I was scrolling through BBC News at around 2 AM on a Sunday — the kind of doom-scrolling that happens when you have had one too many cups of coffee after dinner — when I stumbled across a headline that stopped me cold: a treasure hunter had just been released from prison after spending an entire decade behind bars for refusing to reveal the location of 500 missing gold coins from a 19th-century shipwreck.
My first thought: "That sounds like the plot of a Nicolas Cage movie." My second thought, about 30 seconds later: "Wait. Investors gave this guy $12.7 million. What happened to their money?"
And that second thought is why we are here today. Because this is not just a wild adventure story. It is a masterclass in everything that can go wrong when people invest in unregulated, alternative assets with inadequate due diligence — and it carries lessons that apply far beyond sunken treasure.
The SS Central America Story and Why Investors Lined Up to Fund It
The pitch was irresistible. In 1857, the SS Central America sank off the coast of South Carolina carrying 30,000 pounds of freshly minted San Francisco gold. The sinking was so catastrophic that it contributed to the financial panic of 1857 — one of the worst economic crises of the 19th century. The gold sat 7,000 feet below the ocean surface for over 130 years.
Enter Tommy Thompson, an oceanic engineer at the Battelle Memorial Institute in Columbus, Ohio. Thompson was brilliant, charismatic, and — here is the part that matters — incredibly persuasive. He convinced 161 investors to collectively put up $12.7 million to fund a deep-sea expedition to recover the treasure.
I showed this to my colleague Sandra over a $5.80 oat milk latte last Wednesday. "One hundred and sixty-one investors," she repeated, stirring her coffee slowly. "And not one of them asked what happens if the guy who knows where the gold is just... does not tell anyone?"
Sandra has a gift for identifying the exact structural flaw that everyone else misses.
What Went Wrong — A Financial Autopsy of a Treasure Investment
Thompson and his crew successfully brought up thousands of gold bars and coins in 1988. So far, so good. The recovered treasure was later sold to a gold marketing group in 2000 for approximately $50 million. A subsequent criminal complaint valued the total recovered treasure at up to $400 million.
But here is where the story goes from adventure to cautionary tale: those 161 investors who put up $12.7 million? They received nothing. Zero. Not a dime.
Thompson claimed the profits had mostly gone toward legal fees and bank loans. He said some coins had been transferred to a trust in Belize. The investors, understandably, sued him in 2005. And then, in 2012, when courts demanded he appear and account for the assets, Thompson simply vanished.
He lived on the run for three years — staying in a Florida hotel, paying cash under a false name, using taxis and public transport to avoid detection. He was finally arrested in 2015 in Boca Raton.
I described this timeline to my buddy Tom over a $7.50 lunch on Thursday. His response: "So the guy spent two years paying cash at a hotel in Boca Raton while owing investors millions? That is honestly impressive levels of audacity." Tom has a weird way of finding the humor in financial fraud.
The Ten-Year Standoff That Should Terrify Every Alternative Asset Investor
Here is the part that genuinely shocked me. Thompson was sentenced to civil contempt — an indefinite jail term that would end only when he disclosed the location of the remaining 500 gold coins. A court order that said: "Tell us where the gold is, and you go free."
He sat in jail for ten years rather than answer.
Last year, the judge finally gave up, concluding that Thompson was "unlikely to ever offer an answer." He was released in March 2026. Five hundred coins remain unaccounted for. The investors have never been made whole.
Think about what that means from an investment recovery standpoint. Even with the full weight of the federal court system — contempt charges, imprisonment, a decade of coercion — the investors could not force the return of their assets. In what other investment class can the person managing your money simply refuse to tell you where it is and sit in jail until a judge gives up?
What This Means for Your Portfolio in 2026
You might be thinking: "I would never invest in a treasure hunting expedition." Fair enough. But the structural risks that sank these investors' money are present in far more mainstream alternative investments than most people realize.
Single-operator risk. Thompson was a single point of failure. When he disappeared, the entire investment became inaccessible. This same risk exists in small private equity funds, individual real estate syndications, and single-manager hedge funds. I wrote about similar structural risks in my analysis of how private credit defaults hit 9.2 percent — many of those defaults occurred in funds with concentrated manager risk.
Jurisdiction and asset recovery. Thompson moved assets to a trust in Belize. International asset structures make recovery extraordinarily difficult. A 2024 study by the International Centre for Asset Recovery found that cross-border fraud recovery rates average just 4.3 percent of lost funds. Four point three percent. That $12.7 million effectively became $546,000 in expected recovery — before legal fees.
The due diligence problem. Those 161 investors presumably believed they were making a sound investment. Thompson had credentials, a track record, and a compelling asset (a real shipwreck with real gold). But no amount of asset-level due diligence can protect you from operator fraud when the governance structure does not include independent custodians, third-party auditors, and transparent reporting requirements.
How to Protect Yourself From the Next Tommy Thompson
My friend Greg, who manages a $240 million family office, has a rule he calls the "Belize test." "If the investment structure allows any single person to move assets to Belize without my knowledge, I do not invest." It sounds simplistic, but it captures something important: governance matters more than the underlying asset.
Here is what I would look for in any alternative investment in 2026:
Independent custody. Your money should never be held solely by the person managing it. A third-party custodian — a bank, a trust company, a regulated financial institution — should hold the assets. If the manager cannot or will not set this up, walk away. I made this exact point in my piece about unreliable economic data and portfolio risk: when you cannot trust the data, trust the structure.
Audited financials. Annual audits by a reputable accounting firm. Not a self-prepared financial statement. Not a "summary of returns." A real audit, by real accountants, filed where you can access it.
Liquidity provisions. Understand exactly how and when you can get your money out. Thompson's investors had no redemption mechanism, no secondary market, and no liquidation timeline. Their only exit was Thompson's goodwill — which turned out to be worth exactly nothing.
Regulatory oversight. Investments registered with the SEC or equivalent regulators provide at least a baseline of disclosure requirements and enforcement mechanisms. Unregistered offerings can be legitimate, but they remove critical safety nets.
The Bigger Picture — Alternative Assets Are Booming, and So Are the Risks
I keep thinking about this case because alternative investments are having a moment. Real estate syndications, private credit funds, collectibles, cryptocurrency, fractional ownership platforms — retail investors have more access to alternative assets than at any point in history.
And most of that access comes with far less regulatory protection than traditional securities. A 2025 SEC staff report noted that complaints related to unregistered alternative investment offerings increased 47 percent year-over-year. Forty-seven percent. The report specifically flagged "novel asset classes marketed through social media" as a growing concern.
Tommy Thompson was operating in the 1980s and 1990s, before social media, before crowdfunding platforms, before the democratization of alternative investments. If a single charismatic engineer could convince 161 people to invest $12.7 million in a treasure hunt back then, imagine the scale at which similar schemes can operate today.
I do not say this to scare you away from alternative investments. I hold alternatives in my own portfolio. But I hold them through regulated structures with independent custodians, audited financials, and clear governance frameworks. Because I read stories like Tommy Thompson's and I think: the gold was real. The treasure was real. The investment thesis was correct. And the investors still lost everything.
Sometimes the biggest risk is not whether the asset exists. It is whether the person holding it will give it back.
For more on protecting your portfolio from structural risks in 2026, see my coverage of the European defense spending surge and how Meta's $26.3 million lobbying operation affects tech investment governance.
