In 1872, two prospectors from Kentucky, Philip Arnold and John Slack, walked into a San Francisco bank with a bag filled with rough diamonds, rubies, and sapphires. They claimed to have discovered a secret, mega-rich gem field in the American West. The bank's founder, William Ralston, smelled an extraordinary investment opportunity and quickly organized a syndicate of prominent San Francisco tycoons.
To verify the claim, the investors insisted on inspecting the site, but Arnold and Slack demanded the inspectors be blindfolded during transport. What the investors didn't know was that Arnold had secretly traveled to London and purchased $20,000 worth of low-grade industrial diamonds and gems. He then sneaked onto a remote plateau in southwestern Wyoming and literally salted the earth, embedding the diamonds into cracks in the rocks and anthills.
The syndicate sent an expert, Henry Janin, alongside famed jeweler Charles Tiffany, to evaluate the gems; both declared the find genuine and estimated its worth in the millions. Baron Rothschild himself invested. Arnold and Slack walked away with over $600,000 in cash payouts.
The scheme collapsed when Clarence King, head of the U. S. Geological Exploration of the Fortieth Parallel, investigated the site.
King noticed that diamonds and rubies—minerals that never occur together naturally—were sitting alongside expertly cut industrial stones. By the time the fraud was exposed, Arnold had retired comfortably to Kentucky, where he successfully warded off legal attempts to reclaim the stolen wealth.