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+<title>Bill Wattenburg’s Background: The Gold Mine</title>
+</head>
+
+<body>
+<h1>The Gold Mine</h1>
+
+<h2>(1985–1986)</h2>
+
+<p>In our 1990 report, we had no information on Bill Wattenburg’s activities for 1985 and
+1986. He declined to volunteer anything about this period during our two interviews with him in
+1990. However, we picked up some information on this period during our 1992 interview with
+him at his ranch in Plumas County, California. People in the town told us that he was working on,
+of all things, a gold mine in 1985. They told us that this venture became the largest industry in
+the area for the unemployed loggers and construction workers in Plumas County. We left one of
+our staff in the area for a week to learn about this activity. The story we got suggests that
+Wattenburg had an almost complete change of lifestyle for these two years, as well as a purpose
+in what he was doing. He returned to the profession that he learned from his father when he was
+young, that is, operating heavy construction equipment. He took on another strange challenge at
+the same time.</p>
+
+<p>The following individuals can confirm the events that we summarize below: Clifford Gibbs was the
+general manager on the job for Sunbelt. Earl Arlin, was the Sunbelt chief engineer. James Moak and
+Bill Pinkston were the job supervisors that Wattenburg hired. Attorney John Burghardt, of the law
+firm of Marshall, Burghardt &amp; Kelleher, Chico, California, was Wattenburg’s attorney who set
+up Wattenburg’s mining company called Wattexco and handled his later negotiations with Sunbelt
+Mining Company.</p>
+
+<br />
+<p><b>Here is the story, with references to the individuals who confirmed it for us:</b></p>
+<br />
+
+<p>The logging and lumbering industry in Plumas County began to fade away in the early
+eighties. Many skilled equipment operators and mechanics in the area were unemployed. Bill
+Wattenburg’s classmates from high school and his father’s old friends were among them. They
+had asked Bill Wattenburg to help them find some new industry for the town.</p>
+
+<p>The Sunbelt Mining Company from New Mexico was planning to open a large gold mine
+near Bill’s ranch. It was called the Calgom Mine. Sunbelt had discovered an
+enormous body of low-grade gold ore under a mountain top at five thousand feet elevation. Sunbelt was going to
+put the work of extracting and transporting the gold ore out to bid to several large mining
+construction companies from Nevada and Utah. These companies typically brought in their own
+employees and their own equipment for such jobs. The idle construction equipment owned by the
+local people would not have been used by an outside mining contractor. The locals had no way
+of bidding for the job because this required posting a $2,000,000 performance bond and
+substantial operating capital that they did not have available.</p>
+
+<p>They appealed to Bill Wattenburg to get the job for them somehow when he was vacationing
+at his ranch in December 1984. Wattenburg studied the specifications for the job and
+the manner in which the standard mining companies normally did such work. He concluded that
+there was a much less expensive way to do the job using a lot of the surplus logging equipment in
+the area. But, Sunbelt did not believe that this could be done.</p>
+
+<p>Wattenburg made them an offer they couldn’t refuse. He agreed to a penalty clause in the
+contract whereby he would pay Sunbelt for any loss of projected productivity based on the
+estimates that Sunbelt had made for the progress that standard mining companies should achieve.
+Furthermore, he would start the work immediately that winter (December 1984), whereas the
+other mining companies would not start until the snow melted in the spring. Sunbelt agreed to let
+him try it.</p>
+
+<p>The rest appears to be typical Bill Wattenburg. Local workmen and supervisors at the
+Calgom mine told us numerous stories of the unorthodox and “absolutely crazy” things that
+Wattenburg organized with the local workmen and their equipment that winter.</p>
+
+<p>Wattenburg used his own bulldozer and personally built a road to the top of the mountain
+during the Christmas week of 1984. He then put out the call for all the locals who wanted to go to
+work with their equipment, Several workmen told us that they all got a lecture when they first
+arrived. Wattenburg told them that they had no damn business even trying to beat the big mining
+companies at their own game. But if they wanted to try, he had a plan. He told
+them, “Of course, if you don’t think it will work, you can always go back home where it is nice and warm
+and slowly go bankrupt.” The workmen told us that everybody stayed.</p>
+
+<p>The first task was to cut 2,000,000 tons of “overburden” dirt and rock off the top of the
+mountain and move it a half mile away where it was dumped into a deep canyon. Overburden is
+the dirt and rock on top of the ore body beneath it. The gold ore body was at a depth of a two-hundred
+feet below the surface. Mining companies use very large off-highway trucks for this kind of
+job where the dirt has to be moved some distance. They dig the dirt with enormous excavators
+and load it into the trucks that haul it away. These machines typically cost $200,000 to $400,000 apiece.
