Maureen Milford, The News Journal
Wilmington lawyer Bruce L. Silverstein will not be sanctioned for bad-faith litigation in the case of a phony sunken treasure in the Gulf of Mexico, a federal judge has ruled.
U.S. District Judge James Lawrence King of the Southern District of Florida denied a sanctions case against Silverstein brought by a Key West treasure salvage company, saying the company failed to establish by clear and convincing evidence that Silverstein knew of "corrupt criminal conspiracy."
Neither was it proven that Silverstein acted in bad faith in the case or was willfully blind to a fraud involving the fabricated discovery of thousands of emeralds on the floor of the Gulf of Mexico.
Yet, in what lawyers describe as highly unusual, King referred the matter to the U.S. attorney for the Southern District of Florida "for such action as in his discretion he deems appropriate."
"I've not seen that done in a civil case in a long, long time, if I've seen it done," said Thomas Reed, a professor emeritus at Widener University School of Law.
Silverstein maintained he and his firm, Young Conaway Stargatt & Taylor in Wilmington were actually the biggest "victims of that fraud – not perpetrators," according to court filings. He did not return a call or email seeking comment.
The failure to provide clear and convincing evidence in the Silverstein case does not establish Silverstein's innocence or "forecloses the possibility of future civil or criminal liability," King writes.
"Indeed, these proceedings have left unanswered many questions," King writes.
The case reads like a tall sea tale with talk of pirate treasure, a sunken Spanish galleon and planted jewels. It began in 2010, when a novice treasure hunter named Jay Miscovich claimed he bought a treasure map from a handyman in a Key West bar.
Miscovich said he immediately dove the site off Key West and discovered thousands of emeralds, amethysts and quartz lying on the floor, according to court testimony.
Silverstein, who is a partner at Young Conaway, got involved a year later representing Miscovich and, later, his company, JTR Enterprises LLC. Silverstein, who invested at least $80,000 of his own money, had a 1.5 percent equity interest in JTR. Young Conaway had an equity interest of 5 percent, according to King's ruling.
The legal plan was for JTR Enterprises to file an admiralty action in Florida to get ownership of any treasure. It was then that Motivation Inc. of Key West, a treasure salvage company led by one of the biggest names in underwater treasure hunting, made a claim in the admiralty case.
Motivation, founded by Mel Fisher, discovered the shipwreck of the famous Spanish galleon Atocha worth hundreds of millions of dollars.
Motivation immediately raised questions about the find, which led to testing of the emeralds. The tests revealed that some emeralds were coated with epoxy or a 20th-century jeweler's polish to enhance them.
King declined to award salvage rights in 2012. Motivation then sought sanctions against Silverstein, Young Conaway and others, accusing them of dragging out the litigation and running up legal costs.
During a sanctions hearing last year, the case produced a true Perry Mason moment when a witness said Miscovich had bought $80,000 worth of emeralds from his jewelry store in Jupiter, Florida.
With the revelation in court, the case was deemed a fraud on the federal court.
"One of the greatest transgressions that can be committed against a federal court is to knowingly perpetrate a fraud and to commandeer and manipulate the legal processes to do so," King's ruling says. "This case involves just such a fraud."
Miscovich killed himself in 2013.
King tossed out the sanctions case against Young Conaway last year. Silverstein remained the only party facing sanctions.
Felicia Gojmerac, marketing and business development director with Young Conaway, said the firm was "pleased with the outcome" of the recent ruling in Silverstein's sanctions case.
Courtesy; The News Journal