Please Note: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!
Greg: Investigators couldn't even find fingerprints to identify the corpse because after five days face down in the swamps of the jungle of Borneo, the body was totally decaying. It had been eaten by animals and it was covered with leeches. Some people think he committed suicide by jumping out of the helicopter. Some people think the guy was tortured and murdered and thrown out of the helicopter. Other people think he faked his death. And right now he's living off the millions he made in stock options. But no matter what really happened, it's a pretty damn sexy ending for a geologist.
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Greg: Hello and welcome to Oh My Fraud, a true crime podcast where the only torture we get to talk about is studying for the CPA exam. I'm Greg Kite. And I'm Caleb Newquist. Caleb, before we get into it too much with today's case, I just want to read a listener review real quick. Lizard who said, Consider me a fan. You all are informative, insightful, and most importantly, hilarious.
Caleb: Well, bless your heart, Lizard. Do we love compliments and we love reviews. And we'd love it if you left a review. Yes. You on whatever podcast platform you listen, leave us a review or write a review. Make a rating. I don't know the terminology. I'm screwing up the terminology, but it's like, whatever it is, do it. It helps people find the show. And maybe, maybe Greg will enthusiastically read what you wrote. I would.
Greg: Love to. I would love to. Yes. So, Caleb, hold on.
Caleb: Yes. Yeah.
Greg: Before we get too far into this, let's take a quick left turn. Oh, yeah. If you just here's the question of the day. If you had to fake your own death, how would you do it? Like. Like would you kill yourself? Like, how would you do it? You know, kill in quotes and how would you avoid detection and how would you set up a new life for yourself?
Caleb: Oh, okay. So I had to think about this. I had to kind of compartmentalize this because I have a family and I have to assume that I have to think about this as if their lives wouldn't be ruined. So.
Greg: Okay, good, Good. So you didn't already have a like, a plan laid out?
Caleb: I mean, I'm not going to say that, but but in any case, I am I am my loved ones being left behind. We're not going to get into that bit of it. So there's no.
Greg: Straight there's no go bag with a hand-drawn map in the closet.
Caleb: Right. Right under.
Greg: The floorboards in the rec room.
Caleb: Right behind the painting in the in the den. Yeah. Yeah. Anyway, so the way I see it, the way I think about this is that I basically have two options, neither of which are pretty or affordable. So. But the first is something that usually involves the ocean. Like I tell people that I'm going to go to the beach to watch the sunset and then I stay until the beach is empty and then I escape under the cover of night. Right. And, you know, my I leave my flip flops, my towel, snacks, whatever, in such a manner that it appears that I either went into the water and never came out. So. Accidental drowning. Yeah. And or just simply disappeared.
Greg: The perfect plan for a man who lives in Denver. What else you got?
Caleb: Oh, I guess I could have wandered into the mountains in a blizzard. Okay, that. The other involves fire. Also very pleasant. Right. Right. So I'm thinking like car bomb or like a fire bomb in my petite hair where very little trace of my remains remain. Yeah. And in each case, I'd have to, you know, I have to ditch my cell phone. Of course I'd have to figure out a fake passport. Probably steal an identity, open new credit cards, credit card accounts with that stolen identity. You know, and then, you know, I'd either either, you know, I'd leave the country or like, drive to to northern Idaho or some other remote place where people are nosy but still know to mind their business.
Caleb: That that feels like northern Idaho.
Greg: I think that's a that's spot on for northern Idaho. Yeah.
Caleb: But in any case, you know, I'd have to push the car off the cliff again. More fire. But it would take lots of planning, you know, and I wouldn't be able to tell anyone anything, which I'm not sure I could do because I'm kind of a gossip and painfully introverted. I'd have to make new friends. Yeah. And so, like, I don't know, Northern Idaho, London, Stockholm, Reykjavik. Like, places where I wouldn't stick out, that's where I'd have. I feel like that's where I could write. That's where with your.
Greg: With your, with your very. I mean. Yeah. You look like you look like you should have a Swedish accent. That's like if, if I didn't know you and just ran into you on the street, I'd go, This guy is an exchange student from. From, uh, you know, up there.
Caleb: Yeah. What about you? How do you. How do you disappear and never be heard from again?
Greg: I'd wander into the mountains in the middle of a blizzard. You basically gave mine away because, like.
Caleb: Like Jack Nicholson at the end of The Shining, you know.
Greg: Kind of. He didn't really wander. He just got stuck in the maze.
Caleb: He's kind of losing it. Yeah. Yeah. Anyway, well, you.
Greg: You were like. You wanted to go to some place where you'd blend in. If I if I shaved the beard, got hair plugs in and got my vision fixed, so I didn't need glasses, I think. Dude, you'd be fine. Yeah, I don't think anybody know who the hell I was.
Caleb: No, you'd be great.
