Nevada Man Sentenced on Fraud Charges Involving Scheme to Sell Mineral Rights to Investors

ST. LOUIS, MO—The founder and chairman of Earthly Mineral Solutions, Inc., was sentenced to 60 months' imprisonment on fraud charges in connection with a scheme to sell mineral rights to investors, Acting United States Attorney Michael W. Reap announced today.

ROY HIGGS of Henderson, Nevada, pleaded guilty in late June to one felony count of conspiracy to commit mail fraud and appeared today for sentencing before United States District Judge Stephen N. Limbaugh, Jr.

Co-defendant Frank Schwartz, of Los Angeles, California, was sentenced in April to three years' imprisonment for his role in Earthly Mineral Solutions, Inc. (EMS). EMS is a Nevada corporation and, from 2004 through 2006 sold hundreds of investors across the country approximately $18,000,000 worth of mining claims in the desert south of Las Vegas, Nevada. Schwartz pleaded guilty in January of working for EMS and failing to report its fraudulent activities to authorities.

In all, more than 250 investors have lost principle and interest payments they were promised as part of their agreement to invest in EMS’ mining claims. In addition to the criminal case, Higgs, Schwartz, EMS and the company’s former General Counsel Rick Lawton, face a civil enforcement action brought by the Securities and Exchange Commission. That case is pending in Las Vegas and has been stayed pending the outcome of the St. Louis case.  As part of his guilty plea, Higgs agreed to resolve the SEC case.

Reap commended the St. Louis Office of the FBI and the Department of Interior – Office of Law Enforcement, Security and Emergency Management, who investigated the case over several years. Reap also praised the work of the Nevada Secretary of State’s Office, which first sought a cease and desist order against the company in 2006. Assistant United States Attorney Tom Albus handled the case for the U.S. Attorney’s Office.

"An investor in our economy is not entitled to a guaranteed return on his investment, nor is he entitled to have his wildest dreams come true," said Reap "but an investor is entitled to the truth. By engaging in a pattern of lies, omissions and half-truths, Roy Higgs presented hundreds of people with an investment proposal held out as a sure thing, when in truth it was a long shot. By doing so, he violated the law and harmed a lot of good people. I am pleased that, although the harm to his investors will continue to be felt for a long time, Mr. Higgs has been brought to justice through the hard work of law enforcement.  Hopefully this sentence will deter others from similar fraudulent activity."

Judge Limbaugh, in imposing the maximum sentence allowed, noted he was "overwhelmed" by the scores of victim impact statements provided to him by the U.S. Attorney's Office and agreed with the prosecutor that it was a "sad day" for everyone involved in the case.