Criminal’s Sentence Hinges on Replacement Value of Sunken Treasure

The value that an insurance company placed on a stolen gold bar might play a key role in how much the thieves must pay for restitution.

In 1980, treasure hunter Mel Fisher pulled Gold Bar 27 from the wreckage of a Spanish galleon that had sunk during a hurricane in 1622. He displayed it to millions at his museum in Key West, Fla.

Richard Steven Johnson and his lookout man Jarred Alexander Goldman swiped the bar from its display case in 2010. Johnson sawed off pieces of the bar when he needed cash until all of it was gone. Goldman says he never got the $2,000 that Johnson promised him for the heist.

But Goldman did get a 40-month prison sentence and an order (joint and severable with Johnson) to reimburse Axa Art Insurance and the Mel Fisher Maritime Museum $570,195.43. Johnson was sentenced to 63 months.

A dispute over the length of Goldman’s sentence and the amount of the restitution brought the saga of Gold Bar 27 to the 11th Circuit Court of Appeals in Atlanta.

The appellate court ruled Thursday that District Court Judge Jose E. Martinez in Miami erred by failing to accurately determine the replacement value of Gold Bar 27. While the court did not say how much that should be, it did direct the lower court to take note of the amount that Axa Art Insurance paid on the claim: $101,165.01.

“Today we take this golden opportunity to reaffirm that in a case like this one, where the loss is of a unique artifact for which market value cannot fully compensate, courts must use replacement cost in determining restitution,” Circuit Judge Rosenbaum said in a unanimous panel opinion.

Judge Martinez had determined that Gold Bar 22 was a “priceless work of art.” He stated after Goldman objected to his sentence that he would have given him 40 months regardless of the artifact’s value.

The 11th Circuit did not take issue with the length of the sentence and rejected Goldman’s motion to reduce it, but found that Judge Martinez could have been more careful in calculating the amount of restitution.

For one thing, the judge had made a $10,000 calculation error in Goldman’s favor. That wasn’t the main point. The appellate panel said the evidence in the record simply did not support his determination that Gold Bar 27 was worth $556,000. (The restitution order included other costs paid by Axa Art Insurance in addition to the value of the gold bar.)

The court noted that the museum had calculated the bar’s value by using a point system developed by the Mel Fisher Investor Division. The museum’s president and chief executive officer, Melissa Kendrick, could not say how the amount of points assigned to an artifact were determined nor could she say why 8,178 points had been assigned to Gold Bar 27.

Kendrick did say that few gold bars have the “pedigree” of Gold Bar 27. The treasure from the Spanish galleon Santa Margarita was a part of a “lift a gold bar” exhibit that was the centerpiece of the museum’s marketing. From 3 to 4 million visitors had reached into its plastic case over the years to touch the gold bar and feel its weight.

Axa Art Insurance took a more market-based approach to determine the current market value of Gold Bar 27, as required under the terms of the policy. The insurer identified five auctioned gold bars from another Spanish ship, the Atocha, and found they sold at an average of 45 percent of their melt value.

That would make Gold Bar 27 worth $63,228.13. But Axa added 45 percent to the value for Gold Bar 27 because it had been salvaged from the more famous Santa Margarita. Then it tacked on another 15 percent for the artifact’s notoriety and iconic value. The end result: $101,165.01.

Current market value, of course, is not the same as replacement value. The 11th Circuit said it had determined in a 1999 case, U.S. v. Shugart, that when a loss involves a unique item or when no ready market exists, courts should determine the “replacement cost” to assign value, not the market cost.

Doing so is an “inexact science,” the panel acknowledged. Still, the court said it was error to accept the museum’s estimate of value without further inquiry.

That leaves the district court with some work to do on remand. The appellate court said prosecutors might be able to present evidence that the Mel Fisher Investment Division’s point system established a reliable replacement cost. On the other hand, Axa’s calculation may provide a better valuation.

“Its components appear to attempt to account for what would seem to be all the necessary considerations,” the court said.

Photo courtesy of Mel Fisher Treasures.