134. The Motherlode (Bre-X Minerals)

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Speaker 3 This episode of Swindled may contain graphic descriptions or audio recordings of disturbing events which may not be suitable for all audiences. Listener discretion is advised.

Speaker 4 Quest Village, north of Sycamus, is a great place to get away from the big city, a place where crime was almost unheard of until recently.

Speaker 4 For the past two years, the residents have been victimized by a sneaky thief. Dozens of cabins have been broken into not once, but twice.
RCMP believe one man is responsible for all the break-ins.

Speaker 4 They point to this man, John Bjornstrom, a fugitive who escaped from a Kam Roops prison in 1999.

Speaker 2 Shushwap Lake, an H-shaped stretch of water in the southern interior of British Columbia, is known as a playground for houseboaters, swimmers, hikers, and anglers.

Speaker 2 Its four long arms carve through the landscape, drawing visitors in every summer to explore its coves and forested shores.

Speaker 2 But while these southern reaches bustle with life, the northern half remains largely untouched, silent, remote, and uninhabited. That is, except for the bushman.

Speaker 2 Although sightings were rare, the bushman of the shushwap was no mythical creature.

Speaker 2 He was a 39-year-old fugitive named John Lambert Bjornstrom, who had been serving time in prison for break and enter until he escaped with only six weeks left on a sentence.

Speaker 2 Bjornstrom's uncanny bushcraft and ability to survive the unforgiving wilderness had earned a mix of awe and annoyance among locals.

Speaker 2 For two years, Bjornstrom made the remote Shushwap his refuge, living off the land while supplementing his needs from the cabins that dotted the lake's quieter regions.

Speaker 2 He would slip inside, borrow food or supplies, and sometimes leave behind polite thank-you thank-you notes as if he were a courteous guest rather than an intruder.

Speaker 2 Some residents admired the manners and even began leaving items out for him.

Speaker 2 Others reviled Djornstrom for his approach and saw only a two-bit crook who was heavily armed, judging by the weapons that had gone missing. And sometimes the frustration was justified.

Speaker 2 When resources ran thin, the bushman resorted to straight-up extortion.

Speaker 2 He left cassette tapes or handwritten letters with veiled threats for cabin owners who ignored his request for groceries, fuel, or other essentials.

Speaker 2 Yet, even in these moments, Bjornstrom couldn't hide his courteous demeanor.

Speaker 2 One bewildered resident told the Globe and Mail that, at the end of a rather threatening tape to my brother, he wished him a pleasant summer and happy boating.

Speaker 2 Other encounters veered from demanding to unsettling.

Speaker 2 In one note, the bushman complimented the family on their children's water skiing, adding, it looks like they're improving, as if he had been silently cheering from the trees.

Speaker 2 In another message, Dornstrom told a woman how much he enjoyed listening to her dinner conversation from just outside her cabin walls. Patience among the locals had worn thin.

Speaker 2 What began as a peculiar wilderness curiosity was becoming an uncomfortable reality. The bushman was always watching.

Speaker 7 I always feel that there's some eyes peeking through the bush. You know, like when I'm by myself working, I don't like to be alone.

Speaker 2 For two years and counting, the Sycamus Detachment of the Royal Canadian Mounted Police had attempted numerous times to capture John Bjornstrom, but could never find him.

Speaker 2 The Bushman traveled at night in a black canoe that he submerged underwater during the day, rendering it invisible to anyone passing by.

Speaker 2 He built hidden treetop outposts throughout the forest, stocked with food, supplies, and binoculars. perfect vantage points for keeping an eye on his hunters roaming below.

Speaker 2 Bjornstrom later boasted that he even rigged underwater underwater microphones from walkie-talkie parts, giving him advance warning of approaching boats long before they could ever spot him.

Speaker 8 There's hundreds of thousands of hectares of bush. We've done aerial searches with our helicopter numerous times.

Speaker 8 We've been out with our emergency response team doing ground searches, and we've also done boat searches in the area, finding no trace of the man whatsoever.

Speaker 9 But there's a bushman hiding in the shoes, so I don't want anyone to find him, so I'll

Speaker 2 With every month he remained at large, the Bushman's confidence and infamy grew. Local radio stations played songs about him, and he happily phoned in for interviews.

Speaker 2 Bjornstrom enjoyed the spotlight, so much so that in November 2001, he agreed to appear on camera with the reporter Ted Chernicki of Global News.

Speaker 2 Bjornstrom dictated the terms, a nighttime meeting at a remote spot near the lake. No surprises, no police.

Speaker 10 As darkness falls, we beach and wait, because the Bushman travels only under the cover of darkness, and he only appears after watching us extensively, and until he is sure that the area is safe.

Speaker 2 Out of the darkness emerged a short, stocky man with a thick beard, clad in a wool sweater he had stolen from a nearby cabin.

Speaker 2 He eased into view and calmly took a seat by the campfire in front of the camera, as though he had arranged a casual chat rather than a clandestine rendezvous.

Speaker 2 John Bjornstrom told Ted Chernicki he understood why some locals despised him, but, he explained, what he was doing was for the greater good. And another point, Bjornstrom made crystal clear.

Speaker 2 He would sooner die in these woods than ever return to prison.

Speaker 12 So far, I've actually survived basically on the backs of uh a lot of the cottage owners.

Speaker 14 It's and uh

Speaker 13 should I be a cottage owner and suffer the same consequences, I'd be pretty ticked off too.

Speaker 13 I try not to break anything. I try to avoid as much least amount of damage should it be, but it's unfortunate, but it is a necessary evil for now.

Speaker 13 But I am after something that is far greater

Speaker 13 evil than what I could ever be.

Speaker 2 John Bjornstrom's global news interview not only demonstrated his strengths for living in the bush, but also exposed a weakness that law enforcement seized on, a desire for notoriety.

Speaker 2 This is Jim Harrison, the RCMP detachment commander in Sycamus at the time. What that did do is show us that,

Speaker 2 you know, he had a weakness, he had an affinity, he wanted to tell his story, and that, of course, led to the actions that we took to capture him.

Speaker 2 On November 21st, 2001, the Mounties finally outsmarted the Bushmen.

Speaker 2 Disguised as a documentary crew eager to tell his story, officers invited John Bjornstrom onto a houseboat for an interview and ended his two-year run as one of British Columbia's most elusive fugitives.

Speaker 2 As he was escorted back to the dock, Bjornstrom, in typical fashion, had nothing but compliments to offer the police. It was a good bait, he said.
I have no disrespect for what they did.

Speaker 2 The police did a good job.

Speaker 15 Well-planned thing.

Speaker 2 The eventual discovery of the bushman's secret lair only deepened the myth.

Speaker 2 Chiseled by hand into a rock hillside, his elaborate 900-square-foot cave featured working electricity, wood framing and shelving, a greenhouse, solar panels, a hot tub, and a staggering amount of stolen goods.

Speaker 2 John had a computer, a VCR, a washing machine, a dirt bike, enough guns to start a small army, and a video camera which he used to document some of his adventures.

Speaker 16 Oh, take a look down there. Hey, man, that's a...

Speaker 17 I'm going to see you.

Speaker 2 Prosecutors filed 21 charges against John Bjornstrom, including extortion, assault, resisting arrest, and multiple break-in-enters.

Speaker 2 He ultimately pleaded guilty to 10 counts, admitting to more than 30 cabin break-ins over 26 months.

Speaker 2 Concluding that prison would do little good, the judge sentenced John to 23 months of house arrest and three years' probation.

Speaker 2 Bjornstrom resettled in Williams Lake, B.C., where he had spent his short youth before leaving town on horseback when he was 14.

Speaker 2 He served his sentence at his sister's home and made a living driving cargo trucks and a limousine. In his spare time, John panned for gold and volunteered with the Salvation Army.

Speaker 2 Come December, the ever-bearded bushman donned a red suit to hand out gifts to Santa, embracing his role as a local celebrity. In 2014, the former fugitive even made an unsuccessful bid for mayor.

Speaker 14 My name is John Bjernstrom and I'm running for mayor.

Speaker 2 In the years that followed, John's health faltered, cancer, diabetes, and a string of complications. On the morning of January 13, 2018, Neighbors found him face down on the frozen ground.

