Counting On Monte Cristo -- A Plan To Reopen A Historic Mine And Build A Resort Has Raised More Concern Than Money

This is a story about a ghost town, spotted owls, Coca-Cola, mines, mountains, money, and big dreams that don't always come true.

It's also a story about the Old West colliding with the new, so you might call its most dramatic episode so far the Showdown at Barlow Pass.

On the first Saturday in October, Fred Harnisch, the U.S. Forest Service's district ranger for eastern Snohomish County, headed up the Mountain Loop Highway from Darrington toward Barlow Pass, the divide between the Sauk and Stillaguamish river basins.

He found four men and a bulldozer about a mile short of the summit, just where a subordinate had reported finding them the day before.

The bulldozer was stuck when he got there, Harnisch says - but the crew already had cleared 3,000 feet of new road south from the highway, in the direction of the isolated gold-rush ghost town of Monte Cristo.

Harnisch asked them to stop, told them they were clearing national forest land without permission. They complied. Work halted, and hasn't resumed.

But the Showdown at Barlow Pass is just one facet of this story. What's at stake here is something much bigger: the fate of Monte Cristo, one of the most scenic, historic corners of the Cascades, an area of 7,000-foot peaks, glaciers and alpine meadows popular with hikers.

The man who says he authorized the bulldozing maintains there was nothing illegal about it, that the crew was simply clearing an overgrown, century-old wagon road to which he holds title.

What's more, Gay Mullins says, the new/old road is just part of his grand plan for Monte Cristo.

He wants to reopen the mines, build a museum, a lodge, cabins, and a 100-unit condominium, and open an "environmental school of mining."

"I'm looking for adventurous men and women to become the pioneers of the future of Monte Cristo," Mullins wrote recently. "We will together tame the wilderness and build a new town."

His name may ring a bell. Mullins enjoyed a brief but intense fling with fame in 1985, when he emerged as the leader of a national consumer rebellion against Coca-Cola's ill-fated bid to change its formula.

He appeared on "Good Morning America," "20/20" and other television shows. People magazine deemed his crusade one of the top 10 events of the year.

Mullins' involvement with Monte Cristo dates back more than a quarter-century.

He is seeking investors in Monte Cristo Properties, the company he heads, and says now is the time to get in on the ground floor.

"It'll make 'em millionaires," he says.

But there are several layers of concern about Mullins' plan. Environmentalists say development would ruin the area. They want the Forest Service to acquire key private lands, many of them "inholdings" within a federal wilderness area.

Still more people look at Mullins' track record and question whether his dream will fly. Four years after his company was founded, it owns just one 18-acre tract at Monte Cristo.

Mullins has been trying to arrange financing to buy other lands since 1989, so far without success. No permit applications are pending.

Mullins, who operates from a home office on Highway 99 in Milton, Pierce County, says he's close. He says his chief financial backer is Dr. Warren Guntheroth, a University of Washington pediatrics professor who is listed as secretary of Monte Cristo Properties.

Guntheroth did not return numerous calls.

Mullins also says he's now putting together a complex deal that includes a stock offering, a bank line of credit, sale of waterfront property in Mason County, and a merger between his company and the corporation that is the largest private landowner in Monte Cristo.

He says he already controls 26 percent of that corporation, Monte Cristo Resort, Inc., and is arranging to buy the rest.

But even the 26 percent is disputed. And a number of Mullins' other business ventures over the past 15 years have landed him in legal and financial trouble. Records indicate he owes creditors hundreds of thousands of dollars in court-ordered judgments.

"Gay Mullins, he has wild ideas," says Einar Storakers of Concrete, Skagit County, who has been involved with Mullins and Monte Cristo for two decades. "It's been going on for years, and nothing has happened."

"The rest of us just do not have confidence in his integrity," says William Holtcamp of Sedro-Woolley, like Storakers a longtime shareholder in Monte Cristo Resort, Inc.

But those who want Monte Cristo kept as it is say Mullins can't be ignored. He has been the biggest obstacle to Forest Service efforts to acquire Monte Cristo Resort's 250 acres, says Peter Scholes of the nonprofit Trust for Public Land.

The Trust has been trying to arrange the sale for two years. "It's an important public recreational resource," Scholes says. "Mullins has demonstrated he doesn't have the resources to use it and develop it appropriately."

And, even without financing, Scholes says, Mullins poses a threat to the area's environment. One deal he arranged last year, which later collapsed, would have paved the way for a logger to clear-cut more than 100 acres.

Snohomish County officials say the bulldozing at Barlow Pass last fall was done without a required permit under the state Shoreline Management Act. They are considering legal action.

