Ship of debt
This story originally was published in the June 1999 issue of Columbus Monthly.
For one bright, crisp October moment in 1989, Tommy Thompson had it all. He was a genius. A hero. Soon he’d be a millionaire many times over. To the scores of wealthy Columbus investors who stood on that pier in Virginia, watching his ship—their ship—come in, Tommy Thompson was a god.
“I still get chills just thinking about it,” says one man who was there. “Here was a guy who beat the odds, just thumbed his nose when everybody told him he couldn’t do what he said he was gonna do. He went and pulled it off—made history, really. And we got to be part of all that. I mean, there were people practically crying on that dock, they were so happy for Tommy.”
Happy for themselves, too, no doubt, as they watched a parade of crew members lugging heavy ammunition cans from the ship through a cordon of armed guards to two Brink’s trucks parked alongside the dock. Inside those drab, utilitarian cans were thousands of gold coins, gold bars, gold ingots, all recovered by Tommy Thompson and his Columbus America Discovery Group from the bottom of the Atlantic Ocean.
The gold had lain undisturbed, undiscovered, seemingly unrecoverable, since 1857, when the S.S. Central America sank during a hurricane, some 160 miles off Cape Hatteras. While the wreck disintegrated on the ocean floor, the gold just sat, perfectly preserved over more than a century, waiting for someone with enough brilliance and gall and damn-the-odds tenacity to find it and raise it more than 7,000 feet to the choppy surface.
The man the gold had been awaiting turned out to be Tommy Thompson, a then 37-year-old former Battelle engineer and lifelong science wonk who’d been obsessed with the Central America and her precious cargo ever since he was in college at Ohio State in the ’70s. And now, backed by $12.7 million from a Columbus-based group of 161 investors, darned if Thompson hadn’t gone and done the impossible.
As the gold-laden Brink’s trucks rolled away towards a tightly guarded warehouse somewhere in Virginia, Thompson and his crew, their families, the investors and a handful of media types strolled to a couple of white tents set up nearby for a celebratory buffet.
Later author Gary Kinder, whose book recounting Thompson’s quest, Ship of Gold in the Deep Blue Sea, was published in 1998, interviewed Fred Dauterman, an accountant who’d joined with a number of his partners at the firm now named Deloitte & Touche to invest more than $2 million in the project. “During a lifetime, you don’t have many things that are like a happening,” Dauterman told Kinder, recalling that October day, “and this was like a happening. Everything just came together perfectly.”
The 10-year war
Almost a decade has passed since that one perfect day in Virginia. For Tommy Thompson, his investors and everyone else connected to the Columbus America Discovery Group, those 10 years should have been years of triumph, acclaim and wealth. They’d already done the impossible. Everything else—recovering the rest of the Central America’s treasure, perfecting their title, selling the gold—was just . . . busywork.
In the early, heady days, estimates of the total value of Thompson’s find on the world’s gold-collecting markets ranged as high as $500 million. His investors, all people of considerable wealth even before they’d put money into the Central America project, hardly needed calculators to do the math. Suddenly the $250,000 invested by Don Fanta, then president of the Ohio Company, was looking like $8 million or so. Car dealer Len Immke’s $50,000 stake might be worth $1.5 million. Dispatch Printing Company chairman J.W. Wolfe had risked $323,750; his payoff could be $10 million.
Tommy Thompson himself had invested no cash—had none, in fact, to invest. But he’d sunk five years of his life and all of his considerable talents in the project. As the sole general partner in Recovery Limited—the entity initially set up to finance Columbus America Discovery Group—Thompson’s share was to be 34 percent of the treasure, though he’d later assert in court documents that he’d given away half of his interest to key staff members. Even with a 17 percent share, Thompson stood to wind up with $60 million or more. Market the gold and let the good times roll!
But the devil is in the details. And when big money is at stake, the smallest details can become formidable obstacles. Even as Thompson celebrated on the Norfolk waterfront, the first seeds of a decade of frustration and acrimony were being sown in a federal courthouse across town. There, on the day the gold came ashore, 37 insurance companies filed a lawsuit claiming that they, not Tommy Thompson and his investors, were entitled to the Central America’s treasure because they or their predecessor companies had paid insurance claims after the ship sank.
It would take nearly seven years of bitter litigation and millions of dollars in legal fees for Thompson to establish that Recovery Limited was entitled to the vast majority of the gold. And by the time the legal smoke began to clear in 1996, several other things had happened, none of them good:
• Columbus America Discovery Group had used up its investment capital and been forced to borrow money to keep operating, running up debts estimated now to be more than $43 million.
