Cigar Aficionado

Clyde Hensley planes through the mangrove shallows, the stern of his open-air Pursuit weighed down by two sleek 200-horsepower outboards gunned full throttle. "You're going to be bored out there," he yells over the roar of his engines, "unless you puke first." Hensley, who bears a striking resemblance to a thinner David Crosby, is my charter captain, hotelier and local lore guide. With a hack-hack-a-hack laugh intended to make seasickness seem like good ol' boy fun, he veers off, heading for open water.

It's about 9 a.m., the summer sun is bearing down and in the distance huge, billowing clouds a half-mile high loom across the horizon. I've got a stomach full of eggs, toast and coffee, plus one little pink 25-milligram Bonine pill that is supposed to prevent the food from backtracking once we hit the wide-open sea of the Florida Straits. We set out from Key West and are heading due west about 35 miles. Our destination is a secret place on the naval charts where, just the week before, a crew of divers pulled up $1.2 million worth of uncut Muzo emeralds that sank with a Spanish galleon in a 1622 hurricane. I'm being taken first to the "barge" where I'll wait for the JB Magruder, a ship that will ferry me to the dive site.

The operation is run by Mel Fisher who, after a 16-year search, found the ship's "mother lode" in 1985. Since then he's recovered, by his own account, $400 million worth of items listed on the ship's manifest. That includes gold bars, coins, jewelry and many other artifacts. The emeralds, which were being smuggled on board and were not listed, may ultimately exceed that figure once the entire cache he thinks is there is found.

Even without the remaining gemstones, Fisher is by far the most successful and well known "salvor" in the world. At 72, he is also the grand old man of a swashbuckling trade that is quickly changing. Disappearing into the past is the era of the lone adventurer with a dream and a good marketing motto by which to attract investors (in Fisher's case "Today's the Day!"). Replacing him are corporations armed with the best search and recovery technology and some of the sharpest financial officers. Although there's lots of fine print in their prospectuses, they are finding a lot more treasure, which is helping do away with the business' shadowy past and develop the market for sea treasure.

Today, I'm not expecting boring. I'm thinking more of adventure, of being there when they find an emerald. Call it a romantic desire to touch a piece of the bloody legacy of Spain's search for El Dorado. Second only to money, romance is what this business feeds on, which is both a good and bad thing. If you have ever thought of investing in a treasure search or buying recovered artifacts, caution is the word. As much as your heart will tell you to spend, your brain should have the final word.

We hit the open water and are met by calm seas. Within an hour I spot the Marquesas, a collection of tiny islands with no inhabitants but lots of mosquitoes. We approach a 110-foot-long barge moored a few hundred yards off one of the islands. Hensley pulls up alongside, lets me off and with a hack-hack-a-hack blasts off. There's a plywood cabin at one end. I am met by Robbie Hanna, 30, a diver with a long, red ponytail and a big barrel chest. He's the only one on board. He's house-sitting until the next shift arrives. Hensley was right. Bobbing about with Hanna and watching the barracudas swim by is boring.

Late Renaissance Spain's search for El Dorado had a simple logic: Take slaves and finished goods to the New World and bring back much needed gold and silver to finance wars, pay back loans from Italian bankers, and stabilize the monetary system. The problem was always getting the stuff to Europe. The route was pretty simple. The ships left Colombia or Mexico, then stopped in Havana to pick up escort vessels. The most dangerous part of the journey was getting through the Florida Straits. The idea was to ride the Gulf Stream until the westerlies filled the sails and carried them across the Atlantic. But if a storm hit, and in the late summer and fall many did, whole fleets would be tossed into the coral reefs, shoals and outcropping rocks of the Florida Keys.

On Sept. 4, 1622, the Nuestra Señora de Atocha, among other ships, set out from Havana. It met a hurricane and sank just off the Marquesas. Among salvors, the fate of the ships was well known. Their whereabouts were not. In 1968, Fisher committed to finding them. It would take years of fruitless searching and a battle with Florida for ownership of the site, which Fisher appealed to the Supreme Court and won. The search also cost the life of his son and daughter-in-law in a boating accident. But Fisher eventually found the mother lode of 47 tons of gold and silver bars and coins, plus a small handful of rough emeralds, jewelry and other artifacts.