Speaker 2 He was pronounced dead at 58. Yet the story refused to end there.
The bushman's shadow lingered in the shoe schwap, the questions outnumbering the answers.

Speaker 2 As author Paul McKendrick, who chronicled the saga in the bushman's lair, told chapters indigo that the man is gone, but the mystery he built still hums in the trees.

Speaker 18 I couldn't explain and

Speaker 19 just really lingered in terms of what causes someone to walk away from prison when they're weeks away from completing their sentence, to go

Speaker 21 steal a bunch of stuff and dig out a cave.

Speaker 19 It just doesn't make sense.

Speaker 2 At his 2004 sentencing, John Bjornstrom had offered a motive. Street kids, he said, had told him they were being recruited for modeling.

Speaker 2 For the Sears catalog or something more nefarious, his lawyer asked. More nefarious, Bjornstrom replied.

Speaker 2 He claimed that inside some shoeswap cabins, he had found the evidence of a child pornography ring, videotapes of unspeakable axe that he had gathered, sealed in a cooler and buried near a lighthouse.

Speaker 2 He also said he had stumbled across unmarked graves of teenagers and children, even bagging hair samples for the police.

Speaker 2 Yet, despite providing coordinates for the caches, none of it was ever recovered. More evidence, Bjornstrom noted, that law enforcement was involved in a cover-up.

Speaker 2 Crown prosecutors dismissed the Bushman's tales as wildly delusional and dangerous. And Bjornstrom didn't help his case.

Speaker 2 In interviews and in court, he repeatedly insisted he had a sixth sense, reinforcing the view that his claims were unmoored from reality.

Speaker 13 I have a gift of the psychic ability. Some people will say that's nuts.
You're stupid. You're you're out in the wrong ball field, but I get visions of things of tomorrow today.

Speaker 2 This sounds outlandish, but as author Paul McKendrick uncovered, some people seemed to take Bjornstrom's claims seriously, including the U.S. government, evidently.

Speaker 2 In the early 90s, John Bjornstrom had volunteered for a CIA-linked research effort known as the Stargate Project, which had been investigating the use of psychic warfare since the Cold War.

Speaker 2 Bjornstrom allegedly advanced to a second round before bowing out and returning to Canada, saying the experience left him uncomfortable.

Speaker 2 Yet he also claimed the test validated his premonatory abilities. Hoping to put those talents to use, in 1995, Bjornstrom launched a new career as a private investigator in Calgary.

Speaker 2 It was this role that would send the Bushmen into the woods, initially.

Speaker 2 John Bjornstrom says he was introduced to, and then hired by, a man named David Walsh, the founder of Bree X, a gold mining company suddenly engulfed in global controversy.

Speaker 2 According to Bjornstrom, Walsh asked him to probe the integrity of his Indonesian operation and the disappearance of the company's chief geologist, Michael de Guzman.

Speaker 2 Bjornstrom claims he accepted the assignment and quickly stumbled onto what he described as a massive conspiracy.

Speaker 2 One serious enough, he says, to draw a visit from a group of strong-armed henchmen working for an unknown entity.

Speaker 10 Bjornstrom believes he's simply the man who knows too much.

Speaker 10 Four years ago, three men came to his Calgary office, beat him unconscious, took his computer hard drive, and all other information about Briack.

Speaker 2 Bjornstrom said he went to the police about the incident, but they could barely stifle their laughter. After that, I got out of Calgary, he later said, to protect himself and his family.

Speaker 2 The bushman drifted to the shoe schwap and began breaking in the cabins to survive.

Speaker 2 He was soon arrested for the first time and sentenced to eight months in a minimum security prison, which blew his cover.

Speaker 2 With six weeks left in the sentence, Bjornstrom says he was standing in the prison yard when two unknown men in a truck parked nearby and opened fire.

Speaker 2 Bjornstrom says he slipped through a hole in the fence and walked three days to the shoe schwap with nothing but his inmate attire.

Speaker 2 He's delusional, the Crown prosecutors reiterated. But Dr.
Stanley Simrau, a defense-called forensic psychologist, disagreed. Clinical delusions have no basis in truth, he argued.

Speaker 2 And Bjornstrom's allegations, however far-fetched, did intersect with reality.

Speaker 2 I happen to believe myself that someone did kill Michael de Guzman, Simrau told the court.

Speaker 2 I mean, I had some Briack shares and, you know, I paid a little attention, he said, underscoring his view that, as Bjornstrom alleged, what happened to Brix was indeed a conspiracy.

Speaker 2 A tiny Calgary mining company unearths the world's richest gold deposit, igniting a global frenzy of greed, corruption, and mystery. On this episode of Swindled.

Speaker 9 They bribed government officials fight accounting for clear violations of the U.S. state law and clearly unethical pay to places of taxpayer dollars that were wasted.

Speaker 2 Support for swindled comes from Simply Safe. If you could actually stop someone from breaking into your home before they got inside, why wouldn't you want to? That's the idea behind Simply Safe.

Speaker 2 Real security that can stop a crime before it starts. Traditional systems wait until it's too late.
But Simply Safe's active guard outdoor protection is proactive.

Speaker 2 Their AI-powered cameras detect suspicious activity and real live agents step in.

Speaker 2 They actually talk to potential intruders while they're still outside, trigger sirens, flash spotlights, and let them know the police are on the way. It's wild to watch.

Speaker 2 I've used SimplySafe for years, and I trust it to protect everything that matters to me, even when I'm not home.

Speaker 2 It's reliable, simple, and honestly, kind of satisfying to know someone else is watching when I can't.

Speaker 2 Our listeners get exclusive early access to SimplySafe's Black Friday sale, where you can save 60% on any new system. This is their biggest deal of the year.

Speaker 2 There will never be a better time to get real security for your home. Go to simplysafe.com/slash swindled.
That's simplysafe.com/slash swindled to save 60%

Speaker 2 on any new system.

Speaker 23 Well, basically,

Speaker 23 Brix was a shell of a company with

Speaker 24 almost non-existent working capital.

Speaker 23 And

Speaker 23 I decided to go into Indonesia and

Speaker 23 that's where we started from.

Speaker 23 Just an idea, no money, and

Speaker 23 a very good geologist.

Speaker 2 By 1992, David Walsh was flat broke.

Speaker 2 The former stockbroker had launched a trust company a decade earlier, just in time for a recession, before careening into oil, gas, and mineral exploration with even worse results.

Speaker 2 His diamond play in the Northwest Territories came up empty. His Louisiana petroleum claims didn't yield a drop.
David and his wife Jeanette were $200,000 in debt.

Speaker 2 scraping by on her modest secretary's salary and his threadbare day trading wins.

Speaker 2 Prospects were so bleak that the 1991 annual report for Walsh's basement-run company, Bree-X, opened with a reassuring line to its shareholders. Yes, we are still in business.

Speaker 2 But then David claims, the answer to all of his problems came to him in a memory. Indonesia.

Speaker 2 Ten years earlier, he had met a celebrated geologist who swore there were untapped riches in the Southeast Asian country. Walsh spent two weeks tracking that geologist down and wrote him a letter.

Speaker 2 Dear John, I want to put some romance into both companies, referring to Bri-X and its parent entity.

Speaker 2 Every written profile of John Felderhoff opens the same way. He's a Dutch-born, Canadian-raised, chain-smoking geologist, a true explorer, and river walker, the last of a dying breed.

Speaker 2 Felderhoff would spend months at a time in the world's most remote jungles, searching for signs of treasure. He'd famously contracted malaria 14 different times.

Speaker 2 He'd also famously co-discovered one of the world's biggest copper and gold mines in Papua New Guinea. But that was almost 30 years earlier.

Speaker 2 By the spring of 1993, when that letter from David, down on his luck wash, landed in his mailbox, Felderhoff was in the same boat, out of work and out of money.

Speaker 2 That massive discovery in the 60s hadn't equated the riches for John Felderhoff because he hadn't owned a stake.

Speaker 2 The options he later held in other ventures, once worth tens of millions on paper, evaporated during the bust of the 80s.

Speaker 2 All Felderhoff had left was the shirt on his back, his reputation, and the theory that he wholeheartedly believed. Tectonomagmatism.

