From the Virginian Pilot:
March 7, 1999

BY MARC DAVIS, The Virginian-Pilot
Copyright 1999, Landmark Communications Inc.

On the floor of a Chesapeake warehouse sat the biggest treasure ever recovered from an American shipwreck -- piles and piles of gold coins and gold bars in sparkling, mint condition.

Here was a stack of 140-year-old solid-gold coins, plucked off the Atlantic Ocean's floor. Each ``double eagle'' was worth about $3,500, and there were hundreds of them.Here, too, was a mound of glittering gold bars.

The largest weighed 62 pounds. As pure bullion, it was worth around $200,000. As a rare collectible from the California Gold Rush, it was potentially worth much more. And it was just one of scores of gold bars from the wreck.

One day last summer, this treasure -- spoils from the shipwreck S.S. Central America -- was divvied up among old enemies. Adventurers who plucked the gold from the 1857 wreck off South Carolina got most of it. Insurance companies got the rest. A federal magistrate judge from Norfolk kept the parties honest.

That day -- June 17, 1998 -- should have been the end of the biggest, longest-running legal battle ever in Norfolk's federal court. Instead, the fight over the gold has taken a nasty new turn. Last week, several tightly guarded secrets about the gold emerged during a rare public hearing in a Richmond appeals court and from appeals briefs:

After 10 years of boasting about its find, the Ohio company that discovered the gold in 1989, the Columbus-America Discovery Group, now says it might actually lose money on the venture. The company has spent tens of millions of dollars bringing up the treasure and fighting in court to keep it.

The company originally said the gold was worth up to $1 billion. The company now thinks the gold is worth between $100 million and $400 million.

Christie's, the famous New York auction house, was hired to sell part of the gold, but a Norfolk judge voided the contract last year, saying Columbus-America had misled the court about the sale. As a result, Christie's now has a $43 million claim on the gold and is trying to seize the treasure from Columbus-America.

A lawsuit is pending in New York. The Norfolk federal judge, J. Calvitt Clarke Jr., is furious with Columbus-America. He disqualified the company from marketing all the gold last year, saying he was disturbed by the company's ``lack of integrity.'' Clarke has ordered the public release of the treasure's inventory -- a 36-page list of every gold coin, bar and nugget retrieved from the wreck.

Columbus-America says this could ruin the gold's value and perhaps cause the company to lose money. The judge, however, said it's not his job to pump up the gold's value.

Finally, the gold was physically split up in June 1998 between the company and the insurers, in a deal that was kept secret until now. Most of the gold remains in the Brinks armored warehouse in Chesapeake. But not a single coin, bar or nugget has been sold so far, much to the judge's frustration.

On Tuesday, the attorneys were arguing again, this time before the 4th U.S. Circuit Court of Appeals in Richmond. It was

their third dispute before that court in a decade. When a judge complained, one lawyer nodded wearily. ``We're all tired of this case, I can assure you,'' Columbus-America's attorney, Richard T. Robol, replied. It didn't start this way.

The Central America was one of the hottest stories of 1989. That's when a bunch of long-haired, wild-eyed treasure hunters arrived in Norfolk with a most beautiful bounty: tons of gold.

It was a spectacular affair. Thousands of curiosity-seekers lined the piers behind Waterside to meet the ship. A high school marching band burst into ``The Stars and Stripes Forever.'' Wary guards toted assault rifles. A Brinks truck waited nearby.

``Gold! Lots of it!'' declared Bob Evans, one of the expedition leaders.

``It's a magnificent national treasure,'' Evans gushed that day, ``to be cherished, to be shared.'' Shared, it was not -- at least not immediately.

Before the ship docked, 45 insurance companies had pounced on the gold. Each filed a claim in Norfolk's federal court, based on policies that dated back to 1857. It was a lawyer's delight, and the tussling went on for years.

``Finders weepers? Trove mired in court,'' read a 1990 Virginian-Pilot headline.

