(Mike Maharrey, Money Metals News Service) He was sentenced to 2 years in prison.
He served 10.
Why?
Because he either got royally screwed by the system, or he has epic-level self-discipline.
Tommy G. Thompson is the main character in a story that is either a comedy or a tragedy.
And we’ll probably never know which it was.
Thompson was a treasure hunter. He studied oceanic engineering. According to his attorney and long-time friend Keith Golden, Thompson had always been fascinated with the ocean. He wanted to pursue deep-sea oceanic research but couldn’t scrape together the funding. A friend suggested he take up treasure hunting.
That turned out to be a lucrative and life-altering decision.
With the backing of about 250 investors, Thompson decided to try to find the S.S. Central America.
The ship went down during a 1857 hurricane off the coast of South Carolina. The steamer was carrying 30,000 pounds of California Gold Rush gold. The cargo included gold coins, primarily $20 double eagles minted in San Francisco, along with gold bars, and bags of nuggets and gold dust.
Much of the gold was destined for East Coast banks.
In 1857, the gold was worth about $2 million. With gold over $5,000 an ounce, the melt value alone would be somewhere in the neighborhood of $2.2 billion.
The loss of the ship’s cargo exacerbated the financial panic of 1857.
At the time, the U.S. had a hard money system. Banks issued notes backed by gold reserves held in the banks. The notes had value because they could be redeemed for gold. But because it was a fractional-reserve system, the banks didn’t have to hold enough gold to redeem every note issued. This made the system susceptible to bank runs.
The banking system was already strained in 1856. Much of the gold on the S.S. South America was intended to boost bank reserves. News of the disaster spread quickly, reinforcing existing worries that banks might not be able to redeem notes, adding fuel to an already blossoming bank panic.
In 1988, Thompson found the S.S. America 7,000 feet below the surface of the Atlantic Ocean.
Thompson’s team recovered around 3 tonnes of gold, including 40,000 coins and more than 500 gold bars. The haul was valued at between $100 and $150 million based on the gold price in the 1980s and early 1990s.
And then the legal problems started.
Some of his investors claimed Thompson never paid them their share of the $50 million raised from the sale of some of the treasure, and in 2005, they sued.
Instead of facing his accusers, Thompson went into hiding in Florida, and in 2012, a federal judge in Ohio issued a warrant for his arrest when he failed to appear at a court hearing.
Three years later, U.S. Marshals tracked Thompson down in a Boca Raton hotel. They were staying at the Hilton under fake names and paying in cash.
In 2015, Thompson pleaded guilty to the failure-to-appear charge and agreed to forfeit $450,000 in cash seized at the hotel.
But Thompson’s legal problems were far from over.
About 500 coins recovered from the ship were (and still are) missing. Thompson claims the coins were part of his payment and that he turned them over to a trustee in Belize in 2009. He insisted he had no idea where the coins went after that. As for the $50 million raised in the sale, he said it was used to pay off bank loans and legal fees.
The court didn’t believe that he didn’t know where the 500 coins were, so the judge slapped him with a contempt charge.
Keep in mind, contempt charges are open-ended. Federal contempt charges typically have an 18-month limit. However, a federal appellate court held that the contempt charge could continue because his refusal to come clean about the whereabouts of the coins breached his plea agreement.
In a plea for release in 2020, Thompson told the court, “Your honor, I don’t know if we’ve gone over this road before or not, but I don’t know the whereabouts of the gold. I feel like I don’t have the keys to my freedom.”
The investors dropped their lawsuit in 2018. However, the contempt charge wasn’t terminated until 2024.
And then Thompson still had to serve the 2-year sentence for the original failure-to-appear charge.
Thompson finally walked out of prison last week, more than 10 years later.
Rep. Abraham Hamadeh (R-Ariz.) advocated Thompson’s release for nearly a year after learning about the case.
Hamadeh told the New York Times that Thompson “was imprisoned for over 10 years without proper due process on a civil case,” adding that his “vast experience could be crucial in future deep-sea explorations.”
“I am glad he is finally a free man.”
The question is whether or not Thompson is a rich free man.
You see, this story is either a tragedy or a comedy.
The 500 coins in question are worth about $2.5 million today. If Thompson knows where they are and has had the self-discipline to sit on the information for more than a decade, he’s earned his reward. He’s getting the last laugh.
But if he sincerely doesn’t know where the coins went, he lost 10 years of his life for nothing.
That would be a tragedy.
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