Speaker 2 Tectono-what? Walsh sputtered, after emptying his bank account to fly to Indonesia for a meeting with the geologist. Yes, Felderhoff explained.

Speaker 2 Gold and other precious metals are abundant where the Earth's fault lines intersect.

Speaker 2 The Pacific Ring of Fire, including Indonesia, was littered with collapsed volcanoes that have generated a massive buildup of heat and pressure, which have created miraculous treasures just waiting to be found.

Speaker 2 Do you know of any available properties? Walsh asked. As a matter of fact, I do, Felderhoff replied.

Speaker 2 Deep in the dense, hilly jungles of Borneo, in East Kali Mountain, near the Busang River, sat one of Earth's most abundant gold deposits. At least that's what John Felderhoff theorized.

Speaker 2 Geologically, it's the most brilliant thing I've ever seen in my life, he said. It's so big it's scary.
It's fucking scary.

Speaker 2 Okay.

Speaker 2 Well, why hadn't anyone mind Busang already? They had, Felderhoff said.

Speaker 2 At least a dozen different companies had tried, but they drilled in the wrong places with the wrong methods, the wrong tools, at the wrong depth.

Speaker 2 Geology wasn't on their minds, he later told Fortune magazine, about the previous efforts. They were spending all their time in town chasing girls girls and naming creeks after them equipped.

Speaker 2 David Walsh was sold.

Speaker 2 Back in Canada, he scraped together $80,000 by selling Bri-X options and used it to buy a 90% stake in the mineral rights to roughly 475,000 acres near Busang from a cash-strapped Scottish owner.

Speaker 2 Walsh didn't have the capital to develop it either, yet, but that would be his primary role as president of the company, raise money from Calgary, and keep the operation afloat.

Speaker 2 The geology would be handled by John Felderhoff, Briex's new exploration manager, who remained in Indonesia and assembled a crew which consisted largely of Filipino geologists he had worked with on past projects.

Speaker 2 Michael de Guzman was put in charge.

Speaker 2 De Guzman was a gifted field man who shared Felderhoff's theories and, by most accounts, his arrogance, famously bragging that his IQ topped 150, he was the ideal man for the job.

Speaker 2 But the job would not pay well, at least least initially.

Speaker 2 Salaries would be modest, but every Briack's employee was offered the chance to buy company stock, which was trading for pennies on the Alberta Stock Exchange at the end of 1993, when the crew joined local villagers in the ritual sacrifice of a chicken to appease the spirits before drilling the first hole on their land.

Speaker 2 That first hole was a dud, and a second test hole was just as barren. We almost closed the property, recalled Michael de Guzman.
In December 1993, John said, close the property.

Speaker 2 And then we made the hit.

Speaker 2 A hit, was putting it mildly. A third, deeper core returned gold grades topping 6.5 grams per ton, more than four times the threshold considered economically promising.

Speaker 2 Anything above 1.5 grams per ton can justify a mine. Bre-X accelerated its drilling program to verify the strike.
And by the end of January 1994, nearly 50 holes had been sunk.

Speaker 2 The results were extraordinary.

Speaker 2 Back in Canada, David Walsh was busy broadcasting Brix's stunning drill results to anyone who would listen.

Speaker 2 To bolster its credibility, the company stacked its board with retired mining executives and seasoned stock promoters and commissioned an independent review from respected geologists like Roger Pooley, who confirmed the findings.

Speaker 2 Each move added another layer of legitimacy. Soon, national brokerage houses were raising money on Briex's behalf.
The financial press was buzzing. And by the end of 1994, the tiny Calgary Jr.

Speaker 2 miner was making serious waves, and those waves were only getting bigger. Things are looking very, very good, John Felderhoff wrote to his boss.

Speaker 2 The latest drill results from Busang suggested 2 million ounces of recoverable gold. Bri X's stock jumped at $2.84 a share when those numbers were made public.

Speaker 2 By the summer of 1995, Brix's already glowing projections nearly quadrupled. The company claimed Busang now contained 6 to 8 million ounces of gold.
A penny stock just a year earlier.

Speaker 2 The company's shares skyrocketed to nearly $15, and even seasoned analysts were convinced it was still undervalued.

Speaker 2 After reviewing all the drill data and available cross-sections of Busang, we believe this project will develop into a world-class gold mining operation. wrote Egizio Bianchini of Nesbed Burns.

Speaker 2 After touring the site, Bianchini estimated the deposit could contain as much as 62 million ounces. I know for a fact the gold is there, he later told the Globe and Mail.
I've seen it.

Speaker 26 Heading towards drill hole 96, the rock looks extremely favorable.

Speaker 20 Oh, yes.

Speaker 25 Mike, boring good stuff here?

Speaker 2 The stock surged with every new projection, and there seemed to be a new one every week.

Speaker 2 Brix's 1995 annual report claimed there were 40 million ounces of gold at the Busang property, doubling the company's valuation in days.

Speaker 2 By year's end, the estimate had ballooned to 100 million ounces, rivaling the world's largest gold mines. When did you know you had hit the mother load?

Speaker 2 McLean's reporter Jennifer Wells asked John Felderhoff. He didn't hesitate.
Drill line 59 back in 95, he said. That's when I called David and told him, we've got a monster by the tail.

Speaker 2 That monster was shattering records.

Speaker 2 Briex's stock graduated from the Alberta Stock Exchange to the NASDAQ and then to the Toronto Stock Exchange where it was added to elite indexes normally reserved for blue chip institutional darlings.

Speaker 2 By May 1996, Brix shares peaked at $280 apiece. The company's market value topped $6.2 billion

Speaker 2 and it had yet to produce a single ounce of gold.

Speaker 27 Mr. Walsh, you are every prospector's, every penny stock promoter's dream come true.
Do you have to at times still pinch yourself to believe that you've found what you found?

Speaker 23 I haven't had time to even think about it.

Speaker 23 Nothing's changed. The only thing's changed is I don't wear a tie anymore.
No one can tell me to wear a tie.

Speaker 2 The soaring price of Briack's stock ignited a full-blown market frenzy. Investors were practically dancing in the wall streets and bay streets.

Speaker 2 Mutual funds, insurance companies, pension plans, and everyday people who had never owned a share of a company in their lives all piled in.

Speaker 2 The once obscure Calgary miner was minting minting overnight millionaires like lottery ticket winnings. People poured every spare dollar into the stock.
Some mortgaged their homes to buy more.

Speaker 2 Others borrowed against their own gains, doubling down on what looked like a sure thing. Bri-X was proving everyone a genius.

Speaker 25 But I heard of another tip too.

Speaker 31 Diamond.

Speaker 31 Stocks.

Speaker 2 The most sensational tale came from St. Paul, Alberta, a prairie town of barely 5,000 people.
A local credit union employee caught wind of Brix early and shared the tip with family and friends.

Speaker 2 Many of them bought shares at just $2 a piece. Two years later, the gamble paid off big.
One in 50 residents of St. Paul had become a millionaire.

Speaker 2 I've earned enough from the stock to build a skyscraper, Jack Kinderman, an electrical contracting business owner, told the New York Times. If it doesn't work out, he chuckled, I just jump off.

Speaker 28 Everyone's talking about Brix, a small Calgary mining company that struck gold half a world away.

Speaker 27 And even though the mines are in Indonesia, a lot of the wealth is right here in St. Paul.

Speaker 2 Briex created a lot of wealth in Calgary, too. CEO David Walsh cashed in a portion of his early shares, amassing a fortune rumored to be among the largest in Canada.

Speaker 2 To reassure jittery investors, Walsh emphasized that the sale represented only 3% of his holdings and that he remained the company's biggest shareholder.

Speaker 2 My desire to obtain full value for Brix's stake in the Busang deposit, he wrote, is and will remain aligned with that of every other shareholder.

Speaker 23 There was a quote in

Speaker 23 a magazine

Speaker 23 attributed to me when someone asked the same question,

Speaker 23 except he said, how many shares do I have? And I said, not enough.

Speaker 9 So

Speaker 2 John Felderhoff, meanwhile, sold nearly half a million shares that same year. pocketing around $24 million.