So is the Forest Service. The route Mullins' crew cleared passes near the nest of a pair of spotted owls, listed as threatened under the Endangered Species Act. The area has been designated as "critical habitat" for both the owl and another threatened bird, the marbled murrelet.

Even Mullins admits his grand plan is far from a sure thing. An environmental-impact statement must be written, numerous permits acquired. Access is a problem. "The preservationists may enter into the picture and delay us," Mullins says.

But all the problems - the owls, the road, environmentalists, financing - can be handled, he says. He talks of the millions and billions just waiting to be withdrawn from "nature's vault."

"I want to make a rebirth of Monte Cristo," he says, "another Gold Rush . . . the glamor of (18)49 or the Klondike again."

Gay Mullins isn't the first man to catch gold fever from Monte Cristo. "It's a classic story of American dreams and heartbreak," William Palmer, a retired geologist and mining engineer, says of Monte Cristo's past.

"If things had gone right, it might have been another Butte."

Prospectors first discovered gold- and silver-bearing ore in the area in 1889. They named their find after "The Count of Monte Cristo," the 19th-century French novel of injustice, vengeance and enormous wealth.

In the years that followed, prospectors and speculators staked hundreds of mining claims and platted a town. Aerial tramways carried ore from mines to a concentrator near town. A railroad began hauling the ore to an Everett smelter in 1893.

Isolation and the elements conspired against Monte Cristo, however. Winter avalanches destroyed tramways and cabins. Autumn floods wiped out the railroad in 1897. John D. Rockefeller rebuilt it and kept the mines running for a few more years, but the tycoon sold his interests, and large-scale mining ceased in 1903. All production halted in 1920. Monte Cristo became a destination for tourists and a trailhead for hikers, with a lodge, a restaurant and cabins.

The first good road into the area - across the South Fork Sauk River from the old wagon road Mullins hopes to rebuild - was constructed during World War II, but floods damaged it in the early 1980s, and it has been closed to the public since.

Snohomish County has installed a gate at Barlow Pass. You can drive the four miles to town, if you pay for a key and sign a waiver of liability.

The lodge burned in 1983. Today, Monte Cristo is a collection of cabins that, for most summer visitors, is a healthy hike from the car.

Although it's surrounded by national forest, much of Monte Cristo remains in private hands. Much of that private land is inside the Henry M. Jackson Wilderness, established by Congress in 1984.

Wilderness areas are supposed to be off-limits to development. But the Forest Service says that, short of condemnation, it can't do anything to block activity on private land inside wilderness that is otherwise legal.

Gold fever never was completely eradicated in Monte Cristo.

A 1983 U.S. Bureau of Mines report estimated the area might hold more than 50 million tons of ore containing gold, silver, copper, lead and zinc - most of it under lands owned by Monte Cristo Resort, Inc.

But the bureau also said the climate and topography create "unusually severe mining problems."

Palmer, the geologist and mining engineer, was hired by Mullins to study Monte Cristo's mineral potential in 1989. He concluded there were enough positive signs to warrant exploratory drilling. But Palmer says he also told Mullins he almost certainly could not get permits because of environmental objections. Even if he could, Palmer adds, the odds against a big strike are long.

"It's like betting on long shots at Longacres," he says.

The stories of Gay Mullins and Monte Cristo first began to intertwine in 1967, when he and nine others The Seattle Times described as "enthusiastic young Seattle professional men" bought Monte Cristo Resort, Inc. Mullins says he put the deal together.

What the partners got was the lodge, a scattering of other buildings, most of the lots in the old townsite, and more than a dozen mining claims near town and in a basin to the east.

They hoped to develop a ski resort, but that plan fizzled. By 1977, Mullins was saying the company wanted to sell its property to the state. Most of the firm's commercial operations - the lodge, cabins, a museum - halted when the road washed out a decade ago.

Today, most shareholders say they want to sell. "They want to see some return before our toes turn up," says Bruce Tellefson, the corporation's president since fall.

"We have a bad investment," says Ragnar Pettersson, a Bothell contractor who was Tellefson's predecessor as president. "Let's get rid of it."

Tellefson supports Mullins and says he has invested in his new mining development company. But most of the other shareholders have little good to say about him. Pettersson, for one, says he regrets ever getting involved with Mullins "He has never come through with anything."

Mullins says Pettersson and the others don't understand the complexity of what he's trying to do with Monte Cristo now. "I am working on their behalf," he says.

Only in the past five years or so, Mullins says, did he become aware of Monte Cristo's untapped mineral potential. He incorporated Monte Cristo Properties and two subsidiaries in 1989 to unlock that wealth. Students at the "environmental school of mining" could work the old mines in return for room, board and tuition, he says.

