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Attorney Must Pay $225K |for Hiding Treasure Docs

(CN) — A treasure hunter's attorney must pay $225,000 as a sanction for hiding inventories of the gold recovered from the shipwreck of the S.S. Central America.

The S.S. Central America sank in an 1857 hurricane, taking more than 400 people and approximately $200 million in gold and silver to a watery grave.

The ship sat undisturbed on the sea floor, more than a mile deep, until treasure hunter Tommy Thompson found it during a high-tech search expedition in the late 1980s. It was said to be holding one of the largest reserves of lost undersea bullion in modern history.

Court filings show that after Thompson began pulling gold from the wreck, various insurers came out of the woodwork and sought reimbursement for insurance payouts delivered some 130 years earlier in connection with the ship's sinking.

Other parties wanted a piece of the pie too, including a band of Capuchin monks who supposedly had been granted the rights to the sunken treasure, according to the court filings.

Thompson's attorneys battled through two admiralty trials, and he was eventually awarded the vast majority of the treasure in 1993.

But the lawsuits kept coming.

Two investors Dispatch Printing Co. and Donald Fanta filed yet another civil claim, alleging that they were left with nothing to show for their combined $1.25 million contribution to the recovery expedition. Thompson's companies, Recovery Limited Partnership and Columbus Exploration, ostensibly sold off a significant portion of the gold from the shipwreck, but the investors did not receive "any cash distributions," the investors' lawsuit says.

The Sixth Circuit affirmed sanctions against Recovery's attorney Richard Robol last week for hampering the enforcement of a court order in bad faith.

Defendants turned over an inventory of gold sold to the California Gold Marketing Group in 2000, but turned over no prior inventories.

Through years of litigation, Robol repeatedly assured the court that Recovery and Columbus Exploration had turned over all inventories of the gold recovered from the S.S. Central America.

But when a receiver was appointed to liquidate the companies' assets, it found 36 file cabinets containing company records stored in the basement of a duplex owed by Robol and partially leased to the defendants. Within the cabinets, the receiver found thousands of pages of treasure inventories never produced during litigation.

The court ordered Robol to pay $225,000 in attorney's fees as a sanction for the time Dispatch spent uncovering his fraud, and pursuing its motion for sanctions.

The Cincinnati-based appeals court affirmed the ruling.

"By refusing to notify the court of the existence of inventories created prior to the California-Gold-sale inventory and falsely claiming that the California-Gold-sale inventory was the only inventory in the defendants' possession, Robol hampered the enforcement of the 2006 consent order," Judge Danny Boggs said, writing for the three-judge panel.

The panel found ample evidence that Robol knew of the existence of the undisclosed inventories, meaning that his actions were indeed in bad faith.

"Even if we assume that Robol did not know the specific fact that the inventories were located in his duplex during his misrepresentations - a claim of which Robol has not convinced us - Robol surely had enough knowledge about the inventories that when his clients told him that the California-Gold-sale inventory was all they had, he could not have believed that statement," Boggs said.

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