacts on the ocean floor and then began to recover objects from the site. Odyssey ultimately recovered approximately 594,000 coins and a number of other small artifacts.

The company claimed that the size of the debris field made the origin of all of the coins impossible to determine. However, the U.S. courts disagreed. The company called the ship The Black Swan but the court found the identity of the vessel was the Nuestra Señora de las Mercedes sunk by the British off Cape St. may, Portugal in October 1804.

The court found that the company was looking for the Mercedes and found the Mercedes — noting that all of the coins were minted in Lima, Peru and all of the cannon matched those believed to be on the Mercedes.

Here is how the district court described the life and demise of the ship:

The historical prelude to the Mercedes’s fateful, October 5, 1804, encounter with a British squadron near Cape Saint Mary, Portugal is well documented and is the obvious starting point for correlating the res to the Mercedes. Within a decade, Spain fought with the British against revolutionary France (Guerra de la Convencion or War of the Convention — 1793-1795); ended those hostilities with the Peace of Basel (1795); quickly signed another treaty pledging support to France (Treaty of San Ildefonso — August 1796); and reaffirmed this alliance in a second treaty that demanded it cede Louisiana to France (Second Treaty of San Ildefonso — 1800). (Doc. 131, Ex. C PP18-19.) In 1802, after years of constant strife, the European powers settled into a temporary respite with the Treaty of Amiens. (Doc. 131, Ex. C P 20.) But this lull [**17] did not allay Spain’s concerns about France. Fearing France’s invasion, yet knowing that Britain would consider Spain’s actions a cause for attack, Spain sought to appease France by secretly agreeing to pay a monetary subsidy in lieu of furnishing the military aid required by the first Treaty of San Ildefonso. (Doc. 131, Ex. C PP 21-22.) In short, Spain needed all its resources for these tumultuous times; accordingly, it dispatched frigates to collect “specie and precious produce” from its American Viceroyalties. (Doc. 131, Ex. A at PP 15-16.) One was the Mercedes. (Doc. 131, Ex. A at P 15.) By the time the Mercedes reached El Callao (near Lima, Peru), France and Britain were already at war. (Doc. 131, Ex. A at P 14; Doc. 131, Ex. C at P 24.) Madrid’s June 8, 1803, dispatch to the Viceroy of Peru (the Marquis of Aviles) captures the fluidity of the political events:

The political circumstances in Europe and the declared War between England and France require every Commander of the King’s vessels to increase their care and vigilance to be prepared just in case H[is] M[ajesty] found himself in the difficult circumstance of taking part in this [conflict] …; but in the meantime and to not [**18] endanger the existing specie in that Realm and give time to examine [*1133] the state that European political affairs are acquiring, as prudence dictates, H[is] M[ajesty] has found it proper to resolve that Y[our] E[xcellency] suspend the departure from Callao of the frigates, Asuncion, Clara, and Mercedes, which have gone [there] for specie ….

(Doc. 131, Ex. C at P 24.)

The following summer, the Mercedes and three other frigates (the Clara, the Medea, and the Fama), set out from Montevideo bound for Cadiz. (Doc. 131, Ex. C at PP 27-28.) Spain undoubtedly anticipated a conflict with the British. (Doc. 131, Ex. C at P 27.) On the morning of October 5, 1804, only a day’s sail from Cadiz, a British squadron forewarned of the mission intercepted the four frigates south of Cape Saint Mary. (Doc. 131, Ex. A at P 23; Doc. 138, Ex. E at Annex 27.) The British demanded their surrender; the Spaniards refused.

As soon as the [British] officer returned with an unsatisfactory answer, I fired another shot a-head of the Admiral, and bore down close on his weather-bow. At this moment the Admiral’s second a-stern fired into the Amphion; the Admiral fired in to the Indefatigable; and I made the signal for close battle, which was instantly commenced with all the alacrity and vigour of English sailors. In less than ten minutes, la Mercedes, the Admiral’s second a-stern, blew up along-side the Amphion, with a tremendous explosion.

Captain Graham Moore, Indefatigable 6
The force of the blast blew part of one of her quarterdeck guns into the Amphion’s rigging. 7 More than 250 perished, including its Captain (Jose Manuel Goycoa) and the family of Second Squadron Leader Diego de Alvear. (Doc. 131, Ex. A at PP 9, 25.) The remaining Spanish frigates surrendered, were taken to Great Britain, and impounded. (Doc. 131, Ex. A at P 26; Doc. 131, Ex. D at P 19.) Two months later, Spain declared war against Britain and sealed its fate by an allegiance to France. (Doc. 131, Ex. A at P 27.)

Of course, that battles pales in comparison to the carnage in federal court over ownership of the coins.

The long litigation involved some interesting historic cases and rivaling claims. It was Chief Justice Marshall who first ruled on the underlying doctrine of sovereign immunity in a case involving another Napoleonic War vessel — finding that the courts of the United States lacked jurisdiction over an armed ship of a foreign state in a United States port. The Schooner Exchange v. M’Faddon, 11 U.S. (7 Cranch) 116, 146-47, 3 L. Ed. 287 (1812). He enforced a rule that sought to protect the “perfect equality and absolute independence of sovereigns, and th[e] common interest impelling them to mutual intercourse.” Thus the case turned on the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C.S. § 1602 et seq. The lower court held:

Unquestionably, the Mercedes is the property of Spain — constructed in 1788 by Navy Engineers in the shipyard of the Spanish Navy in Havana, Cuba; commanded by officers and crewed by sailors of the Royal Spanish Navy throughout its service; and designated as a Spanish frigate of war. (Doc. 131, Ex. A at PP 7, 9, 12). It remains on the Royal Navy’s official registry of ships. (Doc. 131, Ex. [**38] A at P 7.) As such, 1609’s plain reading limits Odyssey to arguing the Court has jurisdiction under “existing international agreements” or as permitted by 1610 and 1611. None of these exceptions apply here, as Spain urges and Odyssey’s silence concedes. 17 Instead, Odyssey sidesteps § 1609’s exceptions by claiming: § 1609 does not shield property outside the United States; Spain must actually “possess” the res; the cargo should be partitioned to satisfy the descendants’ claims to the private lots; and other provisions of the FSIA deny Spain sovereign immunity from in personam claims. These contentions are without merit as all evade the FSIA’s goals, its statutory scheme, and the special status accorded warships per the various treaties and agreements § 1609 necessarily incorporates.

This is a video of the actual claims of the Odyssey sinking in the Florida courts.
Source: Daily Mail

63 thoughts on “Arggg! U.S. Court Orders The Return Of 500 Million Dollars Of Gold Coins To Spain”

  1. 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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