Speaker 2 Other executives quietly followed suit. Even Brix itself sold off a chunk, raising $30 million to fund its expansion, which included a new Calgary office to replace the Walsh's basement headquarters.

Speaker 2 On the surface, it looked like smart business. But as the cash outs piled up, a darker question arose.
Was this just prudent profit-taking? Or did the men at the top know something the public didn't?

Speaker 17 When I got this call, it was August, and the story didn't break until October the 4th, and we were frantically trying to get some evidence.

Speaker 17 If you just asked the company or presented it with them, they'd say, Well, it's not true.

Speaker 32 What happened was the Indonesian government was not happy.

Speaker 21 This was a crummy little company.

Speaker 33 They wanted a big player.

Speaker 32 That was one thing. And the other thing was they had cancelled, they had forced certain people in the mining

Speaker 32 mines ministry in Jakarta to cancel Briax's exploration permit. This was key.
You had a $6 billion company.

Speaker 32 It has one asset, one undeveloped mine site, and it's in really other hands, and the government's pulling the plug.

Speaker 34 And no one one knew this so

Speaker 2 in late August 1996 just weeks after Bri X's meteoric stock price peaked Douglas Gould a business journalist at the Globe and Mail in Toronto received an anonymous phone call the hushed voice on the line claimed that the Indonesian government had recently revoked Bri X's exploration permit In Indonesia, an exploration permit isn't just bureaucratic paperwork.

Speaker 2 It's the legal legal key to the treasure. Without it, there could be no mining.
Without mining, no gold. And without gold, Briex, then valued at $6 billion, was worthless.
It was a bombshell.

Speaker 2 To make matters worse, such a permit required the personal signature of President Suharto, a man who ruled Indonesia like his private fiefdom.

Speaker 2 A former general who seized power in 1966, Suharto and his six children got a cut of every aspect of the nation's economy. Oil, water, banking, even a doomed attempt at a national car.

Speaker 2 So imagine Suharto's reaction when he learned through international media that the largest gold deposit on earth had been found in his own backyard, and it belonged not to him or his cronies, but to a group of Canadians who bought the rights for relative pocket change.

Speaker 2 I think that you have to

Speaker 2 play by their rules.

Speaker 23 And we've always taken the attitude attitude that we're a guest in our country and have tried to

Speaker 23 act accordingly to the best of our ability.

Speaker 2 Indonesia welcomed foreign investment and industry, but there were certain rules that had to be adhered to and Bri X had managed to break all of them.

Speaker 2 First, the company never received formal permission from the Indonesian government to purchase the Busang property. Second, it began drilling aggressively anyway.

Speaker 2 And third, it loudly promoted its results to the world before even briefing mining mining officials in Jakarta.

Speaker 2 In a country where nothing of consequence happened without presidential approval, Brix's behavior was tantamount to insult.

Speaker 2 A boomtown had sprung up around Busang, complete with power lines, roads, schools, a church, even glass windows, all without Suharto's blessing. That wouldn't stand.

Speaker 2 Citing a supposed ownership dispute with Briax's local partner, the president abruptly revoked the company's exploration permit in August 1996.

Speaker 2 After confirming the rumors, the Globe and Mail broke the story that October and panic set in. Within hours, nearly half a billion dollars was expunged from Brix's market value.

Speaker 2 The sell-off hit so hard that the Toronto Stock Exchange was forced to halt trading until David Walsh could issue a statement. When he did, he brushed it all aside.
Much ado about nothing, he said.

Speaker 23 There was a lot of misinformation in the press. We tried to clarify it

Speaker 23 as best possible, but at no time did we not have tenure to the ground,

Speaker 23 which unfortunately was reported that we did, which dropped a half of a billion dollars off our market capital. So I feel sorry for those shareholders, but.

Speaker 2 David Walsh wasn't being honest. For months, Brix had publicly boasted of owning Busang outright.

Speaker 2 In reality, the company's exploration permit had been revoked, a fact he had known about about for months, but never disclosed.

Speaker 2 Now, backed into a corner, Walsh spun the story, claiming it had always been Brix's plan to bring in a production partner.

Speaker 2 In truth, partnership was the only way back into Jakarta's favor, and Suharto's government had already chosen the groom for Brix's shotgun marriage.

Speaker 35 Barrick is the world's largest gold producer. We're geographically diverse with world-class assets on five continents.

Speaker 35 With With an unwavering focus on delivering high-quality production, we're the lowest-cost senior gold producer, translating our strengths and results into higher shareholder returns.

Speaker 2 Toronto-based Barrack Gold, founded by fedora-wearing tycoon Peter Monk, was the world's largest gold producer with the money, muscle, and ambition. to build a mine anywhere it pleased.

Speaker 2 And for months, its sights had been fixed squarely on Busang.

Speaker 2 Barrack's advisory board was stacked with political heavyweights, former U.S. senators, the chairman of Germany's central bank, and even two ex-heads of state, U.S.
President George H.W.

Speaker 2 Bush and Canadian Prime Minister Brian Mulroney, both of whom personally lobbied the Indonesian government on Barak's behalf.

Speaker 2 The company had also promised to partner with an operation owned by Suharto's daughter, Tutut, to construct the mine. Behind the scenes, Barak's tactics were even slimier.

Speaker 2 Reports surfaced that the company had hired a private detection agency to dig up dirt on Brix by breaking into its offices and rummaging through David Walsh's garbage.

Speaker 2 Rival firms accused Barrick of playing dirty too.

Speaker 2 Vancouver's Placer Dome claimed the company sent anonymous faxes to Indonesian mining officials, dredging up its past environmental violations to knock it out of contention. And it worked.

Speaker 2 Briex announced that the Indonesian government had, quote, given guidance to partner with Barak Gold on developing the Buseng site.

Speaker 2 Under the proposed deal, Barak would walk away with 75% of the project, leaving Brix with just 25%.

Speaker 36 In Indonesia, it was a given that President Suharto and the government would receive a share. But Walsh also needed a partner to develop the mine.

Speaker 4 In stepped Peter Monk

Speaker 36 and his Canadian gold company, Barak, who pushed right past Brix last fall and cut a deal directly with the government.

Speaker 2 Brix wasn't about to take the hostile takeover lying down. In a last-ditch maneuver, the company announced a strategic alliance with Suharto's eldest son, Segeet, offering him a 10% stake in the mine.

Speaker 2 It was a costly gamble, but if it secured majority control and sped up government approval, Brix considered it money well spent. The effort, however, proved futile.

Speaker 2 The Wall Street Journal reported on November 27, 1996, that Barak was poised to gain control of the massive Brix deposit.

Speaker 2 The Indonesian government set a December 4th deadline to finalize the deal, but when that date arrived, nothing happened. The negotiations had stalled.

Speaker 2 Neither side could agree to terms on how to split the world's greatest gold find.

Speaker 2 At the same time, President Suharto was getting cold feet.

Speaker 2 He was growing irritated with Barrett Gold's underhanded maneuvering, the infighting it had sparked among his children, and the flood of bad press that followed. Every headline in the U.S.

Speaker 2 and Canadian papers seemed to showcase the greed of Indonesia's first family. Yeah, of course, corruption was the norm in this country, but can you foreigners not make it so obvious? Geez.

Speaker 2 President Suharto turned to an old friend for guidance, Mohammed Bob Hassan, a Chinese-Indonesian Muslim plywood tycoon, longtime confidant and golfing partner who had helped Suharto orchestrate his coup.

Speaker 23 I've been friend with President Suharto for more than 40 years.

Speaker 2 Hassan had a different recommendation. Why not Freeport MacMoran?

Speaker 2 The New Orleans-based mining giant had deeper roots in Indonesia than any other foreign company, and was conveniently the nation's largest corporate taxpayer.

Speaker 2 It already ran a massive operation in Papua, had offices in Jakarta, and knew how to navigate Indonesia's maze of rules and payoffs.

Speaker 2 Best of all, the government's long-standing partnership with Freeport meant it could keep a firm hand on the wheel and on its larger-than-life CEO, Jim Bob Moffat, a brash, foul-mouthed Texan who reportedly moonlighted as an Elvis impersonator.

