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6 Notable Gold Trading/Investment Scandals

By    |   Monday, 15 June 2015 05:54 PM

Gold is at the center of some noteworthy investment and trading scandals that have rocked the financial world over time and given proof for the diehard phrase, "All that glitters is not gold."

Here are some notable gold investment scandals to become cautionary tales.

1. Bre-X
A publicly traded Canadian mining company, Bre-X Minerals LTD lured investors in the 1990s with claims of a gold strike in Indonesia that turned out to be a complete fabrication. The scammers planted gold dust in soil samples from their dig, Business Insider reported. Bre-X stock climbed from pennies to more than $280 a share in three years' time before it collapsed under scrutinty in 1997, leaving investors empty-handed. The Bre-X scandal is the subject of several books and appears regularly on lists of history's biggest financial scandals.

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2. Seawater Gold
A swindle for the ages, the Maine seawater gold scam of 1898 was hatched by a New England Baptist minister, Prescott Jernegan, and his partner in crime, Charles Fisher. The two sold investors on their "discovery" that gold could be mined from the ocean, and thousands of people bought shares in the phony extraction company. By the time New Englanders wised up to these "bogus maritime alchemists," as The Martha's Vineyard Times has dubbed them, Jernegan and Fisher had fled.

3. Ethiopia Duped
After the government of Ethiopia learned in 2008 that it had bought 3.2 million grams worth of fake gold bars, the criminal probe that followed uncovered a deeply embedded conspiracy. Employees of the country's national bank, ministry of mines and geological survey were among the 17 people found guilty of fraud in connection with the fake gold con in 2012, the Capital newspaper in Ethiopia reports.

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4. Gold from Ghana
More than two dozen investors handed over $3.2 million to a company promising to sell gold mined in Ghana, Africa, on the international market, only to learn the sellers were stealing the money. Prosecutors in Alabama secured guilty pleas from three conspirators in 2015, according to AL.com.

5. The Real EmGoldex?
Even as this Dubai-based company, and many of its investors, claimed to be legitimate, EmGoldex was under investigation in at least four countries in 2014 and 2015 for allegedly running a gold-based pyramid scheme. EmGoldex promised tenfold returns to investors if they bought gold and recruited others to do the same. The company's website claimed that any alleged scams were the work of people misusing the company's name. But authorities in the U.S., Philippines, Columbia and Panama remained skeptical and issued warnings of possible fraud in connection with EmGoldex.

6. Florida Gold Scam
Four Florida companies prospered in the 2010s by selling gold to customers who never saw any of the product they thought they were buying, and received nothing resembling returns on their investments. The federal government forced the companies' operators to pay restitution and then banned them from all trading in precious metals. As the Sun Sentinel reported, bilked customers had ponied up $7.8 million in deposits and loans to pay for gold purchases on the promise that gold's skyrocketing price would more than cover their cost.

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Gold is at the center of some noteworthy investment and trading scandals that have rocked the financial world over time and given proof for the diehard phrase, "All that glitters is not gold."
gold, trading, investment, scandals
Monday, 15 June 2015 05:54 PM
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