The fight was hardly unexpected. Not only was this a stupendous treasure, it came from a stupendous wreck. The Central America was the Titanic of its day -- the most publicized shipwreck of its era. The side-wheeler, bound from Panama to New York, was packed with miners and businessmen from the California Gold Rush. The ship was filled with gold bars and coins. Many miners carried gold in their trunks and pockets.

The ship hit a hurricane 160 miles off the South Carolina coast. The crew and passengers spent two days desperately bailing, to no avail. The ship went down with 425 passengers and crew. Only 155 survived. How much gold sank? That's anyone's guess. Experts say there were 21 tons, but no one knows for sure.

Nowadays, the big question is: When will they finally sell the gold? No one knows that, either. Ownership isn't a problem. That was resolved three years ago. A judge awarded Columbus-America 92 percent. The insurers got 8 percent.

Last June, the two sides physically split the gold in the Chesapeake warehouse. Columbus-America divided the treasure into 90 lots of equal value. Attorneys for each side took turns picking lots until the insurers had seven.

That was their share. Both sides signed a settlement agreement. It didn't last. Within days, the president of Columbus-America, Tommy Thompson, had second thoughts. ``He had a change of heart,'' his attorney, Robol, told the appeals court Tuesday. ``They reneged,'' countered an attorney for the insurers.

Judge Clarke was disgusted. He signed an order dismissing the case following the settlement, saying it was too late to back out of the agreement. Columbus-America appealed.

Suddenly, just as the case seemed over, it wasn't. On appeal, secrets of the gold negotiations emerged -- some from oral arguments, some from written briefs. The most startling is that a new player, Christie's, is now trying to wrest the gold from Columbus-America. According to one appeals brief, Christie's lent the cash-starved Ohio company $35 million, secured by the Central America gold. In return, Christie's was to auction some of the treasure.

But the auction never happened. When Columbus-America defaulted on the loan, according to the appeals brief, Christie's went after the gold. The auction house recently filed suit in Manhattan federal court.

Judge Clarke became furious when he learned of the Christie's deal. He said it violated a previous marketing order that Columbus-America could only sell a certain part of the gold.

Last May, Clarke ordered Columbus-America to bring Christie's to the Norfolk courthouse. When Christie's failed to appear, Clarke slammed Columbus-America. ``It became unmistakably clear that (Columbus-America) had not been forthright with the court, underwriters or Christie's in its activities to market and sell'' the gold, Clarke wrote.

He ruled that Columbus-America ``is disqualified or not qualified by reason of the lack of integrity'' for failing to keep him informed, for signing the Christie's contract in violation of his previous order, and for failing to come up with a plan to sell the gold after ``years and years and years'' as the gold's sole marketer.

``For all those reasons . . . I still think and still hold that (Columbus-America) is not competent to handle the treasure,'' Clarke concluded.

What happens next? No one knows. The insurers want to sell their gold now. But to do that, they say, they need to release the complete gold inventory. After all, the insurers say, who would buy an expensive, rare gold coin without knowing how many others are out there?

``How could knowing the truth hurt anybody in this case?'' Guilford D. Ware, the insurers' attorney, argued Tuesday in Richmond. ``No one will be hurt, and it will remove any cloud over this gold.''

But Columbus-America wants to release the inventory in stages over five to seven years, as the gold is sold. That would ``build public excitement,'' culminating in a ``media blitz'' just before each auction sale, the company argues in court papers.

In Norfolk, Judge Clarke disagreed. He ordered the inventory unsealed last July. ``Whatever the court's appropriate role'' in the gold sale, ``it is not to conceal information from the public in an effort to artificially enhance the price of the salvaged items,'' he wrote. The appeals court is expected to rule later this year.

Meanwhile, the gold inventory remains secret, along with the shipwreck's exact location and information about the new technology used to find and bring up the treasure.

In December 1998, expedition leader Thompson published a coffee-table book called ``America's Lost Treasure'' -- a 191-page volume that contains spectacular color photos of the wreck, the recovery and hundreds of gold bars, coins and nuggets.

One Columbus-America attorney waved the book at the appeals judge Tuesday.``I don't think,'' attorney R. Hewitt Pate said, ``anyone could look at these books . . . and fail to understand there is a very large amount of gold.''