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FREETOWN (Reuters) - Spurred on by record prices for the precious metal, fraudsters in Sierra Leone have latched on to a cheap gold hustle targeting gullible speculators from the United States and Europe.
At home, the tricksters enjoy notoriety with nicknames such as "Large" and "Capitalist" and are even admired as latter-day Robin Hoods by some in the impoverished West African country.
But authorities fear the scam -- which relies on the false belief that gold can be bought there at a fraction of world prices -- is ruining efforts to rebrand Sierra Leone as a serious investment venue a decade after civil war.
"They are causing us a lot of problems in government," said attorney-general Frank Kargbo.
"One little incident can discourage investors, particularly when it gets out in countries we'd hope we'd attract investors from," he complained.
The U.S. embassy in Freetown says six U.S. nationals have lost up to $350,000 (215,862 pounds) each in scams in the past six months. European embassies have reported similar cases without giving details of the extent of the losses.
Sierra Leone's gold exports stood at 270,234 grams in 2010, more than double the 2008 figure. But that does not show the true output because much of the country's gold is smuggled over porous borders, notably to Guinea.
Gold has enjoyed a meteoric rise in value over much of the past decade as nervous investors seek a safe haven. Although it has eased slightly in recent weeks, gold hit an all-time high of $1,430.95 an ounce on Dec 7 of last year.
That has created a window of opportunity for tricksters who offer expatriate investors a kilo at $18,000-20,000, well under half the world market price.
The scam itself is a riff on the time-honoured advance fee fraud, known in West Africa as '419' after the section of the Nigerian penal code that prohibits it.
Punters are shown a small quantity of real gold, with the promise of much more at a low price. They are subsequently asked to pay large sums upfront for taxes, insurance and licensing.
Any metal they receive, though, is worthless: often brass or copper shavings.
In a twist on the original fraud, Sierra Leonean "419ers" sometimes try to extort more money from the victim by accusing them of attempting to take gold out of the country illegally.
"I don't understand how a fully grown man can be convinced into parting with $600,000 for gold that is not in their possession," said Stribey Edward Logan of Sierra Leone's Transnational Organised Crime Unit.
Douglas Sun at the U.S. embassy simply urges expatriates "to think twice about paying huge amounts of money up front."
"I would warn Americans to be very wary of doing deals with people they meet on the streets, in the hotel lobby, in bars and restaurants," he added.
The improbability of finding a local bargain is underlined by Olufemi Boyle-Hebron, a gold and diamond dealer in Freetown who runs his own refinery.
His agents buy from artisanal miners in the field at prices up to $37,500 per kilo. Once export dues and other fees are paid he sells for $44,000 at a profit of just $3,000 per kilo.
"There's no cheap gold in Sierra Leone ... I work in volume," he explained.
While Sierra Leonean officials emphasise their determination to crack down on gold 419, some privately acknowledge evidence of collusion within the ranks of the police and mines sector, and prosecuting alleged scammers has often proven difficult.
While many Africans deplore their behaviour, there is a certain admiration for scammers among some in a country which hosts a growing number of multinationals eying its resource wealth, but where annual income per head is barely $800.
"There's this almost Robin Hood-like celebration of it," said Daniel Smith, an anthropologist at Brown University in the United States who has studied 419 scams in Nigeria.
"It's like turning colonialism on its head."