Greg: Yeah, exactly. So, anyways, Caleb, the reason we're talking about this is because in the fraud case we're looking at today, we end up with at least one, but maybe two dead guys and one of those two dead guys. Maybe, but not for sure. Faked his own death. And all of this has to do with this gold mine in Indonesia. Our story today starts out in Canada. It was there that an enterprising gentleman named David Gordon Walsh quit his job as the vice president of a national securities firm. And in May of 1988, he incorporated Brex Minerals. And a little over a year later, in July of 1989, Brex debuted on the Alberta Stock Exchange, which, if you're not familiar with the Alberta Stock Exchange, is among the top 100 most sexy stock exchanges in North America. And it debuted at at a whopping $0.30 per share. As a junior mining company.
Caleb: Alberta Stock Exchange, Miss Miss December on the stock exchange calendar. Right.
Greg: Just barely got in.
Caleb: But got in nonetheless. Right? Brex was incorporated as a junior mining company, which sounds weird, right? Yeah, It sounds like a mining company with very low self-esteem.
Caleb: But. But we looked into it and a junior mining company is an exploration company, right? Not so much A company that actually pulls the minerals out of the ground. Yeah, they like.
Greg: They like, go, Hey, there's gold over here. Somebody want to. Yeah. Want to dig this? Yeah.
Caleb: Right, Right. And energy. Energy companies. No, mining is not energy per se, but energy companies kind of work a similar way. Okay. Like back in the day, did you ever watch that movie There Will Be Blood?
Greg: I did, Yeah. Yeah.
Caleb: Good movie. Good movie. Kind of intense and weird and disturbing. But, like. Like in those old days, the guys would be like, the guys. They would walk around with the sticks and the fucking wilderness of Oklahoma or Texas or whatever, and they'd be like, It's right here. Yeah. And like, but they can't do anything. They were just these guys who had a feeling. Right, right, right. And then they, they, they dig a hole in the ground and he'd be like, It's mine. And Daniel Day Lewis would lose his mind. But anyway, that's kind of how mining seems to work, too, I guess.
Greg: Yes. Yeah, it seemed like. Well, and that was one of the things because I know that the I mean, again, maybe it's just because when we, you know, did our accounting studies in school, there was I felt like there was quite a bit that we looked at in terms of like, you know, natural gas, petroleum, that sort of stuff. Yeah. In terms of exploration and and things of that nature. So yeah, looking at this, it seemed like there was a, there was a lot of similarities that it felt like there was between because again, whether it's, whether it's whether it's liquid gold or gold gold, you're pulling it out of the ground, you've got to find it and then pull it out.
Caleb: So, yeah, it costs money to look for it. Yeah, exactly. It costs money to get it out of the ground.
Greg: Yep, exactly.
Caleb: When Brex went public, it very intentionally marketed itself to investors as highly speculative. They were literally going to use investor money to try to strike gold, which, to be fair, sounds insane. Even in, what, 1989? Yeah, that sounds crazy, right?
Greg: Yeah, exactly. It's like, hey, I thought, are you talking 1849? Yeah.
Caleb: Or are you talking California gold rush?
Greg: Yeah, 1989. I think you missed it, guys.
Caleb: Yeah, it's. It's been a few generations. Exactly. Anyway, uh, specifically, Brex was going to look for gold in the Northwest Territories. Now, I have not been to the Northwest Territories, but it is, from all I can tell, remote and fucking cold. So I don't know why you would want to go there. Why you would think gold is there. Maybe these people know something that the rest of us don't. But I don't know why a person would go. Pretty much to the Arctic. To look for gold, right?
Greg: My guess. My guess is that nobody wants to go there to look for gold. So they're like going, Hey, where's Nobody really looked yet. And. And they go here.
Caleb: And it turns out. Brex sucked at finding gold. So much so that just three years after their IPO in June 1992, David Walsh filed for bankruptcy for himself. Brex wasn't declaring bankruptcy, but he was barely surviving. It was basically a shell company.
Greg: By March 1993, David Walsh was desperate. So he called up an acquaintance, a guy named John Felderhof, who was an Australian geologist, not to be confused with Kevin Federline, an American disappointment. And David Walsh asked John Felderhof if he had any leads on any potential mining projects. You know, kind of like, Hey, hey, buddy, I just need the way my brain makes a movie out of this is he's like a junkie looking for a fix where he's like, Just got anything. I just need something. And. And so a month later, David Walsh spent his last $10,000 to go to Borneo with Felderhof in search of gold. Now?
Caleb: Yes. May I. May I just interject, please? This David Walsh guy, I don't know what kind of person spends their last ten K to go to one of the most remote areas of the world. Yeah, but something tells me he didn't have much else going on, right?
Greg: Right. Again, it definitely none of the accounts that I read specifically said use the word desperation. But everything in the story, the context is desperation.
