Investment Scams Using
Precious Metals and Oil & Gas Exploration
The Gold and Y2K Bugs 
You are phoned and are offered an opportunity to buy unregistered
stock in Selket Precious Metals, Inc. They say that they are seeking
to raise $1,375,000, to finance equipment necessary to bring the
Herculean Mine into commercial operation. They require a $10,000
minimum stock purchase per investor.
They tout investments in Selket by claiming that the opportunity
offers low risk and high returns in a short time. They base this
claim, in part, on the anticipated increase in demand for tangible
assets resulting from fears about the impending disaster and financial
collapse that the Y2K computer bug would allegedly cause on January
1, 2000.
Illustrative of the their claims about the profitability and low
risk of an investment in their mining ventures and gold certificates
are the following written and oral claims:
(a) "Gold and Silver is being bought in record amounts. The
reason is the worrisome subject of the 'Y2K computer bug.' It matters
little whether it is going to be catastrophic or comparatively mild,
the price of gold and silver is going to climb at an exponential
rate as we approach the year 2000 because of peoples' fear of a calamity!"
(b) "We have made a conservative evaluation of the precious
metals content of the ore reserves available to us and have determined
that the total amount to be gained, before taxes, is $200,000,000.
This is the amount on which our company stock evaluation is made."
(c) "The gold is there and processing equipment is available
and it would take only about two months to start pouring out gold.
. . and you can't beat that."
(d) "Our weekly production schedule should yield about 334
Troy ounces of gold. At $300 per ounce this is about $100,000 per
week or $400,000 per month. Part of this will be expenses but the
net should be quite impressive."
The promoters also sell "gold certificates" ( redeemable
for gold obtained from the Herculean Mine ) to people across the
country over the Internet, via a web site, and through written promotional
materials and telephone sales presentations.
"WARNING Read the enclosed
file concerning the millennium bug. The only defense you have is
to have something that is spendable like gold, silver, gold certificates,
tradable merchandise or human labor. There will be a tremendous
rise in armed robbery, looting, food raids and many other types
of 'survival crimes'. When people get hungry, ethics, morality
and sportsmanship go out the window."
"These certificates are just like money . . . they cannot
be stolen or confiscated as gold could be. If this happens we will
cancel the ones which were stolen or confiscated and they become
worthless. They can be redeemed for real gold at your discretion.
These certificates are in effect REAL MONEY."
"NOW FOR THE GOOD PART! . . .We will give as a bonus an
amount of gold equal to the amount of your original purchase!!
That is a 100% gain! That is exactly what every broker and venture
capitalist that I approached wanted! I would much rather give it
to you, my friends and customers than I would to them!"
In fact, it turns out that an investment in Selket or its gold certificates
is not likely to yield a substantial short term return with minimal
risk as the Herculean mine will not be fully operational within a
few months and is unlikely to profitably produce at least 300 troy
ounces of gold per week at any foreseeable time in the future, if
ever.
Hints that you might be dealing with a boiler room scammer is if they state:
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"A
lot of oil and gas has been found in an adjacent field
and a tip from a reputable geologist has given us a unique
opportunity to make this venture a success." |
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"We've
hit oil or gas on every other well previously drilled and
a large reputable oil company is planning to operate near
our leased property." |
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"A
decision must be made immediately to invest in order to
assure the purchase of one of the few interests remaining
to be sold. " |
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"The
deal is only available to a few lucky and specially chosen
investors because there is very little risk involved." |
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"I'm
so sure that this oil well "can't miss" that
I've personally invested in the venture myself." |
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