Claims of plunder and corporate piracy over the management of artifacts from an 18th-century shipwreck go to trial Monday in Delaware’s Chancery Court.
The wreck is the Whydah Gally, a slave ship captured by pirate “Black Sam” Bellamy that sank in a 1717 storm off Cape Cod, Mass. The only fully authenticated wreck from the “golden age” of piracy, it was discovered by underwater explorer Barry Clifford in 1982.
Shareholder Paul Buddenhagen leads a lawsuit that paints Clifford and Robert Lazier, his late partner at Maritime Explorations Inc., as swashbucklers who breached their fiduciary duties for decades. The lawsuit claims they manipulated a 2018 merger of their various Whydah-related entities to sideline minority shareholders who had helped keep salvage operations afloat.
The merger’s “true purpose was entirely selfish: to paper over decades of self-dealing and cram down the existing MEI stockholders” and set up Clifford and Lazier to benefit personally from potential new business ventures, Buddenhagen’s attorneys said in a pre-trial brief.
Maritime Explorations hired Buddenhagen as a management consultant in the early 1990s. He’s a disgruntled ex-associate whose case is driven by personal animosities and a fantasy of wealth that isn’t supported by facts, Clifford’s attorneys contended in their brief.
Clifford and Lazier, who died in 2020, got away with diverting the company’s revenues and assets to themselves year after year because they failed to run a tight ship, avoiding the board meetings and bookkeeping that mark normal corporate operations, Buddenhagen alleged.
It’s fair to say paperwork wasn’t their forte, attorneys for Clifford and Lazier’s estate said in their own brief, which includes footnote links to the pirate terminology sprinkled throughout the document.
“Indeed, cleaning the messy slate was one of the reasons for the 2018 merger,” they said.
But their revenues never matched their archaeological successes, and the company survived with self-funding by the defendants, as well as services provided by volunteers, the brief said.
The merger “was not a model for corporate governance,” the brief said, but Clifford and Lazier “viewed MEI’s stockholders, many of whom obtained their shares by volunteering their time to the project (sometimes involuntarily due to lack of funds) as their co-adventurers and sought to treat them fairly by providing for their continued participation in the post-Merger company.”
Plans to create large museum projects in Boston and Tampa, Fla., were scuppered amid criticism over the ship’s role in the Atlantic slave trade. The parties dispute the value of coins salvaged from the wreck: Clifford says coins given to some investors as tokens were valued around $25 each, while Buddenhagen believes they’re each worth $10,000.
Attorneys for both parties declined interview requests ahead of trial.
Clifford and Lazier’s estate are represented by Heyman Enerio Gattuso & Hirzel LLP. Buddenhagen is represented by Duane Morris LLP.
The case is Buddenhagen v. Clifford, Del. Ch., No. 2019-0258.
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