+The loggers had no such equipment. All they had were medium-sized bulldozers and small loaders.</p>
+
+<p>They said that Wattenburg told them: “Well, if we can’t haul the damn dirt, I guess we’ll
+just have to push it where we want it to go.” The problem was that a bulldozer is only good for
+pushing dirt very short distances. The dirt falls away from the bulldozer blade if you try to push a
+blade-full of dirt more than a few hundred feet. But Wattenburg showed them how to do it
+anyway.</p>
+
+<p>Here is how one seasoned operator described it: </p>
+
+<blockquote>
+<p>“He dug a big trench starting from the top and all the way down the side of the mountain to the canyon. This trench was about six feet
+deep and just the width of a bulldozer blade. We stood around wondering what the hell he was
+doing. We thought maybe he was going to run water down this trench to carry the dirt away.
+But then he put maybe five or six of us on bulldozers to start pushing dirt on the mountain top
+into this trench, up at the top of the trench. Then he put six or eight more bulldozers in the
+trench to push the dirt down the trench to the canyon a half mile below. He lined them up one
+right after the other in the trench. He had to teach a lot of us how to keep a load of dirt in front
+of the bulldozer blade without loosing it all on the way down. You know, his daddy taught him
+how to give you a shave with a bulldozer blade if you sit still. … When the dozers reached the
+bottom, they just climbed out of the trench and went back up another road to get another load of
+dirt at the top. We thought it would be tough trying to push dirt with a dozer down that trench
+that far, but it was easy once you got the hang of it. Hell, in a couple of days we were moving
+20,000 tons a day. That’s more than you can haul in trucks that cost three times as much to own
+and operate. … Some of the guys had dozers that were so old and worn out that they could hardly
+climb back up the mountain. It was pathetic. But Bill just told the others guys with new
+equipment to give the old boys a push back up the mountain. The old dozers did just as good as
+the new ones when they were pushing dirt down the hill. … Bill fired one guy with a new Cat
+who was complaining about helping the others. He told this asshole that he could go back home
+and wait by the fire for the bank to come and repossess his new bulldozer. … The guy should have
+realized that Bill’s father always had to work with beat up old equipment. He never could afford
+a new piece of equipment in his life.”</p>
+</blockquote>
+
+<p>The former Sunbelt chief engineer, Earl Arlin, told us that his bosses from Sunbelt
+headquarters came out and saw what Wattenburg was doing and got unhappy as hell. He was
+moving the dirt with loggers and cheap equipment for less than half the cost that Sunbelt had
+estimated it would cost a mining company using regular loaders and big trucks. And they had
+agreed to pay Wattenburg what they were going to pay the other contractors. Wattenburg and
+the loggers were obviously making a killing.</p>
+
+<p>Mr. Arlin remembers that the Sunbelt executives called Wattenburg into a meeting where
+they tried to get him to modify their contract. Wattenburg asked them what they would be saying
+if they had discovered that he was behind on schedule instead of ahead of schedule. Arlin says
+that they just looked at him and smiled. They admitted that they would be fining him for lost
+productivity. At that, Wattenburg told them that he appreciated honest men and he
+would consider reducing the amount they were paying him because he was moving the dirt for much less than
+even he thought was possible. He offered to reduce his payments by ten percent. They wanted
+him to reduce it by twenty percent. They settled on a fifteen percent reduction. The Sunbelt
+executives went home to New Mexico very happy. They told Wattenburg that he could have all
+the work he wanted in the future. Mr. Arlin suggests that he knew something was wrong.
