In 1993, a small Canadian mining company Bre-X announced a huge discovery of gold at a site it purchased in the Indonesian Rain Forest. This site was estimated by a geologist initially to have 2 million Troy ounces of gold. This value steadily increased, rising by 3500% to 70 million Troy ounces in 1997. Over years the company shares went from penny stock to $280/share and in 1997 had a market cap of $6.6 billion dollars. Plenty of large institutional investors like retirement trusts were purchasing large amounts of stock.

In reality, it was all a fraud and the lead geologist was shaving off gold from his wedding band to add to drill core samples. An independent geologist test found that the site had little to no gold. After the news got out, the stocks went from a peak of $286 to $20 in a short time frame.

When the fraud was discovered, the original geologist committed suicide by jumping from a helicopter into the jungle, another partner died of brain aneurysm, and no one involved ever went to jail. The Ontario Teachers’ Pension Plan lost $100 million. The Ontario Municipal Employees Retirement Board lost $45 million. The Quebec Public Sector Fund lost $70 million.

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