• Out of cash and out of credit, Thompson had been forced to suspend recovery operations, leaving perhaps as much as 15 tons of gold at the bottom of the Atlantic.
• The numismatic market for collectible gold coins, at a peak in 1988 and 1989, had tanked badly in the early ’90s, dramatically reducing the potential auction value of the Central America’s trove.
• Thompson had been through protracted divorce proceedings that distracted him at critical moments and eventually ended in a settlement that required him to give up a significant share of his own stake in Recovery Limited to his ex-wife.
• Always secretive, Thompson had become increasingly suspicious and isolated, even from his own investors—an isolation that would lead in 1998 to an attempt by one investor group to force a management change.
Thompson beat back that challenge, as he’s beaten back every challenge since 1985. “I have to be the central authority,” he has repeatedly told investors. And surely it was in part his insistence on total control that drove the Central America project to success.
But Thompson’s obsession with control may now be blocking him from being able to accept management and financial advice, from finding new sources for the $40 million he says he needs to recover the rest of the Central America’s cargo of gold, from finalizing a plan to market the gold that’s already been recovered. After 10 years of constant battles—sometimes against his own allies—Tommy Thompson may be his own worst enemy.
In a 1990 court filing, Thompson’s lawyers sought to explain why their client had been too busy to appear at depositions in his divorce case. Columbus America Discovery Group “is not IBM or General Motors,” the memorandum said. “Rather, while its successes are very large, it is in fact a very small and loosely organized group. Mr. Thompson does not sit atop a hierarchy; there are few, if any, people to whom he can delegate the essential tasks.”
“Columbus America is wholly dependent on Mr. Thompson. . . . .[H]e must attend to the very substantial present financial and future marketing problems that confront the project. . . . [T]he financial success of Recovery Limited remains yet to be achieved. . . . None of the gold has yet been marketed, nor is it clear that it can or should be before recovery is complete, or nearly so. Until marketing of the treasure has produced a financial return to Recovery Limited, bank loans cannot be repaid, investors’ capital cannot be refunded to them, and distribution of net income cannot begin.”
Nine years later, nothing has changed.
Show us the money
When Tommy Thompson and D. Wayne Ashby Jr., then the senior partner at the Columbus office of Deloitte, Haskins & Sells, first began recruiting investors in the mid 1980s, few of those who wrote out checks really believed they’d ever see their money again. “Tommy made an amazing presentation,” recalls one investor, “and with Wayne involved, we knew the numbers would be OK. Wayne wouldn’t screw around with a deal. But everybody knew it was a long shot, too. Even after he’d found the ship, when he was building that little submarine, nobody was sure he could actually get the gold.”
Get it he did, though, and in the afterglow of Thompson’s success, investors waxed almost rapturous. One of his biggest fans in those days was Donald Dunn, the retired chairman of Plaskolite Inc., who with his late wife, Mary, invested $122,000. “Donald Dunn was very supportive,” says Bill Wright, another retired Deloitte & Touche partner who invested $50,000. “I recall one early meeting where Donald spoke very eloquently about what a magnificent achievement it was. I know he’s turned in the other direction now.”
The other direction indeed. The Dunns gave most of their partnership investment to their children years ago, but he still tries to keep up with what’s happening. And he’s grown increasingly bitter. “Years would go by,” Dunn says, “and we wouldn’t hear anything at all. If you asked questions, they said it was too sensitive. Then there’d be a meeting, and you’d go, and nobody would answer questions there either. I got sick of it after a while. To tell the truth, I wonder how much gold they ever really found.”
Dunn’s at the far end of the cynicism spectrum; nobody else is suggesting that Columbus America didn’t actually bring up the gold—some three tons of coins, bars, ingots and bullion, by most accounts. But other investors have become increasingly restive as the years have passed.
“Maybe with hindsight, he hasn’t been a businessman in every sense of the word,” says Wright, who, like Dunn, has given his partnership to his children. “It seems to take an abnormal amount of time to accomplish anything. They set up some kind of a board of partners to provide more information, but I don’t think we’ve been getting enough. We go for months and months without really knowing what’s going on.”
One of the investors who agreed in 1998 to serve as information brokers between Thompson and the larger investor group is Gil Kirk, who invested $28,000 in the early rounds of partnership offerings and now spends a fair amount of time trying to help Thompson sort things out. Kirk says he has considerable empathy with the investors who are angry. “We’re in the 15th year of this thing,” he says. “You can’t blame people who are in their 70s who put their money in when they were in their 50s for being frustrated. Hell, I’m frustrated, and I’m on Tommy’s side.”
