Gold-MIne Scam In Alaska

The exchanges have done a lot to clean up the exploration industry after the Bre-X scandal tore it, but scams still lurk in the dark side of the industry. Many of these scams are pump and dumps, or other kinds of market manipulation, but every now and then a more direct fraud surfaces.

In this case, two men have been arrested for raising money for an Alaskan gold mine that doesn't exist:

Two Lower 48 businessmen who committed to raise millions of dollars to develop an Alaska gold mine on an island just south of Kodiak were arrested Wednesday on counts of securities and wire fraud.

The men are accused of bilking millions of dollars from unwary investors in the Sitkinak Island gold mine and an unrelated real-estate scheme in the Lower 48....

Alaska mining officials said they were aware of the federal probe and had been contacted by the FBI. They also had received calls from potential investors in the gold mine.

Anchorage miner Yoram Palkovitch, 59, said Lange and Pascua, through their business called Black Sand Mine Inc., had so far invested $50,000 in his Sitkinak mining project, which involves placer mining on beach sand.

Palkovitch said [he] has been trying to develop the project -- located on state land -- for decades.

Palkovitch said he did not know about the indictment and the arrests until he was contacted by a reporter.

"I thought (the men) were legit. I still think they are unless I am told otherwise," Palkovitch said.

Evidently, the poor fellow had trusted the wrong pair. Try as they might, the authorities can't get rid of scamsters; it's still investor beware out there. Not to mention prospector beware.