0:02 [SPEAKER_00]: When someone shares a secret, it rarely stays quiet. 0:06 [SPEAKER_00]: Just like a game of telephone, each person adds their own little extra detail, and the story grows bigger, and more exciting with each new version. 0:18 [SPEAKER_00]: That is pretty much how rumors work, and it's exactly what happened in this case, too. 0:26 [SPEAKER_00]: Back in 1872, a whispered hint about diamonds hidden somewhere in the American wilderness started small, but as the story bounced from person to person, it turned into a huge story about hidden treasures just waiting to be found. 0:51 [SPEAKER_00]: Welcome back friend to hometown history. 0:55 [SPEAKER_00]: Today's episode is all about one of America's most elaborate scams, one that drew in even the wealthy and powerful, all chasing a dream that was too good to be true, in the words of Charles Dexter Cleveland. 1:11 [SPEAKER_00]: One of the most bare-faced, reckless, courageous, bold, ingenious, premeditated, carefully planned, deliberate, time-serving, colossal frauds ever known in the history of man. 1:28 [SPEAKER_00]: This is the Great Diamond Hoax of 1872. 1:35 [SPEAKER_00]: Let's go back to the year 1870. 1:38 [SPEAKER_00]: The story began with two prospectors, Philip Arnold and John Slack. 1:44 [SPEAKER_00]: Prospectors are basically people who search for valuable minerals or metals like gold, silver or diamonds. 1:53 [SPEAKER_00]: So they explore areas where these materials might be found. 1:58 [SPEAKER_00]: And usually, these are areas that are relatively unexplored. 2:03 [SPEAKER_00]: Coming back to Philip and John, who were also cousins, by the way, these men made their way to the office of George Roberts, a businessman in San Francisco. 2:15 [SPEAKER_00]: Now Roberts was known for his quick moves, when opportunities knocked on the door, when the cousins knocked on his door. 2:26 [SPEAKER_00]: They brought him that opportunity. 2:33 [SPEAKER_00]: He was a strong, independent and persuasive man from Kentucky, and was about 41 years old at a time. 2:41 [SPEAKER_00]: Philip had served in the Mexican-American War, and then joined the mid-19th century gold rush in California. 2:50 [SPEAKER_00]: Later he worked on gold and silver mining operations, where Roberts had investments. 2:56 [SPEAKER_00]: They were carrying a leather bag. 2:59 [SPEAKER_00]: insisting it contained something valuable. 3:02 [SPEAKER_00]: They couldn't deposit at the bank of California, because it was after hours. 3:08 [SPEAKER_00]: They needed a safe place for their precious items. 3:13 [SPEAKER_00]: At first Philip and John were secretive about the contents, but curiosity got the better of Roberts. 3:21 [SPEAKER_00]: So they finally revealed the contents of the bag. 3:25 [SPEAKER_00]: rough diamonds, and there were lots of them. 3:30 [SPEAKER_00]: They claimed these diamonds came from a hidden gem field, somewhere in the vast western United States. 3:37 [SPEAKER_00]: They refused to disclose the exact location. 3:41 [SPEAKER_00]: Obviously, Roberts was intrigued, and seeing the potential for immense wealth. 3:47 [SPEAKER_00]: He promised 3:50 [SPEAKER_00]: Of course, he quickly broke that promise and shared the news with two other influential men. 3:57 [SPEAKER_00]: William Raulston found her of the Bank of California and asked for her heartbanding. 4:07 [SPEAKER_00]: Raulston was one of the wealthiest men in California at the time, having made his fortune 4:19 [SPEAKER_00]: but heart-bending on the other hand had a more checkered history. 4:23 [SPEAKER_00]: He had been involved in various ambitious ventures, some successful, some not. 4:30 [SPEAKER_00]: By 1870, both Roushton and heart-bending were already involved in a new project, called the Mountains of Silver in New Mexico. 4:40 [SPEAKER_00]: Heart-bending was an England seeking investors when he heard about the gym field, 4:47 [SPEAKER_00]: as you would expect, he was excited to try his luck. 4:51 [SPEAKER_00]: So he hurried back to San Francisco, in May 1871, eager to get in on the action. 