Speaker 20 And all you can ever do in exploration is create the environment for a discovery. You can't ever assure it.

Speaker 20 If you ever meet anybody in the minerals business or the oil and gas business that tells you they got a sense, you better run and hold your pocketbook.

Speaker 2 In truth, Freeport hadn't been eager to touch the Busain project. It already had its hands full with its own massive operations.

Speaker 2 But when Jakarta came calling, the company reluctantly agreed, if only the stay in Suharto's good graces. The deal was announced on February 17th, 1997.
Barrick was out. Jim Bob was in.

Speaker 2 Under the new arrangement, Brix would keep 45%, Freeport McMoran would take 15%,

Speaker 2 and the remaining 40% would go to the Indonesian government and its local partners, half of which, unsurprisingly, belonged to Bob Hassan. The stock market hated the deal.

Speaker 2 Another $400 million was wiped from Brix's value overnight. Once again, David Walsh tried to soothe investors.
This was the best deal possible, he insisted.

Speaker 2 Not only did they give Brix the largest share of ownership, but it also brought in the most experienced mining operator in Indonesia.

Speaker 2 That's a big comfort to us, he told reporters, though his tone suggested he was trying to convince himself as much as anyone else.

Speaker 23 I call it a very nerve-wracking process,

Speaker 23 and we're all quite pleased at Brix that we feel we've come out with a

Speaker 23 great deal for the shareholders.

Speaker 23 I sit here today with a company that has 45% of probably the greatest gold discovery ever to be, certainly in history to date. And the cash flows from that will be astronomical.

Speaker 2 Geologist John Felderhoff chimed in with the diplomatic response to the chaos. I think what happened here was we found too much gold, he said.
So it becomes an issue of national interest.

Speaker 2 If we'd found a lot less, this would have never happened. Then, on that same conference call, Felderhoff doubled down with a new projection.

Speaker 2 Once we finished the drilling program we're currently doing, my estimate is 95 million ounces. Mike de Guzman, my project manager, estimates 100 million.

Speaker 2 If you ask me what the total potential is, I'd feel very comfortable with 200 million ounces.

Speaker 2 200 million ounces of gold, worth nearly 70 billion in 1997 dollars. And with the paperwork finally out of the way, there was just one thing left for Brix to do.
Get it out of the ground.

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Speaker 25 The PDAC is proud to recognize John Felderhoff as this year's Prospector of the Year.

Speaker 2 All the Brix Bigwigs were in Toronto on March 10, 1997, as Jon Felderhoff accepted the Prospector of the Year award at the Prospectors and Developers Association's annual convention for his now world-famous Busang discovery.

Speaker 2 The celebration, however, ended abruptly when David Walsh's phone rang.

Speaker 2 I hated to interrupt their joy, Freeport's Jim Bob Moffat later told McLeans, but I informed them they needed to get somebody back to the job site. We had run into difficulties.

Speaker 2 Back in Indonesia, Freeport MacMoran was conducting its own due diligence on the Busang property as it would for any new acquisition.

Speaker 2 The company drilled seven test holes beside Brix's supposedly rich cores. and what they found was alarming.
Freeport's assays showed a fraction of the gold Brix had reported.

Speaker 2 Even worse, the drill samples themselves had visual discrepancies. Moffat was informed by his team that something was very wrong.

Speaker 18 He said, we've got our first three cores in and there's insignificant gold.

Speaker 18 And so, what did you say?

Speaker 18 I said, well, that's an interesting development.

Speaker 2 David Walsh's eyes glazed over as Jim Bob Moffat began rattling off the technical details. He passed the phone to John Felderoff, who insisted there had to be a mistake.

Speaker 2 To clear things up, Michael de Guzman, Briack's site manager, was sent back to Indonesia to investigate. It was almost a four-day wait, Moffitt later recalled, and then he never arrived at all.

Speaker 2 Michael de Guzman had reportedly been planning a romantic getaway to Niagara Falls with an exotic dancer he had recently met. when the call came ordering him back to Busang.

Speaker 2 Before boarding his flight, the 41-year-old geologist allegedly proposed proposed to her, despite already being married to four, possibly five, different women in at least three different countries.

Speaker 2 The trip took de Guzman from Toronto to Anchorage to Hong Kong and then Singapore, where he further delayed the journey for a medical checkup.

Speaker 2 De Guzman was battling malaria and hepatitis B, ailments that had dogged him for years in the field.

Speaker 2 After receiving encouraging health news, Michael de Guzman finally landed in Indonesia on March 18, 1997. He spent the night in Balak Papan, where he met up with fellow Brix employee Rudy Vega.

Speaker 2 They got drunk at a karaoke bar where de Guzman sang Frank Sinatra's My Way.

Speaker 2 The next morning, de Guzman and Vega showed up nearly half an hour late for their chartered helicopter flight to Samarinda, the final stop before Busang.

Speaker 2 Mike had to make a pit stop to buy new clothes because he woke up soaking wet. He told Rudy he had fallen asleep in the bathtub after drinking an entire bottle of cough medicine.
Again?

Speaker 2 Vega asked in astonishment.

Speaker 2 20 minutes later, the helicopter touched down at Sam Marinda, where the two men went their separate ways. The Guzman would continue on to Busang to sort out the discrepancies with Freeport.

Speaker 2 After a long layover, he boarded another chopper with three bags in tow and took a seat in the back, an unusual choice for a solitary passenger. They lifted off around 10.30 a.m.

Speaker 2 17 minutes into the flight, at roughly 800 800 feet, the pilot heard a sharp pop and felt a rush of air. He turned to see the cabin door flung open and the rear seat empty.

Speaker 2 The headset lay dangling, ripped from its jack. Michael de Guzman had jumped into the dense jungle below.

Speaker 2 After circling the area for 25 minutes without seeing any signs of life, The pilot finally turned back to the airfield and reported the incident to authorities.

Speaker 2 The bags de Guzman left behind offered limited clues. Two sets of handwritten suicide notes addressed to his first wife, his children, and to John Felderhoff and friends.
Sorry, I have to leave.

Speaker 2 I cannot think of myself as a carrier of hepatitis B. God bless you all.
No more stomach pains. No more back pains.

Speaker 2 Even stranger, among the papers was a letter granting full control of his estate to a Briex accountant. a man he had never even met.

Speaker 2 A search and rescue team of more than 100 people began scouring the jungle two days after De Guzman reportedly jumped.

Speaker 2 Three days into the recovery, two Bri-X workers followed a foul stench through the swamp and found a body, face down, half submerged, crawling with maggots and leeches.

Speaker 2 The clothes matched De Guzman's, but little else did. His face was smashed in and unrecognizable.
His hair had disappeared. Wild boars had eaten parts of his body, including his buttocks and genitals.

Speaker 2 To add insult to injury, when the corpse was airlifted out of the jungle, it was somehow dropped from eight feet onto the tarmac, further pulverizing the dead man into a bag of broken bones.

Speaker 2 An autopsy performed in Indonesia positively identified the body as Michael de Guzman using dental records and personal items, but could not determine a cause of death because of advanced decomposition.

Speaker 2 The medical examiner did note, however, that all of his internal organs were missing, which was interesting.

Speaker 2 Official reports concluded that it was a suicide, but de Guzman's family did not believe it.

Speaker 2 They turned to Jerome Bilan, an anthropologist with the Philippine Forensic Group, often described as the Sherlock Holmes of the Philippines.

Speaker 2 Bilan was convinced that the body was indeed Michael de Guzman's, but the circumstances were far from clear.

Speaker 2 The injuries didn't match those typically seen in high falls, and medical experts confirmed that de Guzman's illnesses weren't severe enough to drive someone to kill themself.

Speaker 2 In fact, just just days earlier, the geologist bought new clothes, made plans with Indonesian wife No. 4, and scheduled meetings at work.

Speaker 2 Then came another odd detail, in his supposed suicide notes, that Guzman misspelled his first Filipino wife's name.

Speaker 2 Byland theorized that maybe the letters were written under duress.

Speaker 2 Perhaps he was kidnapped, tortured, partially scalped, strangled, and dumped, as the injuries, delayed search, and relatively young maggots on his corpse seemed to suggest.