That said, Kirk contends Thompson has good reasons for not being more forthcoming, even with his own investors. “Tommy doesn’t want to give any information to the people who are trying to gain advantage over us and control the treasure.” Who might those people be? “I can’t tell you that,” Kirk says. “If I told you that, I’d have to kill you.”
He’s joking, but only barely. “This isn’t a game,” Kirk says. “We’ve got all the money that this town has put up at risk here. We’re walking a tightwire. We’re sworn to confidentiality agreements. I can’t sit around and tell you the things I’d like to tell you; I’m liable for what I say.”
So, of course, is Tommy Thompson, but these days he’s not saying anything, at least for public consumption. Thompson’s assistant, Allison Antekeier, says Thompson hasn’t been interviewed by print media since 1996, “and right now, he’s just not in a position to talk.”
A soft rebellion
From 1989 until 1996, Thompson was constantly in motion. In 1990, 1991 and 1992 he led return voyages to the Central America site to recover additional gold and hundreds of artifacts, each of which had to be meticulously preserved and catalogued. When he wasn’t at sea, Thompson often could be found in Florida, where Omni Engineering Inc.—a company Thompson controls as president, but whose ownership is impossible to track—was developing newer and better versions of Nemo, the boxy little submarine with amazing recovery capabilities.
From Florida, Thompson might fly to Norfolk for another in the seemingly endless succession of court hearings. Beginning in 1990, U.S. District Court Judge Richard Kellam consistently ruled that Columbus America Discovery Group—not the complaining insurance companies—was entitled to the bulk of the Central America’s treasure under the maritime “law of finds.” But every ruling was followed by appeals, reviews, reconsiderations. And with every new motion, every new hearing, the legal bills mounted.
“Tommy was in agony,” says an investor. “He hated the legal crap, but he didn’t trust the lawyers enough to stay away from it. He was right there, every time there was a hearing. He read every page of every brief, and a lot of times he was helping with the writing, too.”
In 1995 the Fourth Circuit Court of Appeals upheld Kellam’s findings in an opinion that also gave Thompson a resounding vote of confidence. “We cannot imagine anyone demonstrating more diligence, skill and energy than Columbus America has shown here,” the court wrote. “Its efforts provide a standard against which all others should be judged.”
The appellate opinion set the stage for Judge Kellam’s final ruling. Just months before his death in June, 1996, Kellam awarded Columbus America 92.2 percent of the “commercial shipment” gold recovered to that point and 100 percent of future recoveries, including a 15-ton “Army shipment” that Thompson insists is still buried beneath the wreck. Kellam also put Thompson in charge of marketing the gold, although the federal court retained ultimate authority to approve or disapprove his plans.
Kellam’s ruling, widely publicized, raised the hopes of the Recovery Limited investors that their long-awaited payoff was just months away. But two more years dragged by with no action and almost no information. Finally, in mid 1998, some investors had had enough.
Led by Fanta, the former Ohio Company president, a group of six incorporated themselves as Central America Inc. and began a quiet campaign to force Thompson to accept the new corporation as a second general partner in Recovery Limited.
In addition to Fanta, the group included real estate developer Tod Ortlip, who with his brother Jay and other family members had sunk nearly $500,000 in the project; Dispatch Printing Company treasurer Ken Pierce, a $25,000 investor; Bank One Columbus president Dave Lauer, a former Deloitte & Touche partner who had invested with Ashby’s group; John Christie, the former Columbus Chamber of Commerce president who was then managing investments for Worthington Industries founder John H. McConnell, a $210,000 investor; and Steve Dutton, now a senior executive with the Casto real estate organization, who’d invested $37,000 through this previous company, Print Communications Group.
“We became known as the Fanta group,” says one of the insurgents. “We were seen as the extremists.”
“What it was,” says Kirk, “was people who had invested a bunch of money over a long period of time and hadn’t heard anything about their investment and were infuriated by that. I can certainly relate to that, but I couldn’t support them against Tommy. I mean, look at all the man has done.”
Initially, the insurgent group’s objective was to take over much of the management and financial responsibility from Thompson. “Our hope was that Tommy would embrace the concept that he needed help and that the partnership needed to operate in a more businesslike way,” says one member.
No such luck. “Tommy became upset,” says the investor. “We heard this through others. Tommy never talked to us.”
The showdown came two days before Thanksgiving at a lengthy, closed-door meeting at the Hyatt Regency Hotel in downtown Columbus. By secret ballot, a majority of investors rejected the insurgents’ plan to install a second general partner. Tommy Thompson remained in total control.
