COLUMN ONE : Dreams of Wealth or Fool’s Gold? : Orange County heirs are fighting for a stake in a fabled Colorado mine. But a dispute between the property’s trustee and a Texas judge has muddled an already twisted tale.

Truth is, none of Nettie MacDougall’s kin paid much heed when she spun yarns about owning a chunk of a famous gold mine in the foothills here. Just fanciful talk from “ol’ Aunt Net,” everyone assumed.

So it wasn’t until long after MacDougall had passed away that her great-nephew, Costa Mesa handyman Scott Hobbs, got curious and picked up the phone last year to ask the family trustee about his potential inheritance.

Trustee: “At the lowest estimate, you know how much (the gold mine) is worth, Scott?”

Hobbs: “How much?”

Trustee: “Five billion dollars.”

That’s billion--with a B.

Here in this frontier town on the outskirts of Denver, about 1,000 miles from the Orange County Fedco store where the 31-year-old Hobbs toils away at $10 an hour, sits the world-renowned Glory Hole, a gold mine that his great-aunt helped establish during the Depression. Although the precise worth of Aunt MacDougall’s precious property remains a matter of some debate in these parts, Hobbs hopes to soon swap his handyman’s apron strings for a millionaire’s purse strings. The hole, he figures, represents his way out of the rut of blue-collar life.

“I know one thing,” said Hobbs, who has begun taking business classes to ready himself for his new career. “I’m not going to have to worry about money again.”

But Hobbs shouldn’t buy that new ranch just yet. Today, the Glory Hole mine and the plum real estate it resides on are at the center of a sinuous tale that has all the makings of a spaghetti Western. There are bodies stuffed down mine shafts. There are pine-studded hills containing tons of $390-an-ounce gold. There’s casino gambling. And there’s a peculiar lawsuit involving a Texas judge who, with a little help from a colleague, managed to turn a $1.25-million claim into a $15.5-million judgment. The upshot? It may mean that no one in the MacDougall line will get as much as an ounce of fool’s gold.

To some, the twisted tale amounts to a bona fide claim jump, 1990s style, involving what locals regard as the “richest square mile on Earth.”

The three main players in this modern gold rush drama: Hobbs, the handsome, unassuming heir hoping to trade his rags for riches; Harold Caldwell, 74, the weathered trustee of the Glory Hole whose mien and manner remind one of actor Jack Palance, and Judge Robert F. Barnes, a gravel-voiced south Texan who uses phrases such as “nervous as a pregnant nun” and who is dead-set on settling an old score with Caldwell.

James K. Kreutz, one of 19 attorneys involved in the case, blames gold fever, an ailment that has broken out with periodic virulence in this part of the country since James Buchanan’s days in the White House. “Gold,” Kreutz said, “has a way of obscuring people’s vision.”

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Here, in Colorado’s Gilpin County, perched atop Oh My God Road and steep, partially paved thoroughfares snaking their way out of suburban Denver, gold falls just shy of religion. And at stake in the MacDougall clan’s battle is a storied mine that has seen its share of worshipers.

Historians have penned entire books on the Glory Hole and its central place in Colorado’s century-old gold rush. Area gift shops peddle postcards of it, trumpeting the more than $200 million in gold that the 700-foot-long mine has produced (and that was when gold went for a few dollars an ounce). One of the big new casinos in town even adopted the Glory Hole name.

“It’s an amazing place, and only God knows how much gold is down there,” said Caldwell, an old-time miner who has fought 35 years of legal and personal battles as the Glory Hole’s trustee-caretaker. “That’s why everyone wants a piece of it.”

Before the legalized gambling boom hit this county three years ago, before casinos began dotting the mountainous landscape and slot machines became Central City’s hottest tourist commodity, this was a town that was defined by the lure and mystique of gold.

Guarded by primeval, 14,000-foot-high peaks, mound after mound of mine rubble, hundreds of creaky shafts and 50 miles of tunnels, the place is reminiscent of an age when prospectors sifted every creek bed and burrowed every hillside in the rush to get rich.

From the first discovery of shimmering nuggets in the gurgling shallows of nearby Cherry Creek in 1859, thousands of settlers stormed the Central Rockies in Colorado to lay claim to minerals that could bring an industrious miner a small fortune.

So quickly did word spread of the treasure lying beneath the majestic hills of Central City and nearby Black Hawk that President Abraham Lincoln, after the Civil War, dispatched a message to Central City miners, saying he was sending reinforcements to unearth the gold and silver to help relieve the nation’s war debt. “There is room for all,” he said, and he was not far from the truth.

In the 1920s, William Mark Muchow, an enterprising Chicago dentist known as Doc, made it his mission to buy the Glory Hole and the rest of the roughly 300 mines in the region--among them, Big Thunder, Little Raven and Matty May--and merge them into a gold-producing conglomerate.