Caleb: Yeah. And like and and felderhof an Australian geologist like I somehow like because because I have young kids and Bluey is basically on a loop in our house. Uh, I'm just like, my, my Australian accent comes out frequently, so I just. Oh, hey mate, let's get to Borneo. And there's some fucking gold over there, man. Let's go. And like. And, and Walsh is just this Canadian and he's just. He's got nothing else going on. He's like, I'm going to take my last 10,000 bucks.
Greg: Okay, So. So how about we take our last $10,000 and go to Borneo? A, Is that. That's right, mate. Get over.
Greg: Ooh, Borneo. Oh, well, okay. I guess we'll go to Borneo. That's right.
Caleb: We'll go.
Greg: It's a shit Canadian accent. Tried to do.
Caleb: It. Might work, though. Anyway, Borneo.
Greg: So it feels like in. Oh, my fraud. We do have an a required geography lesson every episode. So here. Here is here's that segment of the show. Borneo is located in Southeast Asia. It's the third largest island in the whole damn world. It's just southwest of the Philippines and it's about halfway between Vietnam and Australia. Uh, interesting thing. Four different countries lay claim to parts of Borneo, so it's like it's one big island, but it's chopped up into four parts. And those four parts are controlled by four different countries. But the vast majority of Borneo is shared between Malaysia and Indonesia. The other two countries have real small chunks. So, okay, Walsh and Felderhof, they zoned in on this dense rainforest part of Borneo called Busang, and that was in the Indonesian part of the island. And and part of the reason why they did that is because people, the people of Borneo, had been panning for gold in the Busang River for a long, long time. So the thought process was those specks of gold in that there river have to come from someplace. And so likely there's more. Up in the headwaters of the Busang River. So that convinced Walsh. He then sold all of Brex North American holdings. He scraped together $150,000, and with that $150,000, he acquired Busang and he started looking for the mother lode in Busang.
Caleb: This is so this is so like Quixote. Like, is it not?
Greg: Oh, hell.
Caleb: Yeah, it is. So like this guy fucking believes. Yeah, yeah, yeah. And both of you don't know about you feel this way, but like, to me, I this story, I'm just like, these guys are fucking idiots. Like, they are, right? They are going on the biggest, like, pipe dream. Wild goose chase you could possibly imagine, Right? But. But they just might find a fortune in gold. And I'm going to be sitting here in fucking Colorado not doing anything. So. Right. To their credit. To their credit. Go after go. Yeah.
Greg: You're right. I guess I hadn't thought about that before. Like, the thing that sticks out to me is $150,000, even in 1989 was not a lot of money or whatever, or whatever it was. Yeah. Oh, yeah. 1990 to 1993. This was March 1993. Yeah. So even back in March 1993, $150,000 was not that much money. So it seems like they got a they stretched those dollars. But yeah, like you said, it is funny to think that they're basically doing the same thing as selling olive Brex holding and buying $150,000 of lottery tickets. Yeah, it's not a whole lot different.
Caleb: Lottery tickets in another country.
Greg: Right, right, right. Indonesian lottery tickets. Yeah. So. So these guys, so Felderhoff Walsh, they start looking around for gold. But after eight months, it looked like Busang was just one more Brex failure. And and probably based on Walsh going all in, it was probably Brex last failure. But their chief geologist for the project, a gentleman named Michael de Guzman, he pleaded for more time. He he also believed in this place being where the gold was going to be. But despite De Guzman's enthusiasm for the project, by December of 1993, Felderhoff was getting ready to shut the whole thing down, and that's when De Guzman found the gold. Lots and lots of gold.
Caleb: On news of De Guzman's discovery. Brex stock price jumped to $0.70 per share, up from $0.12 earlier in the year. Greg, you are a former middle school math teacher. Yes, that is an impressive percentage increase, is it not?
Greg: That that's that's what, probably about 600%. Close to 600% jump. Yeah, but but also funny, I think since it's still under a dollar per share, it would still be considered a penny stock.
Caleb: Over the next year. More core samples were examined and it was estimated that there were 2,000,000oz of recoverable gold. And by the end of 1994, Brex hit $2 per share. So, Greg, Yes, if you bought $1,000 of Brex stock at $0.12 per share and it is now worth $2, you're you're, you're feeling pretty good about yourself.
Greg: Yeah, exactly. At that point, the way that I not that I've been super speculative with things that I have invested in, but I would be like, okay, the ride's over and I would have cash. Yeah, no kidding. Right? Two bucks. Here I go. This is good enough. We. We made we made what we needed to do. Let's let's count our blessings. And it's kind of a meme.
Caleb: Stock before meme stocks were meme stocks.
Greg: Yeah. Which but again, I think that's part of the fascination I have with this entire case is that it's, it's realizing that gold makes people crazy. Yeah. Fucking insane and madness and, and you see that where where it is where it's like, oh my gosh, what do we have here? And, you know, and all of a sudden they're thinking, you know, King Solomon and you know that that the rocks are going to be made of gold in my city. And, and yeah, it's it's a weird almost like a genetic disease that humans have that gold makes them go crazy.
