With its rich mining history, Arizona is still plagued with the problem of fraud in the precious metals mining industry. Fraudsters may offer official-looking geological surveys or financial statements, when in reality there is little or no current production. In one typical scenario, the promoter claims to have exclusive mining rights to profitable mines, but in actuality, the company does not have any mineral rights to the land or is defunct. In many instances, the amount of ore in the soil is so minuscule that extraction is not economically feasible.
In another typical scenario, the promoter, while touting a geology degree and decades of industry experience, points to a revolutionary process to extract precious metals from anything from volcanic cinders to sediment clay used to make kitty litter. Investors are encouraged to cash out of their poor performing investments and switch to the new, precious metals investment, which may be nothing more than “fool’s gold.”