The United States Attorney's Office for the Southern District of New York has contacted former OceanGate employees and expedition members as part of an investigatory probe, WIRED has learned from multiple sources. The carbon fiber submersible Titan imploded on a tourist trip to the wreck of the Titanic in June 2023, killing the five people on board, including OceanGate founder and CEO Stockton Rush.
WIRED could not confirm the subject of the investigation, and the US Attorney’s Office would not comment. However, several sources said that a forensic accountancy expert was one of the investigators and that the US Postal Inspection Service was also involved.
Although OceanGate is based in Washington state, US Attorneys often investigate crimes across jurisdictions. The New York office has a strong history of complex financial investigations, and the US Postal Inspection Service also works on fraud and money laundering.
OceanGate has attracted more than $28 million in investor funding, with much coming from family and friends, according to witnesses at last month’s US Coast Guard Marine Board of Investigation into the accident.
OceanGate actually comprises multiple entities, including at least three for-profit US companies, one Bahamian corporation, and a nonprofit foundation dedicated to oceanographic research and education. Untangling the flow of money and debt between these could be a complex affair.
Documents obtained exclusively by WIRED from an anonymous source give the most complete public picture yet of OceanGate’s corporate structure. The main company, OceanGate Inc., built, tested, and maintained the Titan submersible as well as its predecessors, the Cyclops and Antipodes. OceanGate then sold the Titan to another company, Cyclops 2 LLC, which would lease the submersible back to OceanGate for five years at a time.
The existence of Cyclops 2 LLC has not previously been reported, and the company was not mentioned during the Coast Guard hearings. Business documents filed with the state of Alaska show that Cyclops 2 LLC was managed by OceanGate Inc. and that at least two of OceanGate Inc.’s board members were investors in the company. Entities linked to Rush’s family held about a quarter of its stock, and the largest stockholder, at more than 34 percent, was Furman Moseley, the retired chairman of a Seattle-based paper mill company. None of the investors WIRED could identify, nor the US Postal Inspection Service, responded to requests for comment. OceanGate declined to comment.
Investors who put at least $250,000 into Cyclops 2 LLC would receive quarterly payments back from the lease of Titan to OceanGate. For example, at the start of 2019, the Titan was undergoing testing in the Bahamas and was still two years from its maiden voyage with paying passengers. Nevertheless, a document prepared for an OceanGate board meeting reported: “Current Cyclops 2 LLC investors have already received 13 percent cash return from OceanGate from contracting the use of Titan.” OceanGate stated that having investors own the submersibles “provides unique cash flow and tax benefits.”
Such arrangements, known as sale-leasebacks, are very common in commercial aviation, where airlines sell planes to, then lease them back from, investors or banks in order to free up capital. “Airlines use planes like ATMs when they need cash,” says Richard Aboulafia, an aviation consultant. Those deals typically include strict requirements for airlines to keep the planes in good condition, and investors generally don’t pay for annual maintenance or support of the vehicle, as Cyclops 2 LLC did for Titan. However, aviation leasebacks where the investing and selling companies are managed by the same person, as happened with Rush in the Titan transaction, don’t happen, says Aboulafia.
According to the leaked documents, OceanGate Inc., having leased the Titan from Cyclops 2 LLC, would then lease the sub on to a third company, Argus Expeditions Ltd (later also known as OceanGate Expeditions). It was this wholly owned subsidiary incorporated in the Bahamas that received funds from passengers for the Titanic and other tours.
The OceanGate Foundation, a 501(c)(3) nonprofit, was also closely linked to the commercial businesses. Although filings with the US Internal Revenue Service do not indicate the source of most of its $1.5 million in contributions, they do show hundreds of thousands of dollars flowing back to OceanGate Inc. to pay for educational and research expeditions.
These types of convoluted structures had been used by OceanGate for years. An earlier purchase-leaseback company called Cyclops 1 LLC that dealt with Titan’s predecessor submersible had for some backers returned nearly 90 percent on their initial investment. By the summer of 2019, Argus Expeditions was sitting on around $500,000 in cash, while OceanGate itself had $1.2 million in the bank.
The apparent success of the leaseback arrangement might explain how Rush was able to attract what was OceanGate’s largest ever investment in 2020, at a time when the company was working on the expensive task of replacing the Titan’s first hull that had cracked during testing. The $18 million in equity funding allowed OceanGate to rebuild the Titan and move forward with its first Titanic expedition in 2021. Around this time, documents indicate that OceanGate may have had more control in the taken-over ownership of Cyclops 2 LLC.
But by 2023, OceanGate seemed to be on a much shakier financial footing. Several witnesses at the Coast Guard hearings testified to what they perceived to be OceanGate’s financial difficulties in the run-up to the final Titanic expedition, including Rush foregoing his salary and occasionally loaning the company money from his personal funds.
Demand for the $250,000 Titanic dives appeared to be tailing off. As late as May 2023, one of OceanGate’s affiliate sellers was advertising that there were still “some very limited dates and spots available at a 40 percent discount” for that summer’s expeditions. This has not been reported previously.
If the federal investigation results in any criminal charges, they would proceed alongside a civil lawsuit currently in a federal court in Washington state. In that case, the family of famed Titanic explorer Paul-Henri Nargeolet is seeking $50 million for his death aboard the Titan, with the lawsuit naming as defendants OceanGate, Rush’s estate, and a number of other individuals and companies connected to the ill-fated submersible. Rush’s estate recently filed a motion to dismiss the complaint against it, stating: “As Rush’s employer, OceanGate is liable for Rush’s alleged negligence.”
Maritime lawyer Alton Hall is skeptical that Nargeolet’s family will recover anything close to the $50 million they are seeking. A 1920 law, the Death on the High Seas Act, generally limits damages to pecuniary losses, such as future earnings. One exception would be if Nargeolet and his fellow Titan passengers, whom OceanGate dubbed “mission specialists,” qualified as seamen under another piece of legislation called the Jones Act. “There are literally books and books written on who is and who isn’t a Jones Act seaman,” says Hall. The passengers who died onboard the Titan “are not Jones Act seamen,” he believes.
An unknown question in these cases—and other cases that might be brought by the families of the two billionaires who also died on the Titan—is who might face legal consequences. The civil case against OceanGate and Rush’s estate also names as defendants OceanGate’s original director of engineering, Tony Nissen, and three companies that manufactured the Titan’s hull and viewport. However, multiple witnesses at the Coast Guard hearings testified to Stockton Rush having the final say in many commercial, engineering, and operational decisions, and his company is likely all but bankrupt. In the end, there might be little to salvage from the wreckage of OceanGate.