A woman's body was recovered from a lagoon just north of Twin Dolphin Drive, where the small plane crashed at about 11:50 a.m., and two bodies were still trapped at the bottom of the lagoon under the wreckage, fire Battalion Chief Dave Pucci said.
The bodies were still laying on the bottom of the lagoon in about five or six feet of water as of about 4 p.m., Pucci said.
He said the plane's position made it impossible to determine the genders of the other two victims, but an employee at R.E. Borrmann's Steel Co. said it is believed the company's founder, Bob Borrmann, was on the plane when it went down.
"It's a tragedy to lose three lives like this," Pucci said.
An article posted on the company's website from the online magazine In Flight USA identifies Borrmann, who is in his 90s, as a World War II veteran who founded the steel company after the war.
The twin-engine Beech 65 Queen Air had taken off from the nearby San Carlos Airport and was headed to San Martin, Pucci said.
It crashed into the water about 30 seconds after taking off, FAA spokesman Lynn Lunsford said.
The article on the steel company's website says Borrmann bought a Beech Queen Air that once belonged to the king of Denmark.
Firefighters responded to the crash and found an approximately 40-year-old woman in the water near the wreckage. She was taken to shore and pronounced dead, Pucci said.
A dive team from the San Mateo County Sheriff's Office arrived at the scene shortly before 1 p.m. to search the water, he said. Due to a sewage spill in the area last week, all rescuers who went into the water Thursday were later decontaminated at the scene.
The other two bodies won't be recovered until representatives of the National Transportation Safety Board are able to investigate the crash.
Board officials were on their way from Seattle Thursday afternoon, Pucci said. Their full investigation will likely take at least 24 hours, but it's not clear when in the process the bodies can be removed.
He said the investigation was going to be muddy and complicated.
The U.S. Coast Guard and California Department of Fish and Game are also responding to the crash to assess any environmental damage.
Officials said a little bit of fuel has leaked from the plane, but it didn't prevent divers from going in.
Steve Hornstra, owner of Steve's Cafe and Catering on Twin Dolphin Drive, said he was returning from a delivery run to nearby office buildings when he heard a loud airplane engine.
"I looked up because this plane was maybe three or four times louder than normal," he said.
"It was a bigger plane," Hornstra said. "It wasn't one of those two-seaters."
He said the aircraft wasn't sputtering or smoking but looked like it was "struggling to get elevation." It veered to the left then the right, he said.
"Then it just kind of took a nose dive, and kind of made a half turn," Hornstra said.
The plane disappeared from view behind some buildings and Hornstra said he heard a thud.
Joanna Lubas was sitting at her desk at an office building at 303 Twin Dolphin Drive when she saw the plane hit the water.
She left the office and headed toward the crash site in the diamond-shaped lagoon, which is lined by office parks and a number of homes.
"When I first got here there were people, I think from these houses, getting into the water," Lubas said.
Rod Cardinale, a paralegal at Grathwohl, Rauch and Cohen on the nearby Marine Parkway, went outside to see what was happening after hearing a "boom" sound.
"I just saw the airplane in the water upside-down with one of the wings sticking out of the water," he said.
Cardinale said several boaters made their way over to the plane and some dove into the water to try to help the occupants.
Thursday afternoon, the plane was nearly fully submerged in the lagoon. A wing was visible under the water. A sheriff's rescue boat was headed toward the aircraft. What appeared to be seats from the airplane were floating nearby.
Bob Wood, a flight instructor at Diamond Aviation, said he had seen the plane depart from the San Carlos Airport.
"I really enjoyed watching the plane take off - it sounds like an airplane used to sound like, really throaty," Wood said.
"So when I heard it went down it was very, very shocking," he said. "It was as normal takeoff with normal altitude."