Many investors at the meeting took their cues from Wayne Ashby, now retired and living in North Carolina, who urged the group to back Thompson. “Wayne’s still staunchly loyal,” says one investor. “He says he’s staying with the guy. But deep down he’s just sick of it all and wishes it would go away.”
Ashby declined to be interviewed, but did fax Columbus Monthly a brief letter, explaining that he fears any publicity “could have a negative impact on current negotiations that I understand are taking place. Accordingly, I do not want to be part of such an article.”
“As far as Tommy is concerned,” Ashby’s letter continued, “in general I am supportive and have empathy for what he has been through. . . . His hands have been tied as he has been involved in ongoing difficult legal situations and negotiations. . . . It has been extremely difficult for him, which in turn has made it difficult for the investors. However, I have never known anyone to work under as much pressure and stress for such an extended period.”
Although the insurgents had failed, some investors left the November meeting encouraged. The brief battle “resulted in our getting a more concrete relationship with Tom,” says Kirk. Another investor, who voted with the insurgents, says the group’s objective was “to force some change. And it worked. I don’t think change would have occurred without that action.”
Once again, investors’ hopes had been raised. And once again, they’d be disappointed.
One strategy that emerged from the November meeting was to raise the $40 million Thompson says he needs to go back to sea and find the elusive 15 tons of “Army gold” that may or may not lie beneath the skeletal remains of the Central America. At the current gold bullion price of around $285 per once, a 15-ton cache would be worth about $137 million—well worth a $40 million investment if the gold exists. But does it exist?
Thompson’s plan is to convert Columbus Exploration Limited, a Delaware partnership formed in 1990 to finance additional explorations, to a corporation that would raise the needed $40 million. Columbus Exploration reportedly raised $9 million in its initial partnership offering and subsequently spent it all, but there’s no indication that the money produced any new discoveries.
So far the refinancing plan has gone nowhere. Existing investors and potential new ones are understandably skeptical about risking more millions when the prospects for recovering even a portion of the original investments are dim.
Another obstacle is an increasingly bitter legal battle between Thompson and Christie’s, the London-based auction house which is Columbus America Discovery Group’s principal—perhaps only—creditor. To finance recovery operations, legal fees and other costs in the years after the 1989 gold find, Thompson initially borrowed from Bank One, collateralizing the loans with his most valuable asset, the Central America’s gold.
By the mid 1990s, Columbus America had defaulted on several loan covenants, and Bank One was becoming nervous. Faced with a possible foreclosure that could have forced the gold into the depressed numismatic auction market, Thompson cut a deal with Christie’s. The auction house would loan Recovery Limited $30 million (subsequently increased to $35 million) to pay off Bank One and finance future operations.
The plan was that when the market improved and all legal hurdles had been cleared, Christie’s would sell the gold at auction through Spink America, its rare coin subsidiary. The proceeds would pay off the Christie’s loans (now estimated at more than $43 million, including accrued interest) and, with luck, provide some return to Thompson and his partners.
Nobody knows when—or if—that plan will be executed. In recent months Thompson, Christie’s and the consortium of insurance companies have been at odds again in federal court. The insurers want to sell their 8 percent share of the recovered gold, but a falling-out between Thompson and Christie’s has brought plans to sell the other 92 percent to a standstill.
Christie’s reportedly is threatening to foreclose on its loans to Columbus America, and U.S. District Court Judge J.C. Clarke seems far less enamored of Tommy Thompson than his predecessor, Kellam. In one 1998 ruling, Clarke found Columbus America Discovery Group “not competent to handle the treasure,” although he subsequently allowed negotiations to continue.
Coin dealers and collectors have been waiting 10 years for a chance to buy some of the Central America’s mint-condition coins—or even just to examine the full inventory. “I want them to at least display this stuff at our convention,” says Steve Bobbitt, public relations director for the American Numismatic Association. “But every time I see something about it, it’s tied up in court. What should have been a very simple thing is not.”
Bobbitt compares Tommy Thompson to the late Mel Fisher, a treasure hunter who found the sunken galleon Atocha off the coast of Florida: “He was a great adventurer and he found a lot of stuff, but he didn’t know how to handle it once he got it.”
The last 10 years have been anything but easy for Tommy Thompson. He’s gotten divorced, seen his partnership go deeply in debt, been forced by lack of money to shut down his search and recovery operation, fallen out with some of his own investors and—so far—been unable to sell the treasure he has recovered on terms he’s willing to accept. Small wonder that he’s occasionally shown signs of stress.
“There has been so much divisiveness, so much anger,” says one investor. “I just hope Tommy doesn’t crack up.”
