The Moffat County "Diamond Fields" Hoax

Moffat County in Colorado's northwest corner is home to one of gem collecting's most notorious gemstone mining frauds. The Great Diamond Hoax a notorious frontier gemstone mining fraud that made scandalous headlines across the country in 1872.

The 1860's and 1870's saw many exciting foreign discoveries of diamonds, rubies, and sapphires. It seemed the United States had a precious gemstone bonanza of its own in 1872 when two prospectors arrived at the Bank of California in San Francisco. Philip Arnold and Jack Slack, cousins and native Kentuckians, deposited a canvas bag containing the purported fruits of their latest prospecting venture—rough diamonds.

The bank's founder, William Ralston, was greatly intrigued. He had Arnold and Slack lead a party of investors to their secret gemstone site somewhere in "Indian Country" to verify the find. Indeed, the ground seemed to be littered with diamonds, rubies, sapphires, and emeralds. The excited investors organized the San Francisco and New York Mining and Commercial Company.

Ralston then commissioned mining engineer Henry Janin to authenticate the site. Janin, considered the country's top expert, estimated the gemstone deposit's potential value at $50 million. Investors then purchased for $660,000 the rights from Arnold and Slack.

Geologist Clarence King happened to cross the "diamond field" while conducting a survey of the 40th parallel. King found the site had been salted—the gemstones, actually of low quality, had been manually pressed into the ground. He detected that trick because some were found in anthills—rather unlikely behavior even for ants building a mound.

The real story later emerged: Arnold and Slack had bought low-quality uncut diamonds, rubies, and other gems in London. They had then "planted" them at the Moffat County site.

The scandal ruined the reputations of many investors, including Janin. It also tainted Ralston. Slack disappeared with his share of the money. Arnold returned to Kentucky where he became a banker. When accused, he refunded $150,000 of the money, then seriously wounded a man who had publicly accused him of fraud. In 1878, he died of pneumonia six months after being shot by an angry competitor.