Caleb: By July 1995, the estimates were revised up to 6 million to 8,000,000oz of gold and Brex share price went up to $14. It's amazing. I mean, this is yeah, later in the year, some mining analysts estimated more than 10,000,000oz of gold. And by January 1996, the stock had climbed to $93 per share. So people are laughing all the way. Yeah, laughing to the bank with this.
Greg: And again, if if I had bought in at $0.12 a share, the whole the whole ride from $2 to $93 would have been like, I don't know why I'm staying in. I got to cash out. Got to cash out. Yeah. I would have been paranoid the entire time, right?
Caleb: Not enjoying a second of it?
Greg: No, no, no, no. Just been. Just been anxiety ridden the entire time.
Caleb: In April 1996, Brex moves to the Toronto Stock Exchange, which is the big boy stock exchange in Canada, and the share price jumped to $184.
Greg: Right, So almost double that was in April. Yeah, April of 96. Yeah. So that was in four months of 1996. The price doubled again.
Caleb: Yeah. That, that, that increase in that short amount of time. Like that's, that's insane. Yes. Later that same year, 1996, the estimates were revised again to 47,000,000oz and the stock price peaked at ready $286.50 per share. Right.
Greg: So even though they hadn't dug up even one nugget of gold, all the shareholders had definitely struck gold.
Speaker4: Not a single flake. Right.
Caleb: Well, you said, though, is so true, though. I can't believe that didn't dawn on me. But it's like gold. There's something about gold that makes especially men, makes men mad, like, lose their fucking minds. Yeah, like, it just. I don't know. Yeah, it's, uh. I don't know.
Greg: Yeah, well, it's. I mean, it's very much, you know, And again, based on movies that we've watched of of people who are like, there's gold in California, and so they just leave everything behind and grab a pickax and a donkey and go out to, oh, no. To the hills of Victorville to try.
Caleb: No, no, no. What's funny about that, though, is like is they go to California without their picks pickax and their shovel and they buy them in California. And the guy's selling pickaxes and shovels. Is the motherfucker who got rich, right? The guy searching for gold ended up drunk and in a river.
Greg: Yeah, exactly. Exactly. So by this time, Brex obviously is a big damn deal. And so, unsurprisingly, some other entities start showing up that want to get their fingers into the pie. And in October of 1996, so 1996, pretty big year for this whole situation. There's a local Indonesian mining company who said that they actually own 10% of the interest in Busang and because of that, the Indonesian government decided that they were just going to delay issuing Brex mining permit until all of the ownership rights were actually settled and just totally written in stone and unquestioned. And so.
Caleb: It seems like a deliberate delay tactic, if.
Greg: I kind of say.
Greg: And and I mean not to you know, one of the things that was actually part of the research that I found, too, is Indonesia as a emerging economy. They did not have the the the most trustworthy government there was. There was a fair amount of corruption involved in the government. So I wouldn't it it's again, it wasn't part of the research, but reading between the lines is almost like they're going, we need to make sure that if this is if these are our natural resources, we need to make sure that all of that profit isn't just going to some knucklehead in Canada. So I think that's part of what's going on there, too. But that's that's a bit of speculation on my part as well. So but listen, to further complicate things, remember Brex was a junior mining company and so it didn't even have the capacity to actually extract all those millions and millions of ounces of gold. And because of that, there were there was not one, not two, but three different mining companies who were who were actually trying to pressure Brex into joint venture deals, which is weird because it very much was that they were trying to pressure Brex, not that they were trying to schmooze Brex which which I but, but it's funny, I think that's, that reflects the fact that Brex was nothing just basically months before this.
Greg: So, so but these are, these are like old established mining companies that like this is their world. And so yeah, I think they're just using their clout to come in and kind of try to force Brex to to to pick them. So then in January 1997, just the beginning of the next year, the Indonesian government issued an ultimatum. They said that Brex had exactly one month to reach a deal with somebody and start extracting the damn gold ore. And if they couldn't do that, they'd lose everything. Like everything would just revert back to to, I guess, the Indonesian government. So no surprise exactly. You know, just beating their their one month deadline. In February of 1997, Brex announced a surprise deal where Brex would get 45% of the profits from the Busang gold mine, the US mining giant Freeport McMoRan. Would get 15% of the profits and all of the local interest, all of the Indonesian interests in the place, including the Indonesian government, would get the remaining 40% of the profits. And so again, unsurprisingly, all of this chaos made the stock price drop down all the way to $23 a share. So again, people who jumped on it to 8650 were probably pretty pissed.
Caleb: Yeah, people who bought it to 86 were not happy.
