Los Angeles, California - A resident of the Mount Washington neighborhood of Los Angeles pleaded guilty Thursday to defrauding more than 100 investors out of approximately $8.3 million through a scheme that sold “ancient slag,” a mining waste byproduct that supposedly contained precious metals.
Michael Godfree, 80, pleaded guilty to one count of mail fraud.
According to his plea agreement, from 2011 to November 2017, Godfree schemed to defraud victim-purchasers of material he identified as “ancient slag and “gold ore.”
Godfree was co-founder of The Minerals Acquisition Company (TMAC), a Pasadena-based outfit that offered to sell slag to victims who were told the company would be able to extract precious metals from this slag, which was generated from copper mining. TMAC sold ton-quantities of the slag with promises of refining the material and recovering precious metals. TMAC provided victims with supposedly attorney-certified “Certificates of Title” that purported to transfer ownership of the slag to victims.
Godfree fraudulently induced the victims to buy the “ancient slag” by falsely representing and promising that the “ancient slag” TMAC was selling was valuable because it contained precious metals and a process would soon be finalized and available that could extract the precious metals supposedly in the slag.
In fact, Godfree and TMAC did not actually own most of the slag they sold, there was not a commercially viable process for extracting precious metals from the slag, and the business operation had not been endorsed by a lawyer.
Acting on Godfree’s false promises, victims sent the company money by mailing checks to the TMAC offices in Pasadena and by wiring money to accounts that Godfree controlled. Godfree used the funds to pay for his personal expenses.
In total, Godfree caused losses of approximately $8,336,965 to his victims.
TMAC was dissolved in 2015, but its operations were largely taken over by Precious Metals of North America Inc., another of Godfree’s companies.
United States District Judge John A. Kronstadt has scheduled a May 12, 2022 sentencing hearing, at which time Godfree will face a statutory maximum sentence of 20 years in federal prison.
The FBI investigated this matter.
Assistant United States Attorneys Joseph D. Axelrad of the Violent and Organized Crime Section and Poonam G. Kumar of the Major Frauds Section are prosecuting this case.