Philip Arnold

Philip Arnold (1829 - 1878) was a con man from Elizabethtown, Kentucky, who was the brains behind a legendary 1872 scam to fool people into investing in western diamond mining operations. He managed to walk away from the hoax with more than half a million dollars.

Related Topics:
1829 - 1878 - Elizabethtown - Kentucky - 1872 - Diamond

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Arnold was a poorly educated hatter's apprentice when he enlisted to serve in the Mexican War. He then went to California as part of the Gold Rush of 1849. He apparently met with some success there, as he was able to return to his native Kentucky, buy a farm, marry, and start a family.

Related Topics:
Mexican War - California - Gold Rush - 1849

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By 1870, he had returned to the West to take a job as an assistant bookkeeper for the Diamond Drill Company of San Francisco. There he was able to acquire several industrial-grade diamonds that he mixed with garnets, rubies, and sapphires he bought from Indians in Arizona.

Related Topics:
1870 - San Francisco - Arizona

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He took his bag of jewels to the office of local businessman George D. Roberts, whom he convinced that they had been found in a previously-undiscovered mine. He swore Roberts to secrecy and asked him to store the gems in his office. But, Roberts could not keep a secret and eventually drew several other men into Arnold's trap, including: William C. Ralston, founder of the Bank of California; Asbury Harpending; William Lent; and General George S. Dodge. Together, they put together an offer to buy-out Arnold and gave him a $50,000 down payment.

Related Topics:
George D. Roberts - William C. Ralston - Asbury Harpending - William Lent - George S. Dodge

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Arnold used the men's money to go to England and acquire some additional uncut gems, valued at about $20,000. Some would go back to San Francisco to further convince Roberts and his investment group. Others would be planted for later discovery.

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In the mean time, Ralston and the others sent a sample of Arnold's gems to New York City for inspection by Charles Lewis Tiffany. Tiffany set up a meeting at the Madison Avenue home of attorney Samuel Barlow, to solicit additional investors. They included such notable figures as George B. McClellan, Benjamin Franklin Butler (politician), and Horace Greeley.

Related Topics:
New York City - Charles Lewis Tiffany - Madison Avenue - Samuel Barlow - George B. McClellan - Benjamin Franklin Butler (politician) - Horace Greeley

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Tiffany grossly overestimated the value of the stones at $150,000--far more than the $20,000 Arnold had actually spent to acquire them in England. This quickly netted the conman an additional $100,000 from the new investors, which he took back to London. There he acquired $8,000 in more uncut gems to keep their attention.

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Eventually, the investors demanded to visit the source of these gems and Arnold concocted a location in Wyoming. So, he led them west from St. Louis in June 1872. Arriving at the town of Rawlins, they continued on horseback. But, Arnold wanted to keep the exact location a secret, so he led them on a confusing four-day journey through the countryside.

Related Topics:
Wyoming - St. Louis - Rawlins

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On June 4, 1872, Arnold finally reached the spot where he had previously planted some gems and encouraged the investors to begin digging. For more than an hour, precious stones were found in abundance. And, before all was said and done, they had given Arnold $450,000 for the remainder of his rights to any future claim on the property.

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The hoax was not discovered until October 1872, when a government survey team led by geologist Clarence King of Yale University inspected the site. He quickly traveled to San Francisco to inform Ralston and the other investors.

Related Topics:
Clarence King - Yale University

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In the mean time, Arnold took his proceeds from the scheme to buy a two-story brick house in his native Elizabethtown, as well as some five hundred acres of nearby farmland--all of which he had deeded in the name of his wife Mary.

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In 1873, Arnold decided to go into the banking business himself, buying a defunct Elizabethtown financial instituion. But, in 1878, he became embroiled in a feud with another banker in town that resulted in a serious shotgun wound to his shoulder. He died six months later of pneumonia, at age 49.

Related Topics:
1873 - Pneumonia

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