An underwater salvage company that claimed to have discovered $500m (about £250m) of sunken treasure in the Atlantic has been accused of inflating the value of its find, so boosting its share price and providing a bonanza for its executives.
The allegation comes amid disclosures in stock exchange documents that some of the bosses of Odyssey Marine Exploration cashed in millions of dollars of shares within days of announcing their recovery of 17 tons of silver coins from the wreck.
Other papers show that the Florida-based company privately estimated the worth of the silver coins at £1.2m. A few days later it claimed publicly that the coins had been valued at more than 200 times that amount.
The identity and ownership of the ship have since become the subject of a court battle and Odyssey has issued a defamation action against Jim McManus, a diver and a director of a UK-based historical website and internet blogger from Florida.
He is one of several people in the online maritime community to suggest that the company pushed up its share price by overstating the value of the find.
Following an announcement by Odyssey to the media on May 18 that it had discovered 500,000 silver coins, the company's share price rose to more than triple its April value as speculators piled in.
Media reports put the valuation of the hoard at about £250m. On May 21 Odyssey issued another press release saying that the figure had come from estimates provided by a coin expert retained by the company and that it was "comfortable" with his calculations.
Instead of retaining the shares once a formal valuation had been carried out and their entitlement to the treasure confirmed, several Odyssey executives and board members started offloading their stock from May 22.
Shortly afterwards, ownership of the treasure was challenged in the Florida courts by the Spanish government, which believes it came from a Napoleonic-era warship, the Nuestra Senora de las Mercedes. That ship was sunk by the British off the Portuguese coast in 1804 while carrying more than 1m silver dollars.
If Spain's claim is upheld it is possible that Odyssey would be ordered to forfeit its haul.
Whatever the outcome, Odyssey's bosses have already profited from their discovery, according to documents filed with the US Securities and Exchange Commission (SEC), the stock exchange regulator.
John Morris, Odyssey chief executive and co-founder, sold £650,000 of shares four days after the issuing of the May 18 press release, while David Morris, the company secretary and treasurer, earned himself more than £343,000 within the following 24 hours. George Becker, then Odyssey's executive vice-president and who has since left the company, also sold shares worth £193,000 within 12 days of the announcement. The commission declined to comment this weekend.
Odyssey has refused to disclose the exact name or location of the wreck from which the haul was taken, giving it only the codename Black Swan. Following the announcement there was widespread speculation in the media that the treasure had been taken from the Merchant Royal, a privately owned British cargo ship known as the El Dorado of the Seas, which sank off Land's End in the 17th century. Treasure recovered from so old a ship would have been very valuable.
The Sunday Times disclosed in June that Spain believed the wreck was really that of the Mercedes and it has since become clear that it cannot possibly be of the Merchant Royal.
An export licence, applied for by Odyssey on May 14 when it was seeking to transport its haul to Florida via Gibraltar, shows that it was taken from a location off the Iberian peninsula, rather than Land's End.
It also shows that Odyssey gave the silver coins a valuation of only £1.2m.
The £250m valuation was given by Nick Bruyer, a coin marketer who has sold coins for Odyssey in the past. He is said to have valued the 500,000 silver coins at between several hundred pounds and £2,000 each.
John Morris and Greg Stemm, Odyssey's founders, have previously been prosecuted by the SEC. It accused them of inflating the value of shares in a company of which they were directors by overstating the worth of salvaged artefacts. They were acquitted by a jury in 1997.
A spokeswoman for Odyssey said: "The value put on the export licences was based on an estimate of what we believed to be our cost basis at that time. In accounting for US companies we are required to value artefacts at our cost of recovery, which has nothing to do with retail value.
"The company has not estimated the total potential value of the Black Swan recovery and will not do so until we have conserved and priced them all.
"John Morris, David Morris and George Becker legally sold parts of their positions after the appropriate waiting period as part of their personal financial planning."
© 2007 - Times Online