+Contractors just don’t give up money. They usually sue you for more.</p>
+
+<p>Mr. Arlin laughed as he told us: “By the next week, Wattenburg’s crazy crew was moving
+30,000 tons a day down the mountain, not 20,000! Hell, they were now making more money than
+they were before he gave Sunbelt back the fifteen percent reduction. Some of the
+poor loggers were making more money in a week than they made all year when they were starving to death
+working in the logging woods with their equipment.”</p>
+
+<p>Wattenburg paid each of the loggers a percentage of the total income he received so that
+the more dirt they moved the more money they made. One workman told us that most of them
+were fighting over who could work two shifts a day. He said that he made as much as $1000
+dollars a day. He was able to pay off the loan on his bulldozer in two months. He said they were
+working in four feet of snow most of the time that winter, and yet they were as happy as a bunch
+of kids playing at a ski resort.</p>
+
+<p>Wattenburg’s job supervisors James Moak and Bill Pinkston told us that the one who was
+having the most fun was Bill Wattenburg. “He couldn’t be on the job during the day because he
+had to be at the university in Chico during the weekdays, but he came up and worked the
+graveyard shift most nights. He loved to get on a big Cat and push dirt. Everybody else got their
+asses in gear when he was there. The two daytime shifts had to go like hell to keep up with the
+graveyard shift. Chico was only an hour away. Some of the equipment operators lived down
+there. They would pick him up at 11pm and get him back to Chico in the morning by 9am. We
+had our management meetings with him on weekends.”</p>
+
+<p>Wattenburg’s crew finished the first phase of the job in April 1985. This was a month
+earlier than the other companies could even have started. Apparently, his company, Wattexco,
+made so much money that he was able to buy a new fleet of bulldozers and earth movers (called
+scrappers) for the second phase of the job.</p>
+
+<p>The second phase was to start digging the gold ore out of the enormous open pit they had
+made at the top of mountain and then transport the ore to the processing plant two miles down
+the mountain. His contract with Sunbelt included this work at a predetermined price which,
+again, was based on what other mining contractors normally charged. Sunbelt was soon very
+unhappy about this, according to those on the scene we talked to.</p>
+
+<p>Supervisors Moak and Pinkston told us that Wattenburg again figured out a way to do
+this next job for about half the estimated costs. Instead of using big trucks to haul the ore down
+the mountain, he told them that they were going to use the rubber-tired Cat earthmovers
+(scrappers) they already had. Wattenburg told them that this way they wouldn’t have to use
+extra loaders to dig the ore and load big haul trucks—and they didn’t have to buy ten of the
+$200,000 trucks either. He argued that the scrapers could load themselves with bulldozers
+pushing them. Once they were loaded, they could go straight down the road to the plant. The
+equipment operators protested that no one in his right mind would do this because these big
+earthmovers are not designed to go long distances downhill with a load of fifty tons of dirt. They
+don’t have enough brakes to keep from running away. Everyone told him it was suicide.</p>
+
+<p>They said that Bill Wattenburg got on the first scrapper and showed them how to do it.
+They recall that he made all the nervous scrapper operators walk alongside the loaded scrapper
+and watch what he was doing as he slowly took it down the hill. An hour later, they were all
+going down the mountain in their scrappers with fifty-ton loads.</p>
+
+<p>Wattenburg’s scheme was something that no decent equipment operator would ever do.