Speaker 2 This conclusion was shared by several others who had investigated the case, including the bushman of the shoe-swap, John Bjornstrom, and Diane Francis, the editor of Canada's Financial Post newspaper and author of Bre-X, The Inside Story.

Speaker 29 For instance, I've discovered that Mr. De Guzman was abducted in February and held captive for five days as a hostage by certain Indonesian people.

Speaker 29 We don't know exactly whom and what was what transpired during that abduction.

Speaker 2 Another curious detail. The pilot on De Guzman's final flight wasn't the usual charter pilot Briak's employees knew, but an active member of the Indonesian Air Force.

Speaker 2 That alone was enough to stir whispers.

Speaker 2 Then came the reminder of a mysterious fire two months earlier at De Guzman's Busang office, one that had conveniently destroyed geological records and key files.

Speaker 2 At the time, it was dismissed as an accident. Now, it looked far more deliberate.

Speaker 2 Even more ominous, De Guzman's mother told investigators that just weeks before his supposed suicide, her son had called her in distress and pleaded, Pray for me. They want to kill me.

Speaker 37 What I really suspect is that Mr.

Speaker 29 DeGuzma's death, which is being billed by the Indonesian police, is a suicide, is actually a murder.

Speaker 2 But that wasn't the only theory. Others believed Michael De Guzman had faked his death and had vanished with his Briex fortune to live out his days in anonymous luxury.

Speaker 2 After all, secrecy was second nature to him. This was a man who kept multiple passports, identities, and wives, none of whom knew about the others.

Speaker 2 Adding to the mystery, John Macbeth, a veteran journalist with the Straits Times, Singapore's most influential English-language newspaper, reported that a corpse had gone missing from the morgue in the very town where De Guzman's helicopter had taken off.

Speaker 2 Had Michael dressed the body in his new clothes and arranged for it to be dumped in the jungle? That theory would explain the disfiguring injuries and even the missing penis.

Speaker 2 Rumors suggested that the body from the morgue had been uncircumcised, while most Filipino men typically are. Don't ask me how I know.
The pseudocide theory refused to die.

Speaker 2 Over the years, alleged de Guzman sightings cropped up in Canada, Malta, Brazil, and the Bahamas.

Speaker 2 Most intriguingly, Macbeth reported that De Guzman's second widow claimed she had received tens of thousands of dollars wired from an overseas bank account, though this was never verified.

Speaker 2 Quote: Jeannie de Guzman never produced any proof of the money transfer and has since gone silent, leaving us to ponder the same old questions all over again.

Speaker 2 However, within days of Michael de Guzman's death, a far more plausible theory and motive had emerged. One that worked for every scenario, murder, suicide, or a carefully planned escape.

Speaker 2 Every pulled thread led back to the same source, the mother load at Busang,

Speaker 2 or the lack thereof.

Speaker 38 Deep in the heart of Kalimantan on the island of Borneo, a mystery is unfolding. It involves a gold mine, an unexplained death, and the fate of millions of dollars worth of investment.

Speaker 2 On March 21st, 1997, an obscure Indonesian newspaper ran a brief 10-paragraph story about Brix, based, it claimed, on information from someone close to the operation.

Speaker 2 Buried in the piece was an explosive revelation. Quote, it is possible that the deposit is not as big as mentioned before.
It could be that it is not viable to mine the deposit.

Speaker 2 As the story rippled across the internet, Brix shares plunged 13% in a single day.

Speaker 2 The Toronto Stock Exchange once again halted trading to stave off a full-blown panic and give David Walsh and company time to respond to the rumors.

Speaker 2 Completely unsubstantiated, David Walsh declared in a press release.

Speaker 2 Freeport, he insisted, had not released any official drill results, results, and Brix maintained absolute confidence in the integrity of the data it had been reporting since 1993.

Speaker 2 Walsh even threatened legal action against those spreading misinformation, blaming them for, quote, the erosion of share value, which has resulted.

Speaker 2 There are very heavy forces trying to discredit us, Walsh told reporters in a separate interview. I am 120% confident the gold is there.
There's just been a colossal screw-up somewhere.

Speaker 2 Then, with trademark bravado, he added, Unfortunately, when the first ounce of gold is poured at Busang, I'm sure the naysayers won't complain about the color.

Speaker 15 We're going to say, Mr. Austin,

Speaker 15 I think our press release says it all for now.

Speaker 2 David Walsh was bluffing, and he knew it. He had already been told that almost no gold had been found.

Speaker 2 While Freeport publicly downplayed the rumors as a mere miscommunication, behind the scenes, Jim Bob Moffat was losing his temper. We had a good idea where this bastard was headed, Moffat later said.

Speaker 2 We were doing due diligence and needed the Bri-X people to come up and look at the data, but we couldn't get anyone to show up.

Speaker 2 They send a Guzman and the poor some bitch disappears, whatever happened to him. I was so pissed off, I could eat dirt.

Speaker 2 Before going public with its findings, Freeport gave David Walsh one last chance to save face. He was invited to hire an independent firm to verify the results.

Speaker 2 Strathcona Mineral Services, a respected Toronto-based consultancy, was brought in to conduct its own drilling program, a process expected to take about four weeks.

Speaker 2 In the meantime, Strathcona would comb through Freeport's due diligence data and Brix's earlier feasibility studies, hoping to uncover where exactly there was a disconnect.

Speaker 2 Strathcona reached a preliminary conclusion within days of arriving in Indonesia. This is Graham Farkasson, the company's co-founder, who led the audit.

Speaker 16 We had a pretty good idea,

Speaker 16 based on all the red flags that we had seen, that there couldn't possibly be something there.

Speaker 16 And so we were not losing any sleep at night, worrying about what the results would be from our own drilling. We pretty well knew that they were going to come back with no gold.

Speaker 2 Farkason felt a moral duty to alert the public as soon as possible. We didn't want to have widows buying the stock while we were sitting on this kind of news, he later explained.

Speaker 2 Before breaking the story, he phoned his contact at Brix a courtesy call to warn them about the storm that was going to hit the following day. The announcement was made at 10:30 a.m.

Speaker 2 on March 26, 1997.

Speaker 2 Based on the work done by Freeport and our own review and observations to date, there appears to be a strong possibility that the potential gold resources of the Busang property have been overstated because of invalid samples and assaying.

Speaker 28 A receptionist inside struggled to handle all the calls, but there was no sign of Brix President David Walsh. Just this this terse news release with an astounding announcement.

Speaker 28 There appears to be a strong possibility that the potential gold resources on the Busang project have been overstated because of invalid samples.

Speaker 2 Not just overstated, but insignificant, meaning there was nothing there.

Speaker 2 Despite Brix's frantic attempts at damage control, dismissing Strathcona and Freeport's findings as merely preliminary, panic spread instantly.

Speaker 2 Within 30 minutes of the opening bell, 7.9 million shares of Brix had changed hands. The Toronto Stock Exchange's computers crashed twice under the volume.

Speaker 2 By day's end, Brix had lost to 80% of its value, over $3 billion in market capitalization, destroyed within minutes.

Speaker 34 I don't know who's responsible or where the mistakes are made, but I think it's all over.

Speaker 10 I think my shares are worthless.

Speaker 2 That afternoon, David Walsh hastily convened a press conference on the steps of Brix's Calgary office.

Speaker 2 Like all the other trials and tribulations we've faced since discovering this project, he declared, we'll be exonerated and the property will stand as we've indicated.

Speaker 2 Walsh spoke with the confidence of a man who still believed Strathcona's drills would prove his geologists right.

Speaker 2 He wasn't alone in his denial.

Speaker 2 Egizio Bianchini, the bullish Canadian gold analyst who championed Brix, dismissed the report as preposterous, while online investors rejoiced at the opportunity to buy more Bri-X shares at bargain basement prices before it skyrocketed again.

Speaker 2 And in St.

Speaker 2 Paul, Alberta, local shareholder Jack Kinderman, who had once threatened to leap off a skyscraper if the stock tanked, told the Wall Street Journal, There's nothing wrong with Bri-X, mark my words.

Speaker 2 Many investors were certain this was just another twist in a vast conspiracy.