Greg: And and sure, in hindsight, this next thing looks a little desperate. But right after this deal was announced and the stock price sunk, John Felderhof, the Australian geologist, he announced he had his own new estimate, not of 47 million, but of 200,000,000oz of gold in the Busang gold mine and stock manipulation. Hell yeah. Hell has to be.
Caleb: Uh, John, I might. It's 200,000,000oz of gold.
Greg: In that, which is funny because think about that. He was also he was the guy who wanted to shut the whole thing down. Right. Just, you know, back in December of 1993. So four years ago, he was the guy who said, there's nothing here. We're going to shut it all down.
Caleb: Like we said, Freeport-McMoRan was brought in to actually mine the gold. So in March 1997, they showed up in Busang in the jungle, and they did their own testing to determine where and how to start their mining operation. But their tests showed, quote, insignificant traces of gold, end quote. Which is weird because my backyard also has insignificant traces of gold.
Greg: My. My backyard, too. Oh, that's so weird. What?
Caleb: Incredible. Incredible.
Greg: It's crazy. Crazy.
Caleb: At the same time, Felderhof and Walsh and de Guzman were at a mining conference in Toronto where they were being showered with praise from the mining world. But Freeport-McMoRan was pissed, and they were demanding an explanation. Yeah, the. The the phrase insignificant traces of gold after 200,000,000oz.
Caleb: Yeah. One of the biggest mining companies in the world. Yeah.
Greg: Who knows what they're doing and knows how to get this stuff out.
Caleb: It has, like, fucking armies of lawyers on retainer.
Greg: Probably. You'd think so.
Caleb: Yeah. Uh, so Walsh and Felderhof send de Guzman back to Borneo. It was his samples that showed the gold deposits. So if anyone could fix this problem, it was him.
Caleb: On March 19th, 1997, de Guzman got on a helicopter to fly from the city of Balikpapan to Busang. 20 minutes into the flight, de Guzman, who is headed to face some potentially difficult and embarrassing questions, jumped out of the helicopter to his death in the Indonesian jungle.
Greg: It shouldn't be laughing.
Caleb: I mean, let's let's let's be frank here. My comedic timing was right on the money.
Greg: Yeah. And as was De Guzman's.
Caleb: To be fair. Yes. Yeah, maybe. Maybe that's what happened. Maybe he was pushed. Or maybe something else entirely.
Greg: At this point, We got to tell you the crazy backstory of Michael de Guzman. This guy was by all accounts, he was a fantastic geologist. He was a he was born in the Philippines. His father was a geologist. He followed in his footsteps. Again, like we said, the Philippines not too far from Borneo. That's how he got pulled in and got part of this, you know, got got involved in the Brex situation in Busang. But another fun fact, prior to being hired by Brex, he was at another company where he was fired for using company funds to buy food and furniture for it just says for a woman. We're not sure who the woman was. And that becomes more interesting the more of his back story unfolds.
Caleb: Wait, You can't just do that.
Greg: You know? Oh, no, I don't know. All right. I don't know what the limitations are on your expense account, but, yeah, it's usually not food and furniture for a lady friend.
Caleb: Uh, there's no there's no expense code for that.
Greg: And there shouldn't be food and furniture for lady friend. Yeah. So the other thing is, de Guzman made a reportedly he made $4 million just personally from the sale of his Brex stock options that he acquired over the over the time. And, you know, and obviously, the thing exploded. So he's he's doing pretty good with anyone with stock options would be thrilled that they had been issued stock options. But then after De Guzman's death, it was discovered that de Guzman had listen for wives in different parts of Southeast Asia with whom he'd had nine children. And none of those four families knew about any of the other four families. Uh, and to top that off, while he was at that conference in Toronto that we were just talking about, he proposed to a stripper to be the potential fifth secret wife.
Caleb: Come on.
Greg: Yeah. This. This guy, he was Mormon. God, if, like. Yeah. As someone who lives in Utah, this guy's a mormon. Uh, then after. After the. A bit of a.
Caleb: Cafeteria Mormon from what it sounds like, but.
Greg: A little bit. Yeah. Then after. After all this stuff happens, they found a suicide letter in De Guzman's personal belongings. And the the the letter said that he committed suicide to escape the ravages of hepatitis B, which don't know about you. I've never heard about the ravages of hepatitis B. Not not saying they.
Caleb: Just give you don't they just give you penicillin?
Greg: I'm not sure. But and I'm sure there's people out there who are suffering from the the effects of.
Caleb: The ravages of.
Greg: Hepatitis B, But I just don't know of anybody who's been like, I just can't take this hepatitis B anymore. But and then on top of that, de Guzman apparently had just recently contracted the virus and the metal. The medical documents suggested that his case wasn't even really that bad when compared to what it could be with hepatitis B and and Caleb, on top of that, the suicide note also misspelled one of his wife's nicknames, and it had a bunch of grammatical errors, even though De Guzman was fluent in English. So that's that's pretty odd.