+He told them to drag their scrapper blades on the dirt road surface as they went down the
+mountain. This would give them the braking power they needed. (The scrapper blade is what
+digs the dirt up as a scrapper is being loaded.) Any operator would be fired on a normal
+construction job if he ever let his scrapper blade dig into the road he was running over after he
+was loaded. This would tear up the road as well as wear out the expensive steel cutting edge on
+the scrapper blade.</p>
+
+<p>But this wasn’t a normal job, Wattenburg told them. Supervisor Moak remembers that
+Wattenburg told them: “I am the one who pays for the scrapper blades, and who cares about the
+goddamn road! So you cut the surface level of the road down ten feet over the next year? So
+what? I could have built that damn dirt road ten feet lower to begin with. When we’re through,
+I’ll put it back where it was when we began. You guys just get your asses down that road with
+all the ore you can haul, and I’ll worry about the rest.”</p>
+
+<p>One of Wattenburg’s equipment mechanics told us that he hired two more unemployed
+mechanics to work every night to replace the worn-out blades on the scrappers. He said that a
+truck load of new scrapper blades worth about ten thousand dollars was delivered to the job each
+week. “Normally, you wouldn’t use this many scrapper blades on a job in a year.”</p>
+
+<p>The Sunbelt manager on the job, Mr.Gibbs, said that he soon figured out what
+Wattenburg was doing. The ten thousand dollars worth of scrapper blades each week was only
+about one-tenth of the cost of the only other alternative, that is, using conventional haul trucks to
+do the job the way that mining contractors would do it. He realized that Wattenburg was making
+a killing again. He was probably digging and hauling the ore for about 60 percent of the normal
+cost of $1.40 per ton. There was at least 4,000,000 tons of ore to be hauled. Wattenburg was
+being paid $1.50 per ton under his contract. That meant that he was going to make about sixty
+cents a ton profit instead of the usual ten cents a ton. It wasn’t long before the Sunbelt executives
+from headquarters in New Mexico wanted another meeting with Wattenburg.</p>
+
+<p>Wattenburg agreed to a ten percent reduction in what they were paying him to deliver the
+ore. But Wattenburg made them agree to give him the third phase of the job which was to build
+the biggest part of the gold processing plant, the buildings and the laboratory. They gave him the
+job on a time and materials basis plus ten percent profit because they had learned their lesson with
+this guy and they figured that he already knew some way to do this job at a lot less cost. The
+local Sunbelt building supervisor objected like hell because he had his own favorite contractor
+from New Mexico already lined up to do the job, but the headquarters guys insisted that they had
+just cut “a hell of a deal with Wattenburg that would save the company six hundred thousand
+dollars.” Arlin told us:</p>
+
+<blockquote>
+<p>“I knew this guy Wattenburg had something up his sleeve again.”</p>
+
+<p>“Sure enough, the next week the place looked like a flea market with all the characters
+who showed up in beat-up old pickups with a hammer or a saw in their hands. Wattenburg hired
+just about every unemployed carpenter and small building contractor in the county. He gave
+them all a piece of the action and turned them loose. They had the damn buildings up in about
+half of the time we expected. You know, this meant that he got paid for what the contractors
+charged to do the job, plus he got a ten percent profit on top of that. But nobody in headquarters
+complained. He got the job done for about ten percent less than we expected.</p>
+
+<p>…</p>
+
+<p>“Later one of our engineers sat down and figured out how much lumber we paid for on
+that building job. It turned that we paid for about twice as much lumber as they used in the
+finished buildings! Right then we realized that these hick contractors who built the buildings for
+us probably were building something for themselves somewhere else at the same time. Where
+else could that much lumber have gone?</p>
+
+<p>“When we asked Wattenburg about this, he said: ‘I sure as hell don’t need to steal lumber.
+But you corporate guys have got to realize that life is pretty rough for these people who have to
+make a living up here nowadays. Most of their families never dreamed of having a home. What
+are you bitching about? They saved you a lot of money, didn’t they?.’ We dropped the subject.”</p>
+</blockquote>
+
+<p>The Calgom Mine was in full operation by August 1985. They began producing
+3,000 to 4,000 ounces of gold a month. Wattenburg was building one of the biggest fleets of dirt moving
+equipment anywhere to deliver the ore from the mountain top to the processing plant. He bought
+every used D9 Cat bulldozer and Cat 631C scrapper he could find on the west coast, according to
+Mr. Al Pissetti, Dillingham Construction Co., Benicia, Ca., and Mr. Roger Ash
+of Wershow, Ash and Lewis, Equipment Auctioneers of Los Angeles and Portland, Oregon.</p>
+
+<p>Mr. Pissetti told us that Wattenburg once called him up in the summer of 1985 and
+bought two of Dillingham’s used D9 bulldozers, sight unseen, for $50,000 apiece. But
+Wattenburg wanted them delivered to the mine site the next day. Pissetti said he had never heard
+of anything like that before. He said that Wattenburg told him on the phone: “I believe you
+when you tell me that the bulldozers are in good shape. If you’re lying to me, you’ll find out who
+I am quick enough.” Pissetti said that he called the bank and found out that Wattenburg had
+already wired the money to the Dillingham account—and the banker told him who Wattenburg
+was. He said he found some truckers to haul the bulldozers to Plumas County that afternoon.