Speaker 2 The Indonesian government, they insisted, had staged the bad test results to seize the mine for itself, with Freeport undoubtedly in and on the plot.

Speaker 2 Others swore it was the Filipino mafia manipulating the stock for profit before silencing Michael de Guzman to cover their tracks. And to some, the most obvious culprit of all was the Americans.

Speaker 2 You knew they just couldn't let the Canadians have anything. It just sounds like a big scam.

Speaker 36 Well, I don't think he committed suicide, the geologist. That's my theory on that part of it.

Speaker 6 But I don't think somebody could go for three years and

Speaker 35 fool the whole world

Speaker 28 and it's it's it's just not possible.

Speaker 6 So I believe in Briack.

Speaker 34 Well, I think there's been a conspiracy not so much by the Briack management but by the assay office in the Philippines.

Speaker 41 I can't imagine

Speaker 36 that first of all they would allow this to happen and the bad name it's going to give Canada all over the world.

Speaker 41 And I hope that the Americans are really saying all all of this to reduce the price of the stock so they can get it a cheaper.

Speaker 15 Maybe a consortium as opposed to a full-blown conspiracy. It just seems that

Speaker 15 anything this big, this fast, this pronounced, that's not American gets the heckbeat out of it, if you know what I mean.

Speaker 2 The cold, hard truth was this.

Speaker 2 Bre-X was a fraud. Engineered from within the company from day one.
Strathcona Mineral Services confirmed as much on May 4th, 1997, after completing its drilling test program.

Speaker 2 Its 150-page report, delivered to David Walsh's desk, began bluntly.

Speaker 2 We very much regret having to express the firm opinion that an economic gold deposit has not been identified in the southeast zone of the Busang property and is unlikely to be.

Speaker 2 We realize that the conclusions reached in this interim report will be a great disappointment to the many investors, employees, suppliers, and the joint venture partners associated with Brix, to the government of Indonesia, and to the mining industry everywhere.

Speaker 2 However, the magnitude of tampering with core samples that we believe has occurred and the resulting falsification of assay values at Buseng is of a scale and over a period of time and with a precision that, to our knowledge, is without precedent in the history of mining anywhere in the world.

Speaker 2 Now came the inevitable reckoning, the same questions that surface in every great scandal. Who knew what and when?

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Speaker 26 Mr.

Speaker 12 Walsh, are you criminal?

Speaker 7 Who are you hiring to investigate this?

Speaker 26 It's been in the press, if you knew.

Speaker 25 It was chaos in front of the Breex office in Calgary today, as once again David Walsh, the rags to riches promoter and president of the company, brushed by reporters.

Speaker 25 Stock markets across North America refused to allow trading in the shares of the company as it now stands accused of the biggest and most sophisticated scam ever perpetrated in the history of mining.

Speaker 2 It's remarkable how simple it is to create billions in shareholder value. All it takes is a stage, a spotlight, and a promise of driverless cars, of flights to Mars.

Speaker 2 of a healthcare revolution with nothing more than a prick of a finger.

Speaker 2 Or if you prefer the old-fashioned way, you could buy a cheap piece of property, sprinkle a little gold dust on some worthless rocks, and call it the find of the century.

Speaker 2 According to Graham Farkasson at Strathcona Minerals, that was precisely Briax's approach.

Speaker 2 At a Spuseng camp, the core samples were crushed on site before being sent for quality testing, a highly irregular practice in the mining world.

Speaker 2 Even stranger, the entire samples were destroyed in the process, leaving nothing behind for verification.

Speaker 2 In legitimate operations, half of each each core is typically preserved for cross-checking to confirm laboratory results.

Speaker 2 Somewhere between the crushing at Busang and delivery to the independent lab, Strathcona determined the samples had been salted, meaning tiny flakes of gold from an outside source had been mixed in to make the pulverized rock appear as if it had been pulled from a rich deposit.

Speaker 2 On closer analysis, the deception became obvious.

Speaker 2 The gold particles in Briax's samples were rounded, as if they had been shaved off jewelry or panned from a riverbed, not angular and embedded in quartz as they would be in a natural ore.

Speaker 7 Clearly indicates that the samples were tampered with, that the gold that was in Briax's own samples was introduced from a foreign source.

Speaker 2 Strathcona estimated that as many as 30,000 ore samples from Brix's Busang operation had been altered, including the ones provided to third-party analysts who confirmed the results.

Speaker 2 It was the simplest, yet most elaborate fraud in the history of mining. It's the oldest game in town, ladies and gentlemen, Jim Bob Moffat told McLeans.
But I've never seen a fraud on this scale.

Speaker 26 The crushrock was carried in plastic bags like this.

Speaker 26 Today, a big American miner who almost unknowingly got sucked into this venture told us a single salt shaker-sized batch of gold dust sprinkled precisely into these bags, thousands of them on the road or on the river over the course of the three years, would have been enough to pull off this scheme.

Speaker 2 The Strathcona report meticulously detailed how the fraud had been carried out, but stopped short of naming names.

Speaker 2 Still, all evidence pointed in one direction, the Busang site manager, who personally inspected every sample bag before it left for ASAI, Michael Antonio de Guzman.

Speaker 2 Subsequent investigations all but confirmed him as the architect of the scam.

Speaker 2 And for two and a half years de Guzman reportedly purchased around 60 ounces of panned gold from the Indonesian locals, ground it into fine powder, and salted the core samples, sometimes right on the Busang camp's poll table, before shipping them off for testing.

Speaker 2 Douglas Gould, Globe and Mail journalist and co-author of the Brix Fraud, believes Michael de Guzman knew the walls were closing in.

Speaker 2 When Freeport uncovered the truth, Gold suspects that Guzman took desperate measures to escape the fallout.

Speaker 42 I think there's absolutely no question that he jumped.

Speaker 42 I think there's absolutely no question that he is the main person behind this, but probably not the only person behind it, and that he realized that the jig was up.

Speaker 2 That was the next question. Had Michael de Guzman acted alone? Most doubted it.
He managed several exploration sites across Indonesia and was constantly on the move.

Speaker 2 And given the sheer volume of samples coming out of Busang, there almost certainly had to be accomplices. Strathconan concluded it could have been as few as two or three individuals.

Speaker 2 The most likely suspects were de Guzman's trusted Filipino geologists, the ones he compensated and rewarded most generously. But when Briax collapsed, those men vanished without a trace.

Speaker 2 Reporters, investigators, everyone who tried to find them came up empty.

Speaker 2 The Wall Street Journal, however, eventually tracked down Cesar Puspos, De Guzman's right-hand man, who insisted he had no idea how the salting could have occurred, even though he himself had approved many of the samples for shipment.

Speaker 31 NBC News in depth tonight, what is emerging as one of the biggest financial scams in history.

Speaker 31 A company called Briax Minerals claimed to have found a massive gold mine in a country that's located in a chain of islands that make up Indonesia called Borneo.

Speaker 23 This is the biggest scandal that's ever hit this industry.

Speaker 34 Maybe worth $70 billion, its Canadian developers said. But in the last few days, it's become clear it wasn't even Fool's Gold.

Speaker 30 Fool's gold.

Speaker 25 A story of fraud, mysterious death, and greed.

Speaker 32 There was not 3 million ounces. There was not 30 million.
There was not 40 million. There was not 71 million, which was the last official estimate.

Speaker 32 There was nothing there. Zero.

Speaker 10 Nada.

Speaker 24 This was an orchestrated fraud.

Speaker 29 But it is essentially a perfect swindle.

Speaker 31 The gold mine was a complete fraud. As a result, Brix stock, which had gone as high as $210 a share recently, was trading at $0.04.5 a share today.

Speaker 2 As usual, the road to riches had been littered with red flags, ignored, dismissed, or drowned out by greed and hysteria. There were the absurd gold projections that ballooned the $70 billion,

Speaker 2 the sloppy chain of custody that flouted every mining best practice, the veil of secrecy surrounding Brix's undisclosed properties and restricted access, the mysterious fire that destroyed records, the suspicious death of Michael de Guzman, the checkered past of John Felderhoff, the dumb luck of David Walsh.

Speaker 2 Taken together, who in their right mind could have believed it?