5:00 [SPEAKER_00]: In the meantime, Philip and John had returned to Roberts, with more diamonds and rubies, claiming they had recovered 60 pounds of gems, worth over a half million dollars. 5:18 [SPEAKER_00]: So the excitement was obvious, and Roberts brought two more prominent figures into the mix. 5:25 [SPEAKER_00]: General George Dodge, a former Union Army officer, and William Lent, another investor and the Comstock Lord. 5:35 [SPEAKER_00]: With each new player, the story gained more momentum. 5:40 [SPEAKER_00]: All five people involved tell that point, also called the same Francisco Bakers, at big 5:48 [SPEAKER_00]: but to their disappointment, Philip and John still refused to disclose the gym field's location. 5:55 [SPEAKER_00]: The reality on the other hand was that Philip had worked for a company that used diamond-tipped drill bits. 6:03 [SPEAKER_00]: He probably took some of the industrial grade diamonds from there. 6:09 [SPEAKER_00]: The rest of the gyms were purchased in London, as we discussed, or from Native Americans in Arizona. 6:17 [SPEAKER_00]: So using these diamonds, they tricked these businessmen and believing that a secret diamond field did exist. 6:26 [SPEAKER_00]: And here is where the actual scam began. 6:29 [SPEAKER_00]: They agreed to bring back even more stones and exchange for a $50,000 investment from them. 6:41 [SPEAKER_00]: That would be about a million dollars today. 6:45 [SPEAKER_00]: With that money in hand, instead of heading to a hidden gym field, the cousins went to London. 6:52 [SPEAKER_00]: Using fake names, they purchased rough uncut diamonds and rubies that were worth half of what they took from the investors. 7:02 [SPEAKER_00]: Then they returned to San Francisco and presented these stones to their 7:12 [SPEAKER_00]: And obviously, the investors were amazed at the sight of these gems. 7:18 [SPEAKER_00]: The stones were, in fact, real, but they noticed that the quality was low. 7:24 [SPEAKER_00]: So to add credibility, it is sighted to have 10% of the stones, a praise by Charles Lewis Tiffany, of Tiffany and Company in New York. 7:35 [SPEAKER_00]: President at this appraisal were several high-profile figures, including Major General George McLean, Congressman Benjamin Butler, and Horus Greely, the editor of the New York Tribune. 7:50 [SPEAKER_00]: Now the thing was that neither Lewis Tiffany nor his Jim expert had experience with uncut stones, so they accidentally valued the Jim's much higher than they were actually worth. 8:05 [SPEAKER_00]: So luckily for Philip and John, Tiffany declared the gyms, genuine, valuing them at about $150,000, nowhere close to the actual value. 8:21 [SPEAKER_00]: With credibility established back in San Francisco, the investors formed the San Francisco in New York mining and commercial company. 8:31 [SPEAKER_00]: They display trays of gems to attract people to invest in their business, and by showing the gems, they hope to convince potential investors to buy shares in their company. 8:46 [SPEAKER_00]: But another problem cropped up, the investors were excited, but they weren't all fools. 8:53 [SPEAKER_00]: They insisted on seeing the actual gemfield 8:57 [SPEAKER_00]: Philip and John agreed to it, on the condition that an expert would come along, and the investors would be blindfolded to keep the location a secret. 9:08 [SPEAKER_00]: The chosen expert was Henry Janan, who was a respected mining engineer. 9:14 [SPEAKER_00]: So in June of 1872, the inspection party, including Philip, John, Janan, Dodge, 9:28 [SPEAKER_00]: They traveled by train to Rollins in Wyoming territory. 9:32 [SPEAKER_00]: And after arriving there, they switched to riding horses to continue their journey. 9:39 [SPEAKER_00]: After four days of a confusing route, they arrived at the site. 9:44 [SPEAKER_00]: A wide flat area with a tall cone-shaped mountain nearby. 9:50 [SPEAKER_00]: surprisingly, within minutes. 9:53 [SPEAKER_00]: One of the party members found a diamond. 