Source:
http://articles.latimes.com/1998/oct/15/local/me-32781
Archive for Thursday, October 15, 1998
A Tale of Treasure Hunting Gone Awry
By Daniel Yi
October 15, 1998 in print edition B-3
For Karl S. Ryll, who grew up dreaming of lost treasures in faraway lands, the lure of a sunken World War II ship in the Philippines was too strong to resist.
So Ryll pinned his fantasy on a treasure hunter from Los Angeles named Dennis Standefer.
The way Ryll tells it, Standefer boasted to investors that he had found a valuable shipwreck off a remote island in the Philippines and needed to raise funds to salvage its valuable mother lode.
But in the end there was no treasure, only financial woes for dozens of investors who now say Standefer made out with tens of thousands of dollars of their money and never lived up to his promises.
Ryll, a 37-year-old San Gabriel Valley high school teacher, has asked federal authorities to open a criminal investigation, while another investor and an ex-business partner have made similar requests abroad.
The FBI will not comment.
But the Filipino government, after being contacted by the ex-partner earlier this year, has filed fraud charges against Standefer. Authorities there believe he is eluding them by entering and leaving the country surreptitiously.
Standefer currently does business through a Web site hawking salvaged treasure and through a business associate in Las Vegas.
Standefer did not return Times requests for interviews. Neither did the Las Vegas associate, Edwin Jones III, return calls.
In the esoteric world of treasure hunting, risk goes with the territory. Projects are highly speculative, counting on data often centuries old and a good amount of luck.
“If someone offers a sure thing in the treasure business, forget it,” said Chris Nelson, vice president of a Tustin-based outfit that is raising funds for a salvage operation off the coast of the Dominican Republic. “Our investors are guaranteed one thing and one thing only, that all the money raised will go into the project, and we will put a valiant effort into finding the treasure.”
Standefer’s accusers–who admit that their dreams of riches clouded their judgment–claim he promised more.
“He ruined my life,” said Gene Hasenbeck, an engineer formerly of Claremont who alleges that he lost nearly $165,000 over three years backing Standefer’s projects. Hasenbeck said he did not complain to authorities because he could not afford any legal costs.
Ernesto D. Adobo Jr., an investigator with the Philippines’ National Bureau of Investigation, said Standefer “did not fulfill his obligation” to his investors. “It turned out to be a misrepresentation. Standefer defrauded investors, in essence.”
‘I Was Impressed by His Performance’
Ryll said he first met Standefer in 1990 at a local social club, where the rotund and rugged self-styled adventurer gave a presentation about the discovery of the Central America, a side-wheel steamer that sank off the coast of North Carolina in 1857 with an estimated 42,000 pounds of California gold aboard.
The ship, discovered in 1988, was one of the most significant historic shipwreck finds of all time, along with the 1985 discovery of the Titanic.
Standefer had tenuous ties to the Central America steamer project but told Ryll and others that he was partially responsible for the discovery, Ryll said.
But court decisions from a lawsuit Standefer filed against Tommy Thompson, a marine engineer and entrepreneur widely credited with the discovery, show that Standefer had little if any participation in the project. He lost the suit and finally a federal appeal in 1991.
Ryll did not know that. Nor was he aware that Standefer had been convicted of mail fraud in 1983.
“I was impressed by his performance,” Ryll recalled.
Two years after their first meeting, Standefer and Ryll crossed paths again. This time Standefer invited him to his house, Ryll said. Ryll said that when he visited, Standefer told him he had found a valuable Japanese World War II shipwreck off the coast of Camiguin Island in the northern Philippines. He spun a complex tale about how the Japanese during the latter part of the war pillaged the country and hid treasures underground or loaded them onto ships to transport to Japan in a desperate retreat, Ryll said.
Such stories are popular in the Philippines, with reports of treasures being found occasionally.
Ryll said he initially raised nearly $90,000 from friends and acquaintances for Standefer, including $6,000 of his own money.
One of those investors was Hasenbeck, who in 1991 had just sold his family house in Claremont and was looking into investing the proceeds.
“I am really embarrassed. I feel like a total fool,” Hasenbeck said recently from Santa Rosa, where he now lives.
He said Standefer visited him and his parents with nothing more than some photos of what appeared to be sea exploration projects and a videotape he said he shot of the purported sunken Japanese ship.
Hasenbeck said that years went by with no return on the investment but that he continued to give Standefer money for this venture and others, hoping to eventually recoup the funds.
Like Hasenbeck, most investors are not pursuing legal action against Standefer because of either embarrassment, limited resources or both.
