Some Recurring Property Scams
Property promoters are not stupid people. They often conceive their scams so as to be at least partially believable, even to knowledgeable professionals. The difference between the typical victims of these scams and the knowledgeable professional is that the professional knows how to quickly evaluate and verify or discredit the claims. He does this by calling on extensive knowledge about geology and ore deposits and through the use of the scientific method to avoid being confused and duped by the promoter.
A couple of examples of attempts to promote platinum-bearing properties in southern Nevada and a silver property in Texas illustrate the nature of these endeavors to deceive and extract money from gullible investors. These investors are gullible in this context if they are not fully versed in economic geology, are not particularly savvy and do not use principles of the scientific method, or are not alert enough to realize that they need to employ a consultant to help them effectively evaluate the property and investment. They often are otherwise intelligent, sensible people who can be deceived about mining claims simply because of their unfamiliarity with the subject.
Playa deposits/Moapa lakebed deposits
Southern Nevada is one of a few areas in the United States where platinum mineralization is known to occur. The mineralization occurs in the lower elevations of a couple of mountain ranges southwest and northeast of Las Vegas. >From time to time, promoters try to convince investors that platinum has washed out of the exposed occurrences in the ranges and has built up to ore grades in the adjacent closed basins in the valleys. In the semiarid West, these normally dry lakebeds in closed basins are called playas, and playa scams concerning gold and the platinum-group elements (platinum, palladium, rhodium, ruthenium, osmium, and iridium) recur regularly. The Moapa lakebed deposits, regionally adjacent to the platinum- bearing Bunkerville mining district northeast of Las Vegas is a favorite area in which to attempt to promote platinum properties. Although it is at least possible that such enrichment processes occur, I have seen absolutely no reliable evidence that they have. Colleagues and I have assessed and discredited these scams more than once.
Silver in Texas -- a variation on the theme
One of the boldest and richest mining scams ever recorded occurred in 1976. The amount extorted from eager investors was estimated to have exceeded $30 million! Three con artists enticed investors with a phony proprietary technology which was to extract substantial silver from vast reserves of ore near Llano, Texas (never mind that there was actually no silver in the rocks to be extracted).
Up-front money was needed from the investors to secure the mining property in Texas and to attract a $10,000,000 loan to build the needed refinery. Investors were told that they would double their money in one week and some were enticed to invest substantially. A widow from the South invested $450,000 and a former Chrysler Corporation president invested $150,000. Needless to say, investors never realized any profit from their investments and, in fact, lost essentially everything that they had invested. Was it the con artists' skill and charisma or the investors' eagerness to see unbelievable returns (or both) that resulted in this debacle? The money was funneled into a bank in the Bahamas where it was essentially out of reach of American officials who eventually were brought into the scam to investigate the broken promises. Indictments were obtained but Bahamian officials refused to cooperate and resisted extradition attempts. Investors never recovered their money.
Other favorite areas in which to try to deceive investors include basaltic cinder cones, lavas in general, the Mancos Shale, the Humboldt Sink, purportedly platinum-rich brines in Nevada, and purportedly gold- rich water in any area. Some promoters try to obtain large loans using barrels of mineral concentrates as collateral (or mining properties themselves). Often the contents of the barrels or properties are essentially worthless and are simply variations on themes presented above.
The Problem of Quartz Veins
I have probably seen more prospectors confused by quartz veins than any other type of mineralization. There are many examples in the western United States where early prospectors found outcropping quartz veins containing gold. These miners constructed vertical shafts or burrowed into hillsides to extract the gold-bearing quartz. Many times, however, while the quartz vein continued underground, it eventually no longer carried gold with it and the miner would abandon the pit or adit. Modern prospectors happening upon these prospects will obtain good assays on residual, high-grade samples that they grab from the wall of the hole near the entrance. Thinking they have found a valuable vein, they will begin mining the quartz at depth only to find that they cannot recover any gold from it.
The problem is that the geologic processes that have deposited quartz in the fracture in the rock are different than the processes that normally cause gold to be deposited. Because of this difference in depositional mechanisms for quartz and for gold, the fracture may be filled with quartz to great depths but the gold may only have been deposited in the shallow portions of the vein. Thus, while the shallow, previously mined portion of the quartz vein contained gold, the modern prospector can persistently follow the vein underground until he goes broke without encountering any more gold. A vein that is pinching and swelling with depth, however, may have deposited gold in several of the wider parts of the vein while depositing none in the narrow zones. This can make it difficult to determine whether a barren zone in the quartz vein may carry gold in a deeper, wider part of the vein. Eventually even these pinching- swelling veins will run out of gold at some depth, however. Prospectors can waste a lot of time and money unjustifiably pursuing gold in barren quartz veins below productive horizons. Devious promoters can likewise make a worthless vein appear to be exceptionally valuable by guiding you to sample remnants of the gold-rich, shallow vein material and indicating that the quartz vein continues with depth. It may indeed continue to some substantial depth but it may have no precious metals accompanying the quartz and may be of little value at all. Be careful!
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