The mining museum might draw 100,000 visitors a year. Artisans could craft gold from the mines into trinkets for the tourist trade.

Mullins also talks of establishing a park on 50 acres near the old townsite, and selling the rights to individual trees there to families for $750 apiece.

"For the first time, people will have a real family tree," Mullins quips. "Own a tree - save a forest."

The access problem should be solved by summer, Mullins says. He has agreed to suspend work on the old wagon road he tried to clear last fall while ownership questions are resolved, but remains convinced it's his property, not the government's, because it predates creation of the national forest.

Mullins also talks of suing Snohomish County to force it to reopen the gravel road that has been closed since the early 1980s. "They have committed an act of piracy," he says.

Mullins has his admirers. "He's getting things put together pretty well," says Tellefson.

Ken Schilaty of Snohomish, who also owns property at Monte Cristo, says he's interested in joining forces with Mullins if his venture gets off the ground.

But Monte Cristo Properties' four-year history is dotted with stock-purchase agreements that never closed and business relationships that soured, degenerating into litigation.

On behalf of Monte Cristo Properties, Mullins signed an agreement in late 1990 to buy 74 percent of the shares in Monte Cristo Resort, Inc., from Pettersson, Tellefson, Storakers, Holtcamp and four others, for $740,000.

But Mullins didn't pay, and the deal never closed.

Last year the shareholders entertained another offer. Congress had earmarked $580,000 in the Forest Service's 1991 budget to buy private inholdings in and around Monte Cristo.

Sam Nagel, lands staff officer for the Mount Baker-Snoqualmie National Forest, says Monte Cristo Resort's property has been the top priority.

Last August the Trust for Public Land, operating as intermediary, offered $430,000. A month later the shareholders turned it down.

Pettersson, then president, resigned - in disgust, he says. He and some other shareholders wanted to accept the offer. Others say they voted no, but favor selling the property to a government agency that will preserve it. Together, they control a majority of the stock.

But the corporation's rules require 70 percent approval for any sale, and Mullins says he controls enough shares to block any offer he doesn't like. "They can't sell to anyone else," he says.

His Monte Cristo Properties controls 26 percent of Monte Cristo Resort, Mullins says, and his ally Tellefson owns another 5 percent.

But Mullins' control of 26 percent is contested. He says it includes the shares his company acquired in 1989 from two men who, between them, had a 15 percent share. But he also acknowledges that, after more than three years, those transactions have not yet closed, that the shares remain in escrow.

One of the two men, John Trimble, says Mullins never paid him, that the 1989 agreement is void. "He just never follows through," Trimble says of Mullins.

Mullins has been busy on other fronts. He signed option agreements last year to buy other private land at Monte Cristo and let companies log and mine in the area. The agreements expired, spawning two new lawsuits.

Late last month Mullins said he had attracted 18 new investors, getting each to sign notes to buy $10,000 of preferred stock in Monte Cristo Properties.

The stock offering isn't on file with the state Securities Division - Mullins said it wasn't required.

But after an official with the division called last week to inquire about the offering, Mullins said he would discontinue it and return the notes.

Mullins said Friday he is submitting a new offer to the shareholders of Monte Cristo Resort, Inc., that everything should be wrapped up this week.

He presented it to Storakers and Holtcamp Friday. Both remain skeptical. "He's always presenting a new offer," Holtcamp sighed.

Meanwhile, last month the Forest Service's regional office in Portland announced it would spend elsewhere the $580,000 Congress had appropriated for Monte Cristo. But if a sale is arranged, money might still be found, it added.

Mullins continues to dream big. "Pioneers, join with me to recover the lost Treasure of Monte Cristo . . ." he wrote recently.

"Money is not a problem. Monte Cristo contains the immediate wealth to provide for all our needs."

----------------------------- DATES OF NOTE AT MONTE CRISTO -----------------------------

1889: Gold discovered at Monte Cristo. 1893: Town of Monte Cristo platted; railroad to Everett completed.

1897: Record ore production; floods wipe out railroad.

1899: John D. Rockefeller gains controlling interest in mines.

1900: Rail service restored.

1903: Rockefeller sells interests; mines closed.

1920: All mining ceases.

1936: Rails torn up.

1941: Gravel road to Monte Cristo built.

1967: Gay Mullins and nine others buy Monte Cristo Resort, Inc., owner of 250 acres.

1983: Floods damage road; lodge burns.

1984: Congress establishes Henry M. Jackson Wilderness Area.

1989: Mullins incorporates Monte Cristo Properties, Inc., to develop area.

1992: Monte Cristo Resort shareholders reject purchase offer from Trust for Public Land.