News of the find made Fisher an instant celebrity. He appeared on "The Tonight Show" with Johnny Carson. Hollywood made a television movie based on his life. Some of the larger, more expensive objects were sold at Christie's in a June 1988 auction. Fisher had investors to satisfy, after all; a 16-year search costs money. But he was determined to find more emeralds which, he suspected, were part of a 70-pound contraband load, according to estimates from historians. In 1992 he found the first big pile.

That year Fisher formed a limited liability company, only to be sued once again, this time by the feds for using salvage methods that allegedly damaged the sea grass. The 1992 partnership fell apart. Then the National Oceanographic and Atmospheric Administration declared the Florida Keys--the coral, the seabed, the islands, everything--a protected sanctuary. That froze almost all salvaging efforts in the area by dozens of salvors, essentially leaving hundreds of sunken ships to their underwater graves.

Fisher was lucky, though. His Supreme Court victory grandfathered his right to recover from the Atocha site, which he'd mapped to cover a 12-square-mile area. It wasn't until 1994, as settlement talks with the feds over the sea grass issue dragged on, that he formed a new search company. That year, he claims, the emeralds recovered--up to $9 million worth--enabled some investors to convert their $50,000 shares into a $300,000 gain.

The pickings haven't been as good in 1995, but they are still impressive. The diving crews are recovering about 15 to 20 stones a week, or at half of last year's rate. But Fisher still says that everyone who invested in the 1995 company, which is almost fully sold, has already made back their investment. The rest of the year's finds are all profit. Or so he says.

Salvors work in a shady world, almost by necessity. In addition to highly speculative ventures, they suffer high costs and long-delayed profits. Finding treasure creates a new set of headaches. If it's in international waters, the salvor has to file an admiralty claim for salvage rights. Any insurance companies that paid off claims on a wreck may sue for a share of what is recovered. Treasure in national waters has to be shared with the local state government. In the United States the deals are straightforward--e.g., Florida gets 20 percent of the find. Then there are thieves who will raid sites. With all the money being raised from investors, even the Securities and Exchange Commission gets into the act.

Another problem is selling the booty. "Everyone is a little bit in the dark about the value of sunken treasure," says Anthony Phillips, director of the specialists departments in the New York office of Christie's. That's quite an admission from the world's leading public auction house for sea treasure. The fact is, the market for such objects is not very evolved.

There are three ways to buy sea treasure: from the salvors themselves, private dealers, or auction houses. Most of the coins are sold by salvors and dealers. Auction houses end up getting the more expensive items, such as jewelry pieces. To the extent that there is an organized market at all, the catalogues and sale prices on file with the auction houses form the database of benchmark values. Still, each find is unique, so standards are being set anew with every major sale. In the end, it's what people are willing to pay in order to own a piece of history.

Sale prices are also affected by the romance of the particular salvage story; that is, the history of the ship and its contents and the efforts of the salvor to find it. "Something that captures the public's imagination," says Phillips. He also suspects that there's a coming boom in sea salvage sales--and therefore, possibly, prices as well. "I'm getting an awful lot of inquiries from salvors at the moment," Phillips adds. "With the thousands and thousands of ships out there and the search technology improving, that's not surprising."

Portugal, for instance, is offering salvage licenses to a number of companies to explore the waters around the Azores Islands, where dozens of ships are believed to have sunk in deep waters. Similar contracts are being negotiated in Haiti and Brazil. In the coming months--once a maelstrom of litigation between some 39 insurance companies concludes--the booty of the S.S. Central America is expected to come to market. A steamship carrying gold coins from the San Francisco mint to New York, the Central America went down in 1857 and still ranks as one of the worst disasters--425 souls lost to the deep--in United States maritime history. Rick Ponterio, a San Diego dealer, calls it "the most significant find of U.S. coins ever." The group that found the wreck--salvors Bob Evans, Barry Schatz and Tom Thompson--is based in Columbus, Ohio. Several auction houses are vying for the rights to handle the sale.

Certainly the first temptation is to deal directly with the salvors. Should you buy artifacts from them or invest in their ventures? Know that salvors are great salesmen and that for all their bravado under the water, they have had their share of problems on land.