Greg: Pretty. Very suspicious. But then check this out. One of his four wives, she claimed that six months after the helicopter incident, her maid received a call from Michael de Guzman, who left a message for his wife. And the message was that $200,000 would be deposited into her bank account. She checked her bank account and boom, there was $200,000 in the bank account. And on top of that, there have been multiple unverified but multiple sightings of De Guzman in Canada since the helicopter incident. Unverified. So it's kind of like, you know, two things that people are seeing and kind of like a yeti in Canada.
Caleb: It's kind of like seeing a yeti.
Greg: Yeah, Sasquatch and de Guzman. They're both in Canada, but nobody can really prove it, right? Okay, then. Then listen. The body that they found in the jungle, it took them five days to find the body. And when they did, the body was too damaged and too decomposed to be reliably identify it. Had they said it had, it was covered in leeches. It had a bunch of maggots in it. It had been nibbled on by forest creatures. And so, yeah, just in bad shape. And matter of fact, Caleb, there was one. There was one and only one account that I saw that said that the body that was recovered had no like the hands and the feet had been cut off of the body. And the report was even that they they they seemed to be surgically removed. Now, you might be wondering what source that was. It was Wikipedia. So I don't I don't think and that was never like other sources I said said that they like they like were looking for fingerprints, but the fingerprints were too badly decomposed. And I kind of go, you can't really I don't think if a hand was missing, you wouldn't say that the fingerprints were decomposed. I think you just say the hands were missing. So so, yeah, So I don't I don't put a whole lot of stock in the in the one account that I read on Wikipedia of the hands and feet being cut off of this body.
Greg: There was another thing that I saw somewhere where there was an account that a body was missing from a nearby morgue at the same time. But again, that was that only popped up once. And so I don't. Yeah, but but I also don't want to discount that because there's just all of these crazy rumors swirling around the the demise of Michael de Guzman and what what really happened. There was even a forensic expert, I think they called him like the Sherlock Holmes of forensic science in the Philippines. And this guy examined examined the evidence of of the people who like I don't think he did a firsthand examination of the body, but he looked at all of the records of the people who did. And his conclusion was that De Guzman had been tortured and murdered and his body was chucked out of the a helicopter. To me, I don't know Caleb to you. To me. I don't know who wants to murder him at this point. People might. They might have wanted to murder him after the face off with Freeport McMoRan. But at this point, I don't know who's wanting to two off the guy. Do you see what I'm saying?
Caleb: I don't know. I mean, I guess the wives didn't know it. The wives didn't know about each other. So they didn't.
Greg: They didn't They all found out about each other after he died. So. Yeah, it's not it's not a scorned woman kind of scenario here.
Caleb: Yeah. I don't know. I don't know.
Greg: Yeah, but. But yeah. Likely. After his death they were like, oh yeah. I'd cut off his hands and feet and push him out of a helicopter. Yeah. Yeah. Indonesian police, they ruled that it was a suicide and the Royal Canadian Mounted Police concurred with the Indonesian police after they reviewed their findings.
Caleb: In Indonesian newspaper reported that the gold estimates were grossly overstated. What, 200,000,000oz? Yeah.
Greg: An independent 200,000,000oz to insignificant traces? Yeah, I'd say that's a gross overstatement.
Caleb: An independent consultant announced gold estimates were overstated. Okay. Okay. Freeport-mcmoran publishes its findings of insignificant traces of gold. Right.
Greg: And I think I think.
Caleb: This has all happened. This is all happened. This is kind of the. Is this the is this the epilog we're doing here? Yeah, at this moment.
Greg: Basically, this is the downfall. Yeah, but. But it's funny. So. So Freeport-McMoRan had had determined that there was insignificant traces of gold and they were going back to Brex going, Hey, we're not finding what you're finding. And at this point, they go, Hey, this whole thing, this isn't our bad. So they they make it public that they're like, going. We also found that there's just no, no damn gold.
Caleb: Here, right? Finally, in May of 1997, Brex released a report saying there was no gold in Busang. The report said, quote, The magnitude of tampering with core samples is without precedent in the history of the world, end quote.
Greg: And and there's been a lot of gold samples in the history of the world.
Caleb: The world. Yeah. It was determined that the initial core samples had been salted with gold. Some nuggets panned from the Busang River and some shavings from gold jewelry. In June 1998, David Walsh died unexpectedly of a brain aneurysm while he was on vacation in the Bahamas. That'd be worse. Ways to go.
Greg: Yeah. Again, they didn't say this, but in my mind I envisioned him like on the on the on the bow of a yacht, like sunbathing with with a mai tai. And all of a sudden, oh, my brain. And then he's. And then he's done. Yeah.
Caleb: So in May 1999, the Royal Canadian Mounted Police announced there was not enough evidence for criminal charges against anyone. Two of the key people were dead after all. So The Australian was the only one that's left.
