4 O.C. Residents Named in Gold-Mine Fraud Case
Four Orange County residents were indicted Wednesday by a federal grand jury in Atlanta for allegedly bilking 300 investors out of $1.4 million in a Costa Mesa-based gold-mining scheme.
The 16-count indictment charges the employees of Gold Hill ’88--Murray I. Brooks, company president and a Westminster accountant, marketing director Croft Ireland and salespeople Ladonna Forrest and Syed Faruque Ali--with conspiracy and mail, securities and wire fraud.
Sources said all four are from Orange County, but authorities could not confirm the specific cities where they live. The defendants, who could not be located for comment, are expected to be arrested today.
The indictment alleges that the defendants told investors that Gold Hill owned a lucrative gold mine in Virgina City, Nev., and encouraged them to invest thousands of dollars for a future delivery of 80 ounces of the precious metal. Some paid as much as $200 an ounce.
The company’s prospectus, according to the indictment, told investors that the mine was “surrounded by a million tons of gold-rich ore.” But the prospectus did not mention that no mining permits had been secured and that the site is part of a national historic monument where large-scale mining is prohibited.
“Of the money raised, less than $400,000 was spent on the project, including less than $40,000 on mining equipment.” said Tim Bentley, spokesman for the Georgia secretary of state’s office, which received consumer complaints about Gold Hill.
Bentley said the U.S. attorney’s office in Atlanta decided to prosecute the four Gold Hill employees because some of the alleged victims live in Georgia.
The Gold Hill investigation was conducted under the auspices of the Leviticus Project, a coalition of state law enforcement agencies that investigate and prosecute investment fraud through a grant from the U.S. Department of Justice.
Federal investigators at the U.S. Postal Inspection Service in Santa Ana and the Orange County district attorney’s office, who have spent two years investigating Gold Hill, refused to comment Wednesday.
The Virginia City site was first excavated in 1876 by John Mackay, father of the Comstock Lode. Mackay dug down 3,060 feet in a patch of desert at a cost of $2 million before he finally gave up after finding no gold.
Postal Inspector Kacy McClelland, lead investigator in the case, said in an interview last year that Brooks told investors that new technology had made it possible for him to find gold at the site. But a geologist told postal inspectors that “gold does not exist in minable grade as claimed” by Brooks.