A 'Titanic' tale behind 'Bodies'
The company presenting the cadavers exhibit not only holds salvage rights to the ocean liner but faces shareholder lawsuits.
By JEFF TESTERMAN
Published August 15, 2005
TAMPA - Long before Premier Exhibitions raised eyebrows with the anonymous cadavers of "Bodies, the Exhibition," the company stirred emotions with priceless artifacts from the world's most famous shipwreck.
Premier, formed last year to focus on museum exhibitions, is the successor to RMS Titanic, the Florida company holding salvage rights to the 46,000-ton luxury British ocean liner that struck an iceberg in 1912 and sank in the North Atlantic, taking 1,523 souls with it.
Premier has displayed some of its 5,900 recovered artifacts, from coins, jewelry and suitcases to a 12,000-square-foot section of the Titanic's hull, to more than 15-million people worldwide. That includes more than 1-million visitors at St. Petersburg's Florida International Museum and Tampa's Museum of Science and Industry, where the company plans to open its "Bodies, the Exhibition" show Aug. 20.
That success, however, has been tempered by controversy and shareholder discontent since a hostile takeover of the company six years ago, led by a wealthy promoter best known for his work with magician David Copperfield.
Since then, the Securities and Exchange Commission has levied sizable fines for improprieties in the takeover. Some large shareholders have accused the company and CEO Arnie Geller of self-dealing and squandering company assets. Smaller shareholders, noting RMS Titanic-turned-Premier has loaded up with Clear Channel Communications executives, say the company has abandoned a sacred duty to preserve Titanic history in favor of profiteering.
"They threw us a curveball with the takeover," said Bill Willard, 43, a Seneca, S.C., high school physics teacher and Titanic enthusiast who owns 10,000 Premier shares. "It's a science and exploration company that's now been turned into an entertainment company."
Even "Bodies, the Exhibition," which may turn out to be as popular as the Titanic exhibit, is displeasing some shareholders.
"We sort of looked ourselves in the eyes and said, "This is kind of gruesome. This is something that belongs in a college biology course,"' said Dave Shuttle, 56, an Erie, Pa., businessman.
Shuttle said he has concerns about how the bodies were acquired and whether a copyright may have been violated, issues being contested in a federal suit filed against Premier in Cleveland.
"The shareholders had no role in ratifying the move to the bodies exhibits," said Shuttle. "With all that's going on, can we say it was a good business decision?"
Shuttle became attracted to the publicly traded RMS Titanic in 1993, when an expedition to the shipwreck turned up a steamer trunk holding 19 of his great-aunt's letters. He and his then-wife, Barbara, bought 1,000 shares "to share in the identity of the company." But, distressed by changes after the company takeover, the Shuttles two years ago filed a $26-million federal class-action suit in Tampa accusing company officials of breaching their fiduciary duties.
"It's not about the money," Dave Shuttle said. "I'm doing this because it's the right thing to do for history."
The stock price of Premier Exhibition (PXHB), which fell as low as 4 cents a share in 2003, has rebounded dramatically and closed Friday at $1.82. The company last month announced record revenue for one quarter, a 548 percent increase from the same quarter in 2004.
Geller credited the Titanic exhibit and the bodies exhibits for the improvement and said Premier "looked forward to the continued expansion of our exhibition base." Geller did not return repeated calls for comment for this story.
In 1994, a federal court awarded RMS Titanic exclusive salvor-in-possession rights for the sunken liner. That meant the company possessed the valuable artifacts but did not own them and could not sell them. In later hearings, CEO George Tulloch assured the court the company sought to conserve the Titanic and its artifacts for future generations in a Titanic Memorial Museum.
The company stance as conservator began to fade in 1999, when a group of shareholders secured a majority of company stock and ousted several officials, including Tulloch. The takeover was led by SFX Entertainment executive Joseph B. Marsh, a college dropout from Akron who operated a nightclub called Filthy McNasty's before becoming the promoter who helped turn David Copperfield into an entertainment phenomenon.