Caleb: Speaking of which, civil charges were brought against John Felderhof, but they were all dropped in July of 2007. So there's that. Yep. In May 2013, a civil class action settlement gave $5.2 million, a drop in the bucket to the investors who were seeking over 5 billion in damages. Yeah. So, yeah, not much. Nope. Michael deGuzman is now somewhere living on the coast in Cuba, pretending to be a fisherman while living off his $4 million of fraudulently inflated stock options.
Greg: And he probably has hair plugs and lasik. That bastard stealing my idea.
Caleb: Dr. Greg, did we learn anything?
Greg: Well, there's there's three things that I. That I learned. So one of them we've already touched on before, and that is that's just the the mental illness that gold brings upon people. Yes.
Caleb: Because a fever.
Greg: It's a fever. A gold fever. Exactly. Because if in hindsight, looking at the Brex stock that it went from $0.12 per share to almost $300 per share. Yeah, everyone in hindsight goes, that's ridiculous. That clearly falls under the too good to be true umbrella like easily too good.
Caleb: We were having a nice laugh about it.
Greg: Yeah and but despite that again the only thing that I can think of that's going to make people stay with a stock that's showing that kind of insane growth is is this same is gold fever where they're going? Yeah, this doesn't make sense. But these guys, they found gold in this in this remote area. And it you know, and this this could be one of the biggest gold finds in the history of the world. So yeah, it makes sense that this little obscure company they just got lucky enough to to find it and now yeah we need to get in on this because it's going to go to the moon when they start pulling stuff out of the ground. But again, if there was think about this, I guess this is where I'm going. Caleb, take gold out of the equation. If there's any company that's showing that kind of growth, I immediately would assume fraud.
Caleb: Like right.
Caleb: Right, Without.
Greg: Question, there's fraud going on in that company. It's a Ponzi scheme. There's something like that. This doesn't happen. That kind of growth just is is not possible. And so so that so again, that's a red flag that was clearly there. But that also I think was very intentionally overlooked because because people and that's the thing. De Guzman was the one who salted the core samples. That's again, he wasn't that wasn't the findings in a court of law like we just said. But that's the the that's the accepted narrative of what happened here is that it was it was de Guzman doing that. But the thing is, everybody wanted to believe him. Everybody did. The Brex, his boss, David Walsh, wanted to believe him. Obviously, John Felderhof wanted to believe him. The Indonesian government wanted to believe him because they they were they were getting a taste of it, too. Investors wanted to believe him because they were getting rich with their the appreciation of their stock values. So so it's it's it's very easy to lie when everybody really, really wants your lies to be true. Yes. So I just I find that to be a fascinating facet of this of this case. So that's that's the first thing I learned. Second thing that I want to talk about is that what happened to Brex is not like it's it's not just this one thing that happened this one time in very recent history. We've seen stuff that's very similar to this as well. I think this this stuff's all has been on your radar, Caleb. But it just this just just this year we recording this in 2023 JP Morgan Chase discovered that it's $1.3 million of nickel that it purchased just just like sacks of of unrefined nickel was actually just sacks of rocks. That's JP Morgan Chase. Yeah. It was.
Caleb: Only a 1.3.
Greg: Million we got it was. Yeah that's that's weird. That was the. Is it weird. That's funny that you say it like that.
Caleb: Yeah. Well, I just know how big JP Morgan is. Jpmorgan Chase seized $1.3 million. Oh, my God. It's not even sneeze. It's like it's it's even it's even more insignificant than that. But the fact that they found they found it, I wouldn't be surprised if there was actually maybe like 130 million in sacks of rocks just laying around because JPMorgan is so big. I just have to believe that it's like, oh, yeah, there's all kinds of like sacks of rocks and people think it's nickel or whatever.
Greg: See, that's bizarre to me, though, too, is I think, a JPMorgan Chase is this this Wall Street bank that's, you know, everything's digital and maybe they have a vault with some paper money in it. I don't I don't think of JPMorgan Chase as having some like some like underground warehouse with sacks of, you know, of, of or I don't see them as having sacks of or that's going to dirty their suits. So that's that's what's that's also weird to me.
Caleb: It is weird it's a weird one.
Greg: But Brex and JPMorgan also weren't alone. In 2021 there's a company called Mercuria Energy that's that is a European venture. And they thought that they had $36 million worth of copper. But what they actually had was, again, a bunch of rocks that someone had spray painted a copper color because that goddamn rust-oleum has just a very believable color palette. So very impressive. That's, that's, that's awesome. Where somebody says like, we got sacks of gold or sacks of copper. It's like, really show me. And they're just like, Yeah, check it out. This looks like copper, right? And they're like, Yep, here's all our money. Here's 36 million bucks. So with both of those cases, the Mercuria and the JPMorgan, I'm shocked that they would spend that much money and not do just basic due diligence that the the sacks had, what the sacks were actually supposed to have. And with that, I actually kind of give a little bit of a pass to Brex because in the the one thing that the Brex case has that JPMorgan and Mercuria don't have is Brex. Everything they were doing was in this very, very remote part of a tropical rainforest. So it was one of the one of the accounts that I read, they got into just how difficult it was to actually get to Busang. So what deGuzman was doing, he was boots on the ground in Busang.
