An employee of R.E. Borrmann's Steel Co. says the twin-engine Beechcraft Queen Air was owned by company founder 92-year-old Robert Borrmann.
Employee Charlene Marshall says Borrmann, his girlfriend and the pilot were believed to have been on the 1961-model plane that crashed a mile after taking off from San Carlos airport.
"His son Paul, who runs the company, heard about the crash and sent one of the guys from the shop down there. It was his plane," Marshall said through tears.
Redwood City Fire Battalion Chief Dave Pucci said divers recovered the body of a 40-year-old woman outside the plane. Pucci said two other bodies have been found inside the aircraft, but crews had not been able to get them out.
Divers were hindered because of contamination in the lagoon caused by a 48,000-gallon sewage spill last week. County officials have barred access to its waters because of high amounts of E.coli and other bacteria.
The aircraft settled on the bottom of the lagoon, which is only about five to six feet deep, Pucci said.
Diana DeFrank said she was eating lunch with her daughter at a nearby restaurant when she heard the plane hit the water. She left the restaurant and saw the plane floating for a few minutes before it began to sink.
Three or four passers-by jumped into the water in an effort to rescue any passengers, she said, but were unable to do so.
About two hours after the plane crashed, only a few inches of the aircraft was visible above the water.
It will be lifted from the water on Friday at the earliest, Pucci said, in a process that will be overseen by investigators from the National Transportation Safety Board.
Federal Aviation Administration spokesman Lynn Lunsford said the agency was also sending investigators.
The U.S. Coast Guard said it was sending a team to evaluate reports of pollution coming from the plane.
Associated Press writers Terence Chea and Jason Dearen contributed to this report from San Francisco.