Take the case of Seahawk Deep Ocean Technology, Inc., of Tampa, Florida. In 1989, the company, then private, found what it claimed were millions of dollars worth of Spanish gold ingots and coins on a ship just 50 miles southwest of the Atocha in the Dry Tortugas. In 1991, Seahawk was taken public. That year the SEC investigated the sponsoring investment bank in the initial public offering for stock price manipulation. This past July, the company settled with the SEC without admitting guilt, but it promised never to employ its former officers and directors in management or officer capacities. And, oh yes, the SEC said the Dry Tortugas find was worth only $1 million in appraisable items.

Seahawk currently has a registration statement filed with the SEC to offer private placements in $25,000 units for 100,000 shares of equity in the company. "We needed cash," says Doug Wakeling, vice president. The cash is for "The Golden Eagle," a code name for what the company hopes is a Civil War-era ship that went down off the Carolinas in international waters. Keep in mind that Seahawk had a $400,000 loss during the first half of 1995.

But it could hit. The company specializes in deepwater wrecks and uses some of the most advanced ROVs (remote operating vehicles) available to photograph and recover sea treasure.

There's also Herbert Humphreys Jr., whose Memphis-based Marex International Inc. found the Maravillas, another Spanish galleon, from which it has recovered more than $2 million in treasure--but not the jackpot. So far, Humphreys has avoided scandal and is generally well-regarded in the auctioneer, numismatic and maritime law fields. But with the exception of a handful of middling finds, mostly of silver coins, he has yet to discover his own Atocha.

Tim Hudson, Marex's chief financial officer, hopes that an operation, code-named "Gulf Stream 95," off the coast of Georgia in international waters will be the big one. "It's the king's coffers," claims Hudson. "There are possibly five pre-1600 ships which were heading for Spain laden with gold and silver." Marex has begun filing an admiralty claim on the site and has begun ROV inspections.

So far, though, Marex's limited partnerships have had mixed results. Its 1990 deal was profitable, says Hudson, but the 1991 partnership lost money. The 1992 facility "is still open," meaning that not all the artifacts have been sold yet. Marex has formed another limited partnership for Gulf Stream 95.

Of course, you don't have to buy gold and jewels. Dorian Ball, a principal in Malaysian Historical Salvors, based in Singapore, found the Diana last year nearby in the Straits of Malacca. Full of mostly Chinese porcelain dated from 1817, Christie's auctioned the find in Amsterdam last March. "Porcelain is a good alternative to gold and silver coins," says Ball. "For $100 you can have a plate, and a lasting source of pleasure." A recently published book, The Diana Adventure (1995, Leisure Pro, New York, New York) chronicles the find.

The day before heading out to sea, I interviewed Fisher in his office, located in an old customs building in the heart of Key West. It also houses a "museum" where he displays some of his treasure and a gift shop where he sells gold and silver coins and emeralds. You're paying retail, though. His gold escudo coins here range from $1,500 to $11,500 each. He also offers a 30.31-carat emerald for a cool $442,000.

Before saying a word, Fisher opens the vault behind his desk, pulls out an inch-thick solid gold disk the size of a salad plate and tosses it into my hands. "That's the look of gold," he utters behind a big toothy grin, an ever-present cigarette stuck in his fist. Next comes a bag of emeralds that he says are worth $1.2 million; he found them the week before. I was impressed, but I wanted to talk turkey, as in, how do investors in the company get paid?

"You don't get money, but the actual emeralds," says Fisher.

"But how do you figure out what they're worth?" I ask.

"We have a division committee that values them," he says.

The obvious concern for investors is the valuation. The higher the committee values the emeralds (the committee is chaired by Fisher's daughter, Taffi Fisher-Abt), the quicker it can get its investors into the profit picture. Problems may arise, however, when you then try and sell the treasure in the open market. Will you get what Fisher's committee valued it for, or less?

Fisher claims that the valuation process is scientific and objective. Moreover, that his emeralds have increased in price by 15 percent a year. He referred me to a local Key West jeweler and emerald appraiser, Manuel J. Marcial, for another opinion.

