This alleged gold-in-the-ground investment swindle has spread like wildfire across the United States since the “Black Monday” stock market crash of October, 1987, according to the North American Securities Administrators Association and the Council of Better Business Bureaus.
Telephone salespeople use high pressure tactics to promote their investment scam. Some of the phoney gold mines contain less gold than sea water, even though the promoters flash slick project brochures and fake mineral assays.
In the spring of 1987, eight “dirt pile” swindles had been identified. By fall of 1988, 52 scams were under investigation. And the Bureau of Mines is providing technical assistance and expertise to bring the criminals to justice.
Typically, the telemarketers ask for an individual investment of $5,000. In return, the investor supposedly holds title to a 100-ton unit of unprocessed dirt, euphemistically referred to as “aggregate ore.” Promoters guarant ee the dirt contains 20 ounces or more of gold, but tell the investors they will have to wait one-to-three years for production.
Usually the “mine” is desert scrubland — by the time the investors start inquiring about production, the phone cons have moved on to another area.
Last year, tens of thousands of Americans from all 50 states lost an estimated $250 million to promoters of the known gold scams.
Victims are from all walks of life, from the elderly to professionals who think they know the risks of investing. They are wary of the stock market and attracted to a chance to buy gold at one-third the market price. From the Northwest Mining Association’s May, 1989, Bulletin
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