+(Our staff saw pictures in the bars and restaurants in the area in 1992 which showed
+Wattenburg’s enormous fleet of equipment working at the open pit mine in 1985).</p>
+
+<p>Wattenburg was employing 100 equipment operators by that time to run the equipment
+around the clock, seven days a week. He even rented a restaurant to feed them. We were told
+that the reason he did that was too encourage the operators to show up on time. Loggers and
+construction workers are evidently notorious for having hangovers on Monday mornings. He
+gave them free meals if they showed up on time before the shift started. If they were late, they
+didn’t get any free meals for a week after that.</p>
+
+<p>After the mine had been in full operation for only six months, Sunbelt Mining Company
+executives decided that it would be to their advantage to buy out Wattenburg. He was making
+more money than they were, and they owned the mine.</p>
+
+<p>Wattenburg gave us permission to talk to his attorney, John Burghardt at the law firm of
+Marshall, Burghardt, and Kelleher, Chico, California. Burghardt handled the final negotiations with Sunbelt for him. Burghardt told us that Sunbelt first said that they were
+going to get another contractor who could deliver the ore at a lower price. Bill Wattenburg’s
+answer was, “be my guest”. Evidently, Sunbelt couldn’t find another contractor at a lower price
+than they were paying Wattenburg. Burghardt said that he then realized why Wattenburg had
+earlier given them the reduction in price that he, Burghardt, had opposed. He said that
+Wattenburg must have known that this would eventually happen and that no one else would be
+able to do the job any cheaper. But Wattenburg was still making a good profit. By not being
+too greedy, Wattenburg had put Sunbelt in a real bind.</p>
+
+<p>They negotiated for several months. Wattenburg said that he just wanted to keep on
+working because the job was providing employment to so many local workmen. Sunbelt
+finally offered to keep most of Wattenburg’s employees if he would sell. Wattenburg agreed to a
+deal whereby Sunbelt would buy his company, Wattexco, and as much of his equipment as they
+needed to operate the mine, but it would have to be all cash.</p>
+
+<p>Burghardt told us about the scene when he appeared with Wattenburg at the Sunbelt
+office to sign the papers and collect the cashier’s check that Wattenburg had demanded:</p>
+
+<blockquote>
+<p>“The Sunbelt representative came with several lawyers and accountants in three piece
+suits. Wattenburg was in his boots and greasy Levis. At the last minute, the Sunbelt boss
+announced that they had thought it over and determined that Wattenburg’s equipment was not
+worth what they had earlier agreed upon. He pushed a cashier’s check across the table to
+Wattenburg. It was for $200,000 less than what it was supposed to be. But it was still more
+money than I had ever seen. My heart started pounding. I nudged Wattenburg to take it, and let’s
+get out of there before they change their minds completely. But, Wattenburg just
+slid the cashier’s check back across the table and told them that if they were a little short of money, he
+might be interested in buying out their interest in the mine. They had a meeting in the next
+room for a while and finally came back with another check for the missing $200,000.
+Wattenburg handed me the check, we shook hands with them, and he motioned for us to go.
