Murray I. Brooks, a Westminster accountant, says there’s gold in them there hills. The U.S. Postal Inspection Service says there isn’t and is working to shut down Brooks’ gold-mine investment operation.
On Friday, the U.S. attorney’s office filed for a temporary restraining order to keep the Postal Service from delivering any mail to Brooks regarding Frontier Energy Resources Inc. of Carson City--particularly checks from would-be investors.
Court records say that Frontier is owned by Brooks and is “believed to have violated federal law . . . by fraudulently soliciting investment funds from the public.”
Friday’s request for a restraining order was the second such action in less than 2 weeks against Frontier, a so-called gold-in-the-ground investment operation. Last month a Nevada judge granted just such an emergency order.
Brooks, reached at Frontier’s Carson City office Friday, refused to comment on the actions taken against him. If the request filed in Santa Ana is granted, it will keep the Postal Service from delivering Frontier mail--estimated at up to 55 investor checks per week--to Brooks’ Santa Ana accountant. The Nevada order cuts off mail delivery to the Carson City office.
The hill that Brooks has set his sights on, “Gold Hill 88,” is made of ore unearthed from a mine first excavated in 1876 by John Mackay, father of the Comstock Lode, according to a geologist’s report. Mackay dug down 3,060 feet in a patch of desert in Storey County, Nev., at a cost of $2 million before he finally scrapped the mine.
In Mackay’s time--when gold sold for a mere $20 an ounce--the mine was called East Yellow Jacket. At the time, there was too little gold in East Yellow Jacket to make it economically feasible to continue mining.
Today, Brooks has title to the mine and the ore. And through Frontier, he’s trying to use history and the mystique of the Comstock Lode to make money, Postal Inspector Kacy R. McClelland alleged.
What Brooks is telling would-be investors, McClelland charges, is that there’s more gold in the mine than Mackay once thought, that new technology makes it easier to get at and that, at about $400 or so an ounce, whatever gold is there is worth the trouble. So far, McClelland alleges, about 390 investors have been bilked out of more than $500,000.
McClelland said that there are at least 50 to 60 gold-in-the-ground investment operations in the western United States. About 30 of the mines in question are in California, he said, “and most of them are telemarketed from California, from Orange County.”
Court records show that Frontier is offering to sell 40,000 ounces of gold through a “pre-delivery purchase plan” for $200 per ounce for an 80-ounce package. Company literature, included in court records, claims that the investor can expect up to an 800% return on an investment.
In January, consulting geologist Robert S. Friberg did a mineral evaluation of Gold Hill 88 at the postal inspectors’ behest and concluded that “gold does not exist in mineable grade as claimed” by Frontier and Brooks.
“The writer believes that this mining venture has been misleading based on the sales literature that has been given to the public,” Friberg said in his report on the mine. “The statements and implications made by Frontier Energy Resources and Murray Brooks are grossly misleading and erroneous. . . . It can only be concluded that the gold potential of this property has therefore been misrepresented.”
All this has led to civil proceedings aimed at closing Frontier down.
In Reno, U.S. District Judge Bruce R. Thompson issued an emergency restraining order on Feb. 22 that prohibits the Postal Service from delivering to Brooks’ Nevada offices any mail regarding Frontier. On Friday, Thompson issued a preliminary injunction to continue the prohibition while civil proceedings against the company continue.
In addition to the requests for restraining orders, the Santa Ana office of Brooks’ accountant has been raided, along with the Costa Mesa office of the boiler room that had been marketing Frontier to consumers. Evidence has been seized and Brooks’ Huntington Beach bank account has been frozen.
In addition to the civil case, McClelland said, a criminal investigation is continuing against Brooks, although he has not been indicted on civil or criminal charges.