9:56 [SPEAKER_00]: And soon enough, they were all discovering a large quantity of gems. 10:02 [SPEAKER_00]: Janan, who was now completely convinced of the authenticity of the site, reported the gem field as genuine. 10:10 [SPEAKER_00]: In the new spread, like wildfire, 10:20 [SPEAKER_00]: Now we know that Philip and John were calling the investors. 10:24 [SPEAKER_00]: So the question is, how did Janet and the inspection team find so many diamonds in that field? 10:32 [SPEAKER_00]: And the answer is, they didn't. 10:36 [SPEAKER_00]: Well, they did. 10:38 [SPEAKER_00]: But those diamonds didn't belong to that mine. 10:42 [SPEAKER_00]: They planted those gems, well in advance, and left them for the visitors to find. 10:49 [SPEAKER_00]: The term for this is salting. 10:52 [SPEAKER_00]: Basically they scattered low-quality diamonds, and other gems that they had bought from various places, to make it look like there was a natural deposit of precious stones. 11:04 [SPEAKER_00]: So when they led the investors to that site, the investors found the planted gems, and believed what they wanted to be the truth all along. 11:13 [SPEAKER_00]: The field was real. 11:18 [SPEAKER_00]: So after the success of this inspection of around 3,000 acres of land at that site, the investors paid Janan $1,500 and offered him $8,000 shares of company stock. 11:33 [SPEAKER_00]: Upon returning to New York, Janan sold his shares for a $30,000 profit, which is roughly around $7.5 million today. 11:45 [SPEAKER_00]: Meanwhile, Philip and John realized that their con was now too public, and it was time to cash out. 11:54 [SPEAKER_00]: All in all, John took $100,000, while Philip ended up with $550,000 minus expenses. 12:05 [SPEAKER_00]: So together they had coned their investors out of $650,000, which is well over $13 million 12:15 [SPEAKER_00]: After that, John disappeared, and Philip returned to Kentucky with his family. 12:22 [SPEAKER_00]: They were officially out of the game, but the investors weren't. 12:31 [SPEAKER_00]: The hoax might have gone undetected, if not for a combination of luck and skillful detective work. 12:46 [SPEAKER_00]: One of King's men, Samuel Emanz, met Janan on a train, and saw some of the diamonds. 12:54 [SPEAKER_00]: But his knowledge led him to doubt the authenticity of the gym field. 12:59 [SPEAKER_00]: So he reported his suspicions to Clarence King, who then decided to investigate further 13:07 [SPEAKER_00]: King and his team traveled to the Wyoming Colorado border, where they found the side just as Janan described. 13:16 [SPEAKER_00]: They discovered gems, but thanks to their expertise, they also found evidence of tampering, tiny holes in the ground, where gems have been planted. 13:28 [SPEAKER_00]: The jig was up, and with that, the once enthusiastic investors realized they have been due 13:37 [SPEAKER_00]: again the news broke and pretty soon news papers were publishing the headlines on their front pages. 13:46 [SPEAKER_00]: Both Philip and John were found and indicted for fraud but never brought to trial. 13:53 [SPEAKER_00]: Philip settled out of court with the investors and later became a banker in Kentucky. 14:00 [SPEAKER_00]: Unfortunately for him, as past eventually caught up to him, he was shot by a business rival in 1878, and died six months later from pneumonia. 14:14 [SPEAKER_00]: John dropped out of public view, he moved to St. Louis, an open-to-casket making business. 14:21 [SPEAKER_00]: Later he became a casket maker in White Oaks, New Mexico, where he lived quietly until he died in 1896, at 76 years old. 14:36 [SPEAKER_00]: And that is all for today's episode. 14:39 [SPEAKER_00]: The great diamond hopes of 1872 is actually a reminder for us that all that glitters is not 14:52 [SPEAKER_00]: So the next time you hear about a quick and easy way to get rich, that sounds too good to be true, think about a twice. 15:01 [SPEAKER_00]: Thanks for listening to Home Town History. 15:04 [SPEAKER_00]: Be sure to follow along for more interesting stories from the past.
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