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Man wins rights to seek gold from ship that sank near Juneau

Becky Bohrer
Dave McMahan / Alaska Department of Natural Resources via Associated Press

JUNEAU -- A Gold Rush-era mystery could soon be solved, with a recent federal court decision approving a Washington state man's plans to recover cargo from the sunken luxury liner SS Islander -- including any gold on board.

Theodore Jaynes and his company, Ocean Mar Inc., had been fighting since the 1990s for salvage rights to the vessel, which was carrying about 180 people from Skagway to Vancouver, British Columbia, when it sank off the coast of Douglas Island in the early morning hours of Aug. 15, 1901. Forty people died, according to a court of inquiry report for the Canadian government.

A 1996 restraining order against Jaynes, obtained by another salvage company with an interest in the site, Yukon Recovery LLC, sparked years of legal wrangling that culminated in April with U.S. District Court Judge H. Russel Holland approving Ocean Mar's recovery plan.

For years, mystery has surrounded the Islander, which had been seen as a posh, unsinkable, 240-foot liner.

Ocean Mar, in court records filed in 2007, said there was very strong indication, if not solid proof, that the ship ran aground on the south end of Douglas Island, across Gastineau Channel from Juneau.

A history of the disaster, part of a 1992 report on shipwrecks commissioned by the city and borough of Juneau, indicated there was fog on the waters that night. Ocean Mar said the story of the Islander hitting an iceberg in Lynn Canal appears to be false.

The report also cited rampant rumors around the time of the crash about large amounts of gold having gone down with the ship, which sank 20 minutes after impact.

Jaynes' expedition is hardly the first to try its luck at finding the treasure; perhaps the most significant and successful prior attempt came in the 1930s, when a salvage company raised about two-thirds of the Islander's hull. According to the 1992 report, it cost an estimated $200,000 to beach the ship, and the salvagers got about $50,000 in returns.

About 60 feet of the ship's forward section snapped off during the raising, according to court documents, and remained under water.

In a 2007 filing, Ocean Mar said its research had indicated that at least six tons of gold bullion in 25 to 30 wooden boxes was stored in a passenger cabin. It also said it had found what it believed to be bullion boxes near shore, no deeper than 200 feet.

Gold was trading last week at approximately $1,619 an ounce.

Holland placed Ocean Mar's recovery plan under seal, saying it contains proprietary, confidential information and its release could hurt the company's ability to carry out its recovery work.

Jaynes' attorney, Jed Powell, told the Puget Sound Business Journal in May that Jaynes is "wary and excited, enthused. One way or another, we're going to know the answer to the SS Islander story."

He said Ocean Mar under a contract would pay the Salvage Association of London 25 percent of the value of any insured gold that's recovered, to reimburse any insurers that previously might have paid claims.

Powell did not return messages from The Associated Press, and efforts to reach Jaynes' were unsuccessful.

Associated Press