As an attorney based in Miami, I see a lot of international fraud cases filed in Miami. But lately I’m seeing a lot of cases related to what can best be described as gold fraud. Of course, with the price of gold in record territory, this is not exactly a surprise.
Just today, the Securities & Exchange Commission filed a fraud cases against Quri Resources, Inc., a purported mining company headquartered in Miami and operating in Ecuador, with violating the anti-fraud provisions of the securities laws.
In the complaint against Quri Resources, the SEC pointed to press releases claiming, for example, that the company was ready to begin drilling on a mining project in Ecuador with a probable gold reserve worth over $1 billion; it had signed letters of intent to acquire two valuable mining projects in Arizona; and it had acquired a second mining project in Ecuador and anticipated producing gold within three months.
According to the SEC, however, there was no way to know the value of the gold without detailed exploration. It further noted that there was no project in Arizona and only one in Ecuador, which was not developed. “Quri had no money, was never able to raise any funds, had no reasonable expectation of any funding, and was heavily indebted,” the SEC said.
The lesson in today’s story: International investors should take a good hard look at any gold-related investment opportunity that comes their way. It’s unlikely to be the golden opportunity its made out to be.