Nettie MacDougall, a railroad machinist supervisor in Illinois for 45 years, met Muchow in Chicago during the Depression and signed on as one of the original 10 investors in his start-up mining company. (No one knows how much she paid in.) One company document from 1969 lists her as an officer of the Chain O’ Mines firm, as it was to become known.

At its peak between 1929 and 1937, the Glory Hole turned out 200,000 ounces of gold, 18 tons of silver and 1 million tons of lead, zinc and iron. It ranked as one of the biggest mineral producers in the country and attracted visitors of all stripes.

Although it is unclear how much MacDougall benefited from her Glory Hole investment before her death in 1985, she never doubted that the place would prove, quite literally, a gold mine for her heirs.

“She was always saying how we’d all be millionaires,” recalled Irene MacDougall, 82, of Homestead, Mich., whose late husband was MacDougall’s brother. “She’d say what she would do for the family, how she’d take us all on a trip around the world.”

After her death, MacDougall, who never married, left behind properties in Illinois and Florida, as well as $100,000 in cash. But the family put so little stock in her gold mine talk that no one pursued the Glory Hole entry in her will when it came time to settle her estate. At least not until Hobbs, the Costa Mesa handyman, got involved in January, 1993.

If MacDougall’s heirs do wind up with a chunk of the Glory Hole, family members agree, it will be largely through his perseverance.

Hobbs, a soft-spoken man who resembles a surfer more than a would-be mining mogul, visited the Glory Hole last year. What he found was a mine with a decidedly erratic record.

Despite its fame, the Glory Hole has sat silent for much of its 135-year history, its crater testimony to the difficulty of trying to wring a fraction of gold out of a ton of silt and stone.

When running, the Chain O’ Mines machinery can churn through 750 tons of rock and minerals a day, processing it all through a rickety, musty, wood mill that was built in 1926. But just as often, it seems, production has been plagued by problems: caps on gold prices; two well-publicized “swindles” that are said to have robbed the company of millions in joint ventures, and personal problems and distractions that Caldwell said have left him with scant time to restart full-scale mining at the Glory Hole--the charge he was given in 1969 when the aging Chain O’ Mines officers tapped him to be trustee because of his loyalty.

“I always believed that it was my job to get the property back into production,” Caldwell said. “But it wasn’t even profitable to mine gold till probably the late ‘70s.”

The distractions for Caldwell took a macabre turn in 1981, when two miners--including the father of a close friend--vanished near the Glory Hole. Relatives suspected they had been murdered and their bodies dumped into one of the hundreds of mines peppering the area.

Chain O’ Mines employees searched for nine years before authorities found the skeletal remains of the men in 1990. Just as their families had speculated, the two had been buried along with their pickup truck in an abandoned 400-foot shaft.

Two men were convicted of clubbing the miners to death with lead pipes, but authorities never could corroborate testimony linking the killings to a San Jose businessman who went to prison for orchestrating a multimillion-dollar gold scam involving the Glory Hole. Family members suspected that the miners were slain because they had discovered the plot.

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The Glory Hole’s most vexing problem, however, is a convoluted legal row that has as many twists as a mile-long mine shaft: Texas Judge Barnes in 1989 successfully sued Caldwell for reneging on a $50,000 cash loan and on a promise to repay a $1.2-million bank loan Barnes took out on Caldwell’s behalf.

More important, as far as MacDougall’s heirs are concerned, Barnes--who was an attorney who dabbled in real estate before joining the bench in 1988--subsequently succeeded in persuading a Colorado court to make the Glory Hole and the other Chain O’ Mines properties subject to the judgment against Caldwell. This despite Caldwell’s insistence that he never owned the property and the fact that his dispute with Barnes stemmed from a soured real estate deal in south Texas.

The result: The Glory Hole and the rest of the Chain O’ Mines properties have been put into court-ordered receivership by Colorado District Judge Kenneth Barnhill. Which means that, for now, whatever income the properties generate goes to Barnes, according to reams of court documents on file in Texas and Colorado.

The news got even worse for Caldwell last week: Barnhill signed an order allowing the sheriff to sell off all or part of the property to satisfy the multimillion-dollar judgment. Caldwell’s lawyers vow an immediate appeal, but they admit it will be a tough fight.

Also, the legal troubles have derailed Caldwell’s and the MacDougall heirs’ hopes of getting the Glory Hole back into full production for the first time in more than a decade.

To hear Scott Hobbs, his mother, Susan, and surviving MacDougalls tell it, all of this amounts to a thinly veiled plot to lay claim to their gold at a time when its price--nearly $400 an ounce--and technological advances make mining quite lucrative.