Marsh's Magicworks Entertainment later handled concert tours for Fleetwood Mac and Janet Jackson, among others. In 1998, Marsh sold Magicworks for $118-million to SFX Entertainment, a promotion company later acquired by Clear Channel.
Marsh poured $5-million into the RMS Titanic takeover and immediately pointed to a fortune waiting to be plucked from the ocean bottom.
"There's about a billion dollars of artifacts down there - that would be $80 a share, to put it in round numbers," Marsh told the Akron Beacon Journal after the takeover. "That's a lot of shareholder value."
Marsh, through his secretary, said last week he had "no comment about anything regarding Titanic. "
Last year, the SEC alleged the takeover had involved "materially false and misleading statements" made in company filings. The SEC said the takeover group waited until it had acquired control of the company to notify investors, thus leaving them powerless to prevent the change in control.
Seven officials or investors were fined a total of $405,000.
Geller, who became CEO after the takeover, consented to pay a civil penalty of $85,000, but without admitting any allegations. Marsh was fined $75,000 and ordered to pay a penalty of $35,000 for buying shares below cost.
The company was unaffected by the SEC action. But the improprieties had stirred up other investors who went to court with additional claims.
In 2002, Lawrence D'Addario, one of the original partners in the Titanic salvage operation, sued the company, Geller, Marsh and Gerald Couture of Clearwater - the chief financial officer, who died of cancer last month - alleging fraud, self-dealing and conflicts of interest. According to the federal suit, Geller mismanaged company assets by agreeing to swap 600,000 shares of RMS Titanic valued at $900,000 to Argosy International for treasure maps purportedly showing the location of lost wrecks around the globe. The maps turned out to be worthless.
The suit also says the company's board agreed to tender $750,000 worth of stock to Argosy for the rights to the Carpathia, which answered the Titanic's distress call in 1912 and rescued survivors. The vessel was sunk off the coast of Ireland in World War I.
Argosy paid just 500 pounds to the British government for the rights to the Carpathia, records show, but those rights were only for the sunken ship, not any cargo. Yet the amount paid Argosy was based on a valuation that included the ship's contents. So far, RMS Titanic - now Premier - has gotten nothing for its $750,000 investment in the Carpathia.
The class-action suit filed by Dave and Barbara Shuttle takes aim at the 1999 takeover. It says Geller and others conspired "to enrich themselves at the expense of shareholders."
The suit also says the company expressly agreed in court that it would not try to peddle the Titanic artifacts to private collectors. Yet, RMS Titanic officials asked court permission to take title to the artifacts, or be awarded a $225-million salvage award. A federal judge denied that request.
Based on prices paid for Titanic memorabilia - $44,650 for a menu, for instance - the value of the RMS Titanic artifacts is incalculable. But Shuttle and others still insist the company has a responsibility to keep the collection together and not auction it off. "If you were a Fortune 500 CEO, what would it be worth to have (Titanic) Captain Smith's bullhorn on your desk?" said Shuttle. "But the company doesn't own the artifacts. It has to be a guardian."
Willard, the South Carolina investor, is concerned not just that the company is abandoning its preservationist role but that it is continuing to dilute share value to pursue new exhibit plans like "Bodies, the Exhibition."
Last week, Premier told stockholders that it intended to increase authorized shares of stock from 30-million to 40-million shares, providing flexibility to finance operations and to pursue acquisitions, according to an SEC filing.
This year, Marsh - the company's largest single shareholder - his promotions partner and two former Clear Channel executives were beneficiaries of a $2.09-million sale of their Nevada company to Premier. That company, SEC documents show, has an agreement with the Dalian Medical University Plastination Co. in China for the right to display 20 body specimens and 170 organs.
"They issue shares like McDonald's hands out Happy Meals," said Willard. "What we're tired of is this - the only people who seem to be making any money is the new management team."
--Jeff Testerman can be reached at 813 226-3422 or email@example.com
[Last modified August 15, 2005, 02:30:20]
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