According to one former employee, Thompson did momentarily crack up in Columbus America’s offices on an afternoon in May, 1997. In a civil damage suit that’s scheduled to be tried in June, Columbus America’s former human resources director, Victoria Shields, says Thompson “became enraged and began verbally and physically intimidating Mrs. Shields and her son without provocation. Over the next 45 to 60 minutes, Thompson proceeded to chase Mrs. Shields and Mr. Dunham [her son] throughout the third-floor office suite and physically assault her. Mr. Dunham attempted to protect Mrs. Shields and he, too, was physically assaulted. Thompson attempted to choke them, punch them and restrain them with his forearms and arms, tearing their clothes and bruising and cutting them.”
Shields says her injuries required $421 in emergency-room treatment. “Before the incident,” her suit contends, “Thompson had manifested behavior which was erratic, temperamental and inappropriate to the workplace.” She’s seeking damages, including more than $220,000 in lost salary.
Thompson, in a counterclaim, says Shields was a bad employee who charged personal items on Columbus America credit cards, allowed her son to drive and wreck a company van, borrowed $33,000 from the partnership and failed to repay it.
Thompson declines, through his assistant Antekeier, to give his version of the incident. Antekeier herself, however, says such a violent outburst would be totally uncharacteristic of the man she’s worked for for two years. “I’ve seen some very, very stressful situations, and I just can’t see it happening,” Antekeier says. “I can’t even imagine it happening. Usually it’s Tommy that keeps us calm.”
A close friend says that after sometimes-contentious divorce proceedings that went on from 1989 until 1992, Thompson has reestablished good relations with his former wife and their three children, now 16, 13 and 11. “He’s a very gentle, sweet man,” the friend says. “He spends a lot of time with his kids. He feels really bad about the fact that he didn’t spend as much time with them as he should have when they were looking for the gold. . . . The kids are crazy about him now. They’re over at his house all the time.”
Thompson lives in a rented, sparsely furnished house near the Olentangy River. His lawyers have asserted in court filings that he’s never paid himself a salary of more than $60,000 a year. Everyone seems to agree that his quest hasn’t been primarily for wealth. “He is not in it for the money, I can assure you,” says the friend. “That’s not what motivates him. He’s into the challenges. If he gets rich, great. If he doesn’t, he doesn’t care.”
Perhaps not, but there are others who think Thompson should care, especially when he’s spending their money. There’s no denying that Thompson and Columbus America Discovery Group have received a great deal of money—an estimated $57 million all told, including $22 million for investors and $32 million in loans. And all or nearly all of that money has been spent. “One of our problems the last two or three years was, we ran out of money,” says one investor. “That was something nobody knew.”
Also unknown is the relationship between Columbus America and Omni Engineering Inc. and EZRA Inc., two corporations controlled by Thompson. Omni Engineering, a Florida company licensed to do business in Ohio, may have an interest in Nemo, the sophisticated undersea robot. EZRA owns Columbus America’s headquarters, a restored, 5,000-square-foot building opposite Goodale Park on Buttles Avenue (purchased for $365,000 in 1994) and a $215,000 building on West Sixth Avenue near Battelle. Thompson is listed in filings at the Ohio Secretary of State’s office as president of both Omni Engineering and EZRA. But who owns the stock of the two companies? Does Thompson get income from either? He’s not talking.
If the partners are ever to see their investments again, someone must break the stalemate between Columbus America and Christie’s. Some investors are optimistic. “I think there will be money for investors,” says one member of the insurgent partner group.
Others are cynical. “It’s gone,” says Donald Dunn. “Just gone. That’s it.”
And some are caught in the middle. “This is really hard, hard stuff,” says Gil Kirk. “Will it ever be over? The answer is yeah. But I can’t tell you when. Nobody knows the answer to that.”
Least of all Tommy Thompson, who spends his time these days shuttling between his office on Buttles Avenue, the federal courthouse in Norfolk and Christie’s offices in New York City, trying desperately to negotiate a compromise that will let him sell the gold he found 10 years ago—and perhaps send Nemo back to the bottom of the Atlantic to search for more.
If Thompson revisits that pier in Norfolk, perhaps his mind’s eye can somehow peel away 10 years of failed decisions, nasty litigation, lost friendships and shattered dreams. Perhaps for a moment 47-year-old Tommy Thompson recaptures the pure joy of being 37-year-old Tommy Thompson, standing proudly on the deck of his ship as the band plays “Stars and Stripes Forever” and scores of investors applaud his singular achievement.
If Thompson knew then what he knows now, would he do it all again? Or would he turn that ship around, head out to sea and dump three tons of gold back to the bottom of the Atlantic, 7,000 feet straight down?
Herb Cook Jr. is a senior editor for Columbus Monthly.