After seeing Fisher, I walked to Marcial's storefront on Duval Street, the city's main drag. Marcial says that these emeralds were from the Muzo mine in Colombia, which still produces gemstones. These, however, are finer because they are darker in color. Moreover, their history makes them rare and adds a "treasure value" of from four to five times the retail value of cut emeralds currently available.

Okay, I told him, but are they a good investment? "Not if you're interested in liquidity," Marcial says. "If you cut them they may also lose value. You buy them as art history, as unique and rare gems, and you put them away." He claims that, in general, emeralds rise in value from 8 to 15 percent a year.

Fisher's coins have a more spotted past. Henry Garrett, a coin dealer based in North Hollywood, California, recalls the time when he was offered silver coins from one of Fisher's investors who received them in a distribution. "She got what she was told was $500 worth but I valued them at only $100," says Garrett. "I've seen other coins of his which he prices at double what even the guidebooks value them at." (Fisher was investigated in the mid-1970s for allegedly "salting" one of his sites with gold to keep investors happy. No wrongdoing was found.)

"True collectors," says Garrett, aren't that interested in Spanish silver coins (known as pieces of eight or reales) because their condition is usually poor. Silver encrusts in seawater as a result of oxidation and erodes even more in warm seas. Gold remains pristine. Gold escudos are a much better investment overall, he says. The Spanish coins rarely circulated in their own time; they were primarily used like the gold in Fort Knox is used today. Garrett claims that almost none are to be found today--except what is recovered from sunken ships.

Garrett advises against buying coins directly from salvors. "You'll pay high retail," he says. The best entry for a novice is to contact a local numismatic association (Garrett's Professional Numismatists Guild of San Diego is one of the better ones) and obtain a list of dealers. Then buy a guidebook to price comparable material. Better yet, try to attend the annual American Numismatic Association trade show.

The JB Magruder shows up in the early afternoon. I've been whiling away the time with Hanna. The diver has a half-dozen emeralds, about nine carats in total (Fisher's divers get paid, in part, in emeralds) which he plans to put toward a boat. He will entertain offers from anyone interested in buying them.

The captain of the JB Magruder, Richard Engels, decides to leave the barge there and head directly for the dive site. The JB Magruder is a former service boat for the oil industry, a 91-foot-long tub overcome by diesel fumes and too many coats of bright blue paint. Within minutes of leaving the barge, the steering's hydraulics go out. Engels steers by adjusting the thrust on the twin engines. He's a thin, short, former Minnesotan of 55, and a onetime independent salvor put out of business by NOAA's sanctuary plan.

There are four divers on board. I notice sores on their arms and legs. Engels calls it the "Atocha Plague." It seems that continual days spent in contact with the sea bottom stirs up toxic wastes that cause infections. Two divers reach the sea bottom with an eight-inch-wide suction hose. The plan is to vacuum up the entire 10-foot-thick layer of broken coral and shell over a 600-foot-by-600-foot area, right down to the bedrock.

Engels turns on the compressor. The sound is deafening. The hose spits out the chunks into a trough equipped with a series of screens. The divers rake the shells along and through the screen holes until only a fine sandy material is left. The sand is rescreened at night. It's more akin to strip mining than adventure. It's ear-splitting, tedious, mind-numbing work--until one of those emeralds is found. "They just jump out at you," says one of the divers.

Close to nightfall, Hensley returns to pick me up. No emeralds were found today. "I guess you could think this is just some scam," Engels says with a chuckle as I get into the Pursuit. Hensley hands me a cold beer.

The next day I return to Fisher's office for one more interview. He tells me that he is negotiating to sell $54 million worth of his sea treasure, plus that of some of his investors, to representatives of the Spanish government. I guess the treasure will make it home after all. He tells me about his fight with the federal and state governments ("they want the treasure for themselves") and that it's all a conspiracy being directed by real estate interests in Florida. They want to put him, and other salvors, out of business and to hurt the water-recreation economy so that land prices will plummet and they can buy it up.

"They have a lot of people, like you, on their staff," he says, squinting his eyes at me for effect.

Several weeks later, I call back to see if he had pulled up any more emeralds. Between late July and early September he found 51 stones, which he valued at several million dollars. I wish I could have seen just one of them sparkling in the Florida sun. Not to buy, but just to touch that bit of history.

Montieth M. Illingworth is a New York-based writer.