The year was 1820. A charming Scottish adventurer by the name Gregor McGregor appeared in London from Central America. He told the story of a wondrous Central American country called Poyais, to which he was granted the rights of colonization and started calling himself with the title cazique of Poyais which was bestowed to him by George Frederick Augustus I king of the Mosquito coast. He had laid down the beginnings of a country in the hospitable and fertile land and now only needed colonists and funds for this paradise on Earth. So he opened a Poyaian legislation office in London and started issuing state documents, selling land and, more importanty producing Poyaian bankontes. He took a loan for 200 000 pounds in the name of the state of Poyais and issued bonds. In the meantime he started granting titles to his first followers in order to attract more and more of them. In 1822 a book was published, in which a sea captain wrote about the famous land of Poyais and its majestic cacique whose humble portrait was on the cover. The author, whomever that might be, described the precious environment, abundant natural resources, friendly civilized natives and even asserted that despite its location in the Mosquito coast - there is no other land on Earth less troubled by mosquitoes... So the advertizing camopaign got more and more successful. Inherent British sentiment against Spain who at the time had sovereignty in the area helped to boost the venture and the bonds, titles and lands started selling. By 1823 Poyais had its own general, army, barons, bankers, and even a few officially appointed doctors and its cazique was getting richer
Even the luxurious lifestyle of His Majesty the Cazique did not alert his followers and on February 23 1823 the ship Honduras Packet with captain Hill set sail for Poyais with its first 43 colonists, mostly Scottish highlanders. However a big surprise was waiting for them - the so called town of St. Joseph - the capital of the colony in the mouth of the Black river in Honduras was nowhere to be seen. The captain dropped them on the shore at the spot where 100 years ago there was a short lived Briitish colony and left them there to clear the lush jungle and somehow settle. But the settlers were divided as to what to do, disappointed and most-importantly - had no experience whatsoever in such environment, so their actions were chaotic and ineffective, their buildings didn't last, their fight with the jungle was lost and even their few supplies were spoiled by neglect.
A month later the second ship arrived with 160 more settlers. By this time it was already obvious that Poyais was a scam. The few more adaptive and quarrelsome settlers became thieves and pirates, while most of the others were just apathetically sitting around and waiting for their deaths. And they came quickly - deceases spread rapidly and people started dying. At this point came a proclamation from the Mosquito king George Frederick, declaring the grand of land to McGregor null and void; he also required the settlers to buy their land from him with actual currency - it appeared that the Poyaian dollars were not good enough even for fruits and vegetables. So an envoy somehow went to British Honduras (Belize) and asked for help. The British however, were somehow slow to react, wanting to investigate the case and only after the realization of captain Hill of what McGregor did to those people did they receive actual help. At the time of the resque missions all of the people in the colony except one were ill or dead. Only around 90 colonists (of more than 200) survived and only around 50 got back to Britain, the rest stayed in the British West Indies.
But what happened to McGregor? Not only did he stay in his giant home in Britain during this ordeal, but his charisma was so strong that even some of the survivors thought that he was innocent and defended him publicly. However when an official investigation was launched, he had already left for Paris. Guess what did he do there? The same scheme with the same level of success; however the French state was more careful and did not let the ship with settlers leave the harbor of Le Havre. Later in life he tried the same thing again in Britain and finally settled in Venezuella without ever getting a verdict for his deeds.
Currently the mouth of the Sico Tinto river (Black river) is exactly as inhospitable as it was during the times of Poyais. There is almost no sign of the presence of the dying colony there and the land belongs to Honduras, part of the department of Colon.
Coordinates: 15° 58′ 0″ N, 84° 58′ 0″ W
Wikipedia article about McGregor
Scientific paper about the story, by Alfred Hasruck (pdf)