Scott Hobbs recently filed a complaint with the Texas Commission on Judicial Conduct, alleging collusion on the part of Barnes and the Texas judge who gave Barnes the multimillion-dollar award in the case, Joe B. Evins. As colleagues and friends, Barnes, who declines to give his age, and Evins, 68, have lived and worked in tiny Hidalgo County, near the Mexican border, for the better part of a half-century.

Although there is no evidence to support the family’s allegations of wrongdoing on the part of the judges, Scott Hobbs and Caldwell’s attorneys point to irregularities in the $15.5-million judgment Barnes received.

Although the original Barnes-Caldwell transaction involved $50,000 cash and a $1.2-million bank loan, Evins awarded Barnes $15,550,000, including $10 million in punitive damages.

With interest, the judgment exceeds $20 million.

How does a $1.2-million lawsuit become a $15.5-million judgment?

“Good question,” said Kreutz, a Colorado attorney who represents Caldwell. “But you can ask for the moon when the other side doesn’t show up.”

Which brings up another intriguing issue in the case, Caldwell’s attorneys say:

Within the thick courthouse files are affidavits from a process server, DeWayne Perdew, and his girlfriend, Lucy Lackey, who said they were not even in the same state as Caldwell on the date he was supposedly served by Perdew with notice of Barnes’ lawsuit. They were at a George Strait country music concert in Cheyenne, Wyo., they said. Perdew provided the affidavit despite the fact that he could face perjury charges. Initially, Perdew said he had served papers on Caldwell in person on July 30, 1989, court documents say.

What is clear from court documents is that Caldwell did not attend the judgment hearing, where Evins heard arguments only from one side--Barnes’.

Evins denied any wrongdoing in awarding the $15.5-million judgment, saying it was “far-fetched” to suggest any “hanky-panky,” was going on. “Wouldn’t make a damn bit of difference if it was the President of the United States or if I had known the plaintiff all my life,” he said.

Although Evins acknowledged that the size of the judgment was unusual given the sum in the original dispute, he deemed it reasonable because Caldwell, he said, has an unusual amount of assets. “The idea of punitive damages is to punish,” Evins said. “If your net worth is . . . $100 million, $10,000 would hardly be punitive.”

Barnes declined to comment on whether it was fair that MacDougall’s relatives may lose their inheritance because of his unrelated feud with Caldwell. Saying that he has reached an age where he doesn’t want any enemies, Barnes emphasized that he had no interest in the Glory Hole or any other mine in the Chain O’ Mines company.

“It’s a piece of a mountain as far as I’m concerned,” said Barnes, who also denied impropriety. “I’m satisfied that it’s a good judgment.”

The original judgment and subsequent rulings that have put the ownership of the Chain O’ Mines in jeopardy have reached state appellate courts in Colorado and Texas.

“The problem with this case,” Evins observed, “is you’ve got some lying goin’ on. . . . Everybody’s a suspect in a $15-million lawsuit.”

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Especially when what’s at stake is a gold mine.

Just how much the Glory Hole and the rest of the Chain O’ Mines property--which consists of hundreds of smaller gold mines and mostly prime acreage in and around thriving Central City--is worth today depends on whom you ask. Estimates range from $792 million to $22 billion.

Skeptics insist that the real gem of the company’s portfolio is the land it owns near downtown Central City, where casino owners are parting with handsome sums to put up Las Vegas-style gambling houses.

But old-timers believe the gold-steeped veins of the Glory Hole and surrounding mines have barely been scratched. Yes, the easy-to-get gold has been harvested. But below the surface lies much more, they say.

A 1985 study by Chain O’ Mines engineer-geologist Donald J. McCoy Jr. estimated that the Glory Hole holds 50 million tons of ore reserves, worth an estimated $5.3 billion in gold, silver, copper, lead and other minerals.

For now, though, the hands of the Hobbses and MacDougalls are bound. The families have retained attorneys to try to sever the Chain O’ Mines property from the Caldwell-Barnes dispute. Even if they succeed, other surviving heirs of the original 10 Chain O’ Mines investors might surface and lay claim to the Glory Hole.

In the meantime, Hobbs has emerged as the choice of the handful of MacDougall heirs and Caldwell to become trustee of the company and do whatever it takes to pluck the mine from the legal red tape in which it is entangled. Caldwell, who said it’s time to step down, has promised Hobbs the trusteeship, along with a share of whatever piece of the Glory Hole the family ends up getting.

By day, Hobbs constructs sales displays and “fixes things” around the Fedco store. But each night, he returns to a cramped studio apartment in Newport Beach, crammed with meticulously bound notebooks all dedicated to the Glory Hole, its gold and his Aunt Nettie MacDougall’s legacy, a legacy he hopes to preserve.

“The prize,” he said, “is so damned big.”