Greg: He was taking these core samples and there really wasn't. It was it was too difficult, too costly. There weren't experts who had any kind of inclination to go, Yeah, I'm going to trek into the Indonesian jungle on Borneo to just fact check Michael de Guzman. So they have that excuse. Jpmorgan and Mercuria absolutely do not. They just had sacks laying around that they didn't make sure had the what do you call it, the minerals that they were supposed to have inside them? Um, yeah. So I guess, I guess that's it. And I kind of touched on the last, the last thing I have to say really, I kind of lump that in with the, with the first part. And that's just that people want to believe the lies. And we see that this is the connection I want to make there. We've seen that with Ponzi schemes, we've seen it with pyramid schemes. And obviously we see it now with an Indonesian gold rush. And the thing that we lack and is that that the accounting profession is supposed to provide. But I think obviously anyone who's doing any kind of audit anywhere, whether that's financial audits or metallurgical audits, they need to have skepticism. They got to go. I don't know if these are really the rocks that they're claiming that they are. There's there there. How do I.
Caleb: Know these are the rocks that you say.
Greg: They are, right? Yeah, exactly. So we need professional skepticism because we don't even have amateur skeptics out there, let alone professional skeptics with these cases.
Caleb: Yeah, people people are enthralled by the story. Yeah, right. Like the story right now or the story was crypto. The story has been crypto. People want to believe. People want to believe that story so fucking bad.
Caleb: Pretty interesting. Yeah, but those are the stories. That's just more stories that people want to believe. And yeah, yeah. Like you say, we could use some just I'd settle for amateur skeptics at this point.
Greg: Exactly. Exactly. Because it does seem like you don't need a huge amount of expertise to just, you know, I mean, I don't know, again, in movies like like I think it's didn't like pirates. They'd take their doubloon and they'd like bite it a little bit.
Caleb: To make sure it was.
Greg: Gold. Nobody was even doing that.
Caleb: With no.
Greg: No, with this stuff. And also, it's funny, like they said that De Guzman had salted the core samples with and the part that makes sense. Was he salted it with just flecks of gold that had been panned from the Busang River. But then he got desperate and he's like, Hey, who's got a gold tooth? Let's knock that out and shave it up and put it in with this sample. So, uh, so yeah, again, there's very, very little, very little testing, very little skepticism happening in any of this.
Caleb: The biting of the gold. That's so true. That's like that's, that's a that's a that's what amateur decent that's decent audit evidence right there.
Greg: Right? Yeah. I mean, kind of it's at least a minimum It's something supplemental procedures. There you go. There it is. All right. That's it for this episode. Remember, best practices dictate that if you have four wives, make sure that they all live in the great state of Utah.
Caleb: And also remember that even if your company implodes from a massive fraud, it's possible to squirrel away enough money to travel to the Bahamas to die from an unexpected brain aneurysm.
Greg: Like a like a damn CEO. So, hey, if you want to drop us a line, we'd love to hear from you. Please send us an email at Omi Fraud at Earmark Cpcomm. We get lots of emails in. And as a matter of fact, Caleb, I think somebody sent this in to us like we did.
Greg: And I think whoever you are, send me another email and I will apologize to you on a future episode for not giving you the proper shout out in this in this episode. But Caleb, if people just want to talk to you and leave me out of it, where can people find you? Out there on the Internet.
Caleb: They can shout at me on Twitter because that's what Twitter is for, right? And LinkedIn, where things are a little where the where things are a little bit more civil. Yes. At Newquist on Twitter and backslash, Caleb Newquist on LinkedIn. Greg, if they want to leave me out of it, where do they find you?
Greg: I'm I'm starting to just give up on Twitter, period. I barely ever check in now, guys nowadays. So I'd say just go find me on LinkedIn. Greg Kyte, CPA. The last name is k y T because my ancestors were just as bad as spellers as I am.
Caleb: Oh My Fraud is written by Greg Kyte and myself. Our producer is Zach Frank. If you like the show, leave us a review. Please give us a rating. Yeah, share it with a friend. Do it. That's how people find the show. Be sure to subscribe on Apple, Stitcher, Spotify, iHeartRadio, whatever platform you listen on. And for the accountants listen on earmark, get some CPA. That's what Greg.
Greg: Does. I do. I love it. I'm already up. I've already got what we're we're a little over four months into my CPA period, and I've already got 30 out of my 80 credits knocked out. Beautiful.
Caleb: Wonderful. Join us next time for more adverse swindlers and scams from stories that will make you say, Oh my.
Greg: Oh my fraud.