Speaker 2 Almost everyone, apparently. In the days that followed, as the market erased what little value Brix had left, the most powerful players scrambled to wipe the egg from their faces.

Speaker 2 Canada's mining sector, once a point of national pride, had become an international joke.

Speaker 2 Regulators rushed to impose new reporting standards and quality controls, desperate to prove they had learned something from the humiliation.

Speaker 2 The investment advisors who once promised limitless riches suddenly claimed to be victims themselves, blindsided not by deceit, but by their own absence of common sense.

Speaker 2 The Toronto Stock Exchange was no less complicit. By listing Brix and stuffing it into major indexes, it helped funnel billions of ordinary dollars into the illusion.

Speaker 2 Some of the country's largest institutional investors took staggering losses. The Ontario teachers' pension plan alone was out $100 million.

Speaker 2 But no one suffered more than the average Joe.

Speaker 25 Across Canada and the United States, people lost millions of dollars. People like investor George Dieckmeyer.

Speaker 21 Three-quarters of my assets are $250,000 on which I come to make a living from it.

Speaker 2 Of Brix's 240 million outstanding shares, nearly 70% were owned by ordinary investors. And for many of them, the only thing left in their hands was the empty bag they'd been sold.

Speaker 2 Ordinary investors like 78-year-old retired accountant George Diekmeyer, who had staked nearly everything he owned on Brix and lost it all. But the loss ran deeper than dollars.

Speaker 2 The stockbroker who had urged him to buy in, a longtime friend, Pierre Turjin, was so consumed by guilt that he leapt to his death from his seventh-floor apartment.

Speaker 31 This was extremely difficult because, to some extent, I felt maybe I was responsible too for his demise.

Speaker 2 Lawrence Beadle, a 62-year-old lawyer in New Westminster, B.C., lost $3 million when the gold stock collapsed. It's just fate, just bad luck, his wife consoled him.

Speaker 2 We will make everything right again.

Speaker 2 But when Beadle's wife walked into his office to answer the phone on April 7th, 1997, she found her husband slumped over in his chair with a gunshot wound in his head.

Speaker 2 Stories of ruin like these fueled a wave of outrage and up to eight class action lawsuits in the aftermath.

Speaker 2 Investors from New York York to Vancouver, from Texas to Toronto, accused Bri-X of issuing false statements about its supposed gold reserves, while insiders quietly cashed out.

Speaker 2 And it wasn't just the company or its executives in the crosshairs. The lawsuits named everyone who had helped legitimize the illusion.

Speaker 2 Geological consultants, investment bankers, financial advisors, and analysts, even the stock exchanges themselves.

Speaker 2 Most of the plaintiffs understood that recovering any of the billions lost on paper was a pipe dream. Where would the money even come from? The lucky few who sold early.
3X was already bankrupt.

Speaker 2 At a minimum, shareholders wanted accountability, especially after the Royal Canadian Mounted Police's Commercial Crime Unit announced in May 1999 that it would not pursue criminal charges.

Speaker 2 The fraud was too sprawling, too costly, too complex to untangle, it claimed. The witnesses were scattered across the globe, and the evidence, like the gold, had disappeared.

Speaker 43 It is probably the biggest stock fraud in Canadian history, but that is no guarantee that anyone will be going to jail.

Speaker 43 In fact, the RCMP announced today that it will not be laying charges in the BRIX swindle.

Speaker 2 What about David Walsh? Shouldn't he have been held responsible for overseeing the entire thing? Not quite.

Speaker 2 Every investigation, all of which the former Briack CEO cooperated with, concluded that Walsh was less a mastermind than a mark.

Speaker 2 He had spent little time in Indonesia and played almost no role in the actual mining operations. Yes, he sold tens of millions of dollars worth of stock, but never at the peak.

Speaker 2 And when the house of cards collapsed, David was still its biggest shareholder, losing more money than anyone else. If David Walsh was guilty of anything, it wasn't fraud.
It was faith.

Speaker 2 Blind, costly faith in the people around him. A failure to ask questions that mattered.
And even if prosecutors had found found a way to make charges stick, his punishment would have been brief.

Speaker 2 Walsh dropped dead from a brain aneurysm at his home in the Bahamas on June 4th, 1998, a little more than a year after the collapse of Brix.

Speaker 6 As you've heard on the news throughout the morning, the founder and chairman of Bri X Minerals, David Walsh, died yesterday at the age of 52. His life ended in disgrace.

Speaker 2 What about John Felderhoff, Bri-X's exploration manager? Surely, he had to have known. Not according to him.

Speaker 2 Felderhoff released a statement from his home in the Grand Caymans after the scheme was exposed. Let me state categorically again that I did not participate in any tampering.

Speaker 2 I was not aware of any tampering with the Busang core samples, and I believe that the systems and personnel in place at Busang were adequate to detect tampering.

Speaker 2 Felderhoff was quick to remind everyone that he, too, had been left holding a mountain of worthless Briax stock.

Speaker 2 He had cooperated with Strathkona's audit, hired reputable labs and consultants, and even sent his own son to work at the Busing site.

Speaker 2 Something he would not have done, he says, if he suspected anything was amiss.

Speaker 2 In the end, Felderhoff's defense boiled down to two possibilities. Either he was lying through his nicotine-stained teeth, or he was utterly incompetent.

Speaker 2 Neither, as it turned out, was particularly flattering. This is Andrew Willis, the co-author of the Briacks Fraud.

Speaker 42 John Felderhoff was the chief geologist. He was in Indonesia.

Speaker 21 His name is all over the scientific work. If he did not know, he should have known.
He was incompetent because he ultimately was very much responsible for those day-to-day operations.

Speaker 2 The Ontario Securities Commission suspected the same.

Speaker 24 This is the man who may have to answer for the biggest fraud in mining history, John Felderhoff. Felderhoff is one of the top officers of Brix.

Speaker 2 On May 11th, 1999, the Ontario Securities Commission charged John Felderhoff, the last senior Brix executive left standing, with eight quasi-criminal offenses, including insider trading and approving misleading press releases.

Speaker 2 In theory, a conviction could have led to prison time. But unlike true criminal charges, these carried no extradition power.
Felderhoff could simply stay beyond reach, and for the most part, he did.

Speaker 2 The case dragged on for six years, built largely on the mountain of red flags Felderhoff claimed to have somehow missed.

Speaker 2 Proceedings were repeatedly delayed as the OSC tried and failed to have the judge removed for alleged bias after he tolerated the defense lawyer's combative style.

Speaker 2 Finally, on July 21st, 2007, the verdict arrived. John Felderhoff was acquitted on all charges.

Speaker 2 In his ruling, the judge described the fraud as unprecedented, adding, The mining industry did not suspect that such sophisticated tampering on such a scale could occur and was not actively looking for it.

Speaker 2 The decision was a bittersweet victory for the 67-year-old John Felderhoff.

Speaker 2 Despite racking up an estimated $75 million through the sale of Briack shares, the lengthy litigation and a long divorce left him virtually broke again.

Speaker 2 To make matters worse, Felderhoff was never able to return to mining. He had been blacklisted from the industry to which he had dedicated his life.
No reputable company would touch him.

Speaker 2 Still, he refused to let go of the one symbol of his former glory, his 1996 Prospector of the Year award, even after officials politely asked him to return it.

Speaker 2 John Felderhoff spent his final years in the Philippines, running a small convenience store from the home he shared with his new wife.

Speaker 2 In a rare 2012 interview with a northern miner, he reflected on his time at Brix, claiming he knew exactly who was responsible but refused to say their names aloud.

Speaker 2 Two things, however, he maintained with absolute certainty. Michael de Guzman was innocent, he said.
And the hills of Busang still held gold waiting to be mined.

Speaker 37 Today, a judge did the same. He ruled that after 16 years of litigation, there's no reason to continue.
No more money to recover. Tens of thousands of investors were bilked out of billions of dollars.

Speaker 37 They'll share a mere $5.2 million,

Speaker 40 a pittance.

Speaker 33 The largest fraud in Canadian history goes without any accountability.

Speaker 2 Swindled is written, researched, produced, and hosted by me, a concerned citizen, with original music by Trevor Howard, a.k.a. DeFormer, aka the Bushman of Southern California.

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