+There was no more conversation. That was it—It was all over.”</p>
+</blockquote>
+
+<p>Burghardt told us he was sweating when he left. Wattenburg said to him later:</p>
+
+<blockquote>
+<p>“Don’t feel bad about leaving without sticking around for small talk. Those Wall Street lawyers always
+pull that bullshit of bringing two or more checks to a closing to see if they can get an anxious
+seller to chicken out at the last minute and take less money. They figure most suckers are so
+anxious to get a few million dollars cash in their hands that they will always take a few hundred
+thousand less. That way they can go back to headquarters and brag about how much money they
+saved the company. But when you call their bluff, they feel sort of stupid on the spot. It’s best
+not to rub it in by sticking around too long. You might have to deal with them again someday.”</p>
+</blockquote>
+
+<p>Attorney Burghardt said that this was his trial-by-fire in corporate mergers. Burghardt
+admitted that he didn’t realize what Wattenburg really knew about big business until after this was
+all over. Much later he learned that “this guy in greasy Levis” had built and sold two high-tech
+companies to the Wall Street crowd before he got in the dirt moving business. He said that he
+later realized that Wattenburg had been playing a chess game with them all along, but that
+Wattenburg was always about three moves ahead of them. “I was his attorney, but he never
+really told me what he had up his sleeve.”</p>
+
+<p>In terms of how much money Wattenburg made, Attorney Burghardt would only volunteer: “He did all right, but he didn’t walk away with what he could have by any means. He
+got his capital back with a decent profit and he created thirty million dollars of business in the area
+and a lot of jobs. I’m sure he could have made a lot more money doing other things for the time
+he put in.”</p>
+
+<p>Calgom Mine chief engineer Earl Arlin, now retired, was on the job every
+day supervising the mining operation. He probably saw more of this story first-hand than anyone.
+He was an engineer on major mining jobs for thirty years. His analysis of the scene may be the
+best overall:</p>
+
+<blockquote>
+<p>“I knew who this fellow Wattenburg was. I listened to him on the radio for years. It
+was always hard to believe that he was up there running a bulldozer or fixing a piece of broken-down equipment in the middle of the night. It was not
+surprising what he did. I knew he wouldn’t do things in ordinary ways. I sort of felt sorry for my own company
+every time they negotiated a contract with him.</p>
+
+<p>…</p>
+
+ <p>“He gave those old loggers their moment of glory and the chance to do one big job. I
+ think he wanted them to know that they could be somebody … that they could do better than the
+ big-city contractors with all their new equipment. … He was reliving his childhood. I don’t think it
+ was just the money. I think he had been dreaming about going back and doing something like
+ this in the construction business that would have made his father proud.</p>
+
+<p>…</p>
+
+<p>“When a man drives his new Mercedes up a dirt road with greasy tools in the back seat, he
+is not there because he has to be. … We had calls coming into the office for him all the time from
+important people in San Francisco and Hollywood and Washington. He wouldn’t come down off
+the mountain to call them back, and he wouldn’t use the portable telephones we gave him
+either. … He left a lot of his money on the table to take care of the people who worked with him. In the
+deal he made with Sunbelt, they didn’t buy all of his equipment by any means. But he agreed to
+leave some of his extra equipment on the job for us to use, I mean big bulldozers and scrappers.
+He let us use that equipment for free so long as we employed some of his old-timers from
+the area to operate the equipment. They had jobs for the next two years … some of those old
+boys were running new bulldozers that they never before in their lives even dreamed of touching
+All the next year, he would stop by the job whenever he was in town and just watch his old
+crew working on the mountain. He’d climb on a Cat and do a little work while the crew was
+having lunch or he’d give some suggestions to the mechanics working on a piece of equipment
+that broke down. He never came in the office to tell us how we ought to be running the
+operation.</p>
+
+<p>…</p>
+
+<p>“We had one real emergency in the winter of 1986. Heavy rains for two weeks almost
+washed out our cyanide ponds. The mine would have been out of business if the cyanide had
+washed into the river below. Wattenburg showed up with a truckload of big water pumps that
+we hadn’t been able to rent from anybody because everybody in northern California was being
+flooded. He stayed up there to help us day and night for almost a week. We asked him later
+where he found the pumps we needed. He told us that Dillingham Construction Company, the
+big contractor in Benicia, owed him a favor. He never sent us a bill.”</p>
+</blockquote>
+
+</body>
+</html>
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