Treasure Hunters Little Regulated
There are no statistics on the scope of fraud in the little-regulated treasure hunting business, which has only a couple of dozen professional outfits operating at any time, according to those in the industry. The Securities and Exchange Commission, Federal Trade Commission and state authorities said they did not have any fraud statistics involving the business. Treasure hunters have begun to unite, largely because of attempts by conservationists to ban the practice.
Peter Hess, a Wilmington, Del., attorney currently lobbying the United Nations to keep private shipwreck explorations legal, says the nascent move to organize will eventually lead to credibility and self-regulation.
The Professional Shipwreck Explorers Assn., ProSEA, was formed earlier this year and has several hundred members, from professional salvors to weekend divers interested in the field, Hess said.
“Gone are the days when deals were made on a napkin,” Nelson said. “People would invest money on a person’s word without any parameters or time frame.”
Still, the business hasn’t been without its share of controversy.
In 1991, a Fort Meyers, Fla., man claimed to have found the lost treasure of pirate Jose Gaspar off the Florida coast and sought investors for the project. The problem, according to a state official who investigated the case, was that Gaspar never existed; he was a fictitious character created by a Tampa real estate promoter in 1922.
Anger Is Tempered by Humility
Mel Fisher of Key West, Fla., considered by many to be the granddaddy of American treasure hunting, gained fame in 1985 when he found the Spanish galleon Atocha, but has since been fending off accusations in court that he passed off fake treasure and “salted” his sites, meaning he sprinkled his diving locations with items he would later claim were finds. Fisher denies the allegations.
And even marine engineer Thompson’s discovery of the Central America was mired in years of litigation by parties all claiming a share of the treasure and tying up returns to those who funded the project.
But Ryll and Hasenbeck both admit they were taken by the sense of adventure. In 1992, in the beginning of his relationship with Standefer, Ryll even traveled to the Philippines and helped in the exploration of the Japanese shipwreck.
Ryll said Standefer had called him shortly after arriving there to say that his equipment was stolen and that he needed Ryll to buy some items and bring them to him.
Ryll, who was a substitute teacher at the time, said he charged the purchases to his credit cards and flew across the Pacific.
“When I got there, he was already broke,” Ryll said. But the once-aspiring screenwriter fell in love with the location and did not think to question the situation. “I just thought he was a bad manager of money,” he said.
Ironically, shortly after Ryll left Standefer, and what turned out to be a worthless sunken ship, local divers made a discovery on another site just miles away. The other shipwreck turned out to be the Charleston. The American cruiser sank in the area in 1899, one year after the Spanish American War. Locals, using crude methods, were hauling handfuls of Mexican silver coins from the site. The news made headlines around the Philippines.
Because Standefer already had government permits to explore the Camiguin Island waters, it was the perfect opportunity, Ryll said. He added that Standefer hesitated at first, but eventually decided to focus his attention on the Charleston.
However, he did not have the means to carry on the project by himself. So he contacted another treasure hunter, Steve Morgan of San Pedro, to become a partner on the project.
Morgan, a burly, sun-beaten man, said he thought the evidence of the ship was credible. He said he committed an initial $150,000 from a pool of investors who regularly bank his projects, and worked out a deal with Standefer. Morgan would take care of operations in the United States, and Standefer would direct the actual exploration efforts, he said.
But it wasn’t long before the partnership unraveled. Morgan charges that Standefer kept stalling the project and raising issues to try to wrestle it away from him. When it appeared Standefer might be successful in doing so, he faxed letters to local newspapers painting Morgan, who had flown to Manila in his efforts to save the project, as a foreign raider pillaging Filipino national treasures.
The controversy grew so heated that the government closed the site, according to both Morgan and Philippine government official Adobo.
Ryll said he too suffered a smear campaign when he began raising objections about Standefer’s dealings earlier this year and threatened legal action.
According to Ryll, the school where he worked and the Pasadena police received anonymous faxes claiming Ryll was using the so-called date rape drug Rohypnol and other prescription medication on his students.
The police dismissed the allegations after searching Ryll’s house.
A former landlord of Standefer’s recently received a telephone bill addressed to Standefer from a hotel in Malaysia. The bill shows calls made from Standefer’s room to the Pasadena police and Ryll’s school in El Monte on the same days the officials received the anonymous faxes.
“Those are just about the most heinous charges someone can make against a teacher,” Ryll said.
Another investor, Harold Karakas, a former police officer and a private investigator from Orange County, says he has made a personal commitment to help authorities prosecute Standefer. He and Ryll are working to contact other alleged victims, hoping to convince authorities in Malaysia or Indonesia–where they believe Standefer may be hiding–to file charges against him.
They work with an anger tempered by humility.
“Greed,” Karakas admitted, “overwhelmed our common sense.”
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