Last summer a white van sped under the scorching sun, crossing two northeast provinces to Hunchun, the Chinese border town wedged between Russia and North Korea. The police, acting on a tip, closed in and nabbed two South Koreans and three Chinese with their suspicious cargo. Ten 'dragons' - well-preserved dinosaur skeletons - were among the 2,364 pieces of fossils that were about to be smuggled across the border into a multimillion dollar international black market. The 'July 18 case', the largest fossil smuggling operation uncovered in China, came to trial in Shengyang, the capital of Liaoning province last month, but the court adjourned without a verdict. The case threw a harsh light on the neglect, loopholes and huge profits of trafficking fossils. Western Liaoning on the eastern flank of the Mongolian plateau was the first link in the chain of the lucrative operation. In the past decade, almost all the startling discoveries of paleolithic birds and small-framed dinosaurs were made in this poor region of largely bare hills. The area more than 120 million years ago was dotted with fresh water lakes and volcanoes. Volcanic eruptions spewed ash in the sky, suffocating animals. Those that fell into the water were quickly buried in the fine sands at the bottom of the lake. As a result, the area yields a rich variety of birds, reptiles, fish and plants in extremely well-preserved fossils. Since the mid-1990s, Chaoyang city has developed into a hub for scientists and fossil hunters. Zhang Wanlian, a reporter for the Chaoyang Daily, became a chronicler of this extraordinary period of scientific discoveries as well as the plundering of the paleolithic treasures. He was the first one to report the large-scale illicit fossil trade two months before the police raid. 'My story on May 10 may have caught the attention of the government,' he said. In the article, he described a group of South Korean nationals as actively buying fossils in the neighbouring Jinzhou, a bustling railroad town that has become a haven for fossil dealers. For centuries, farmers and herders have stacked rocks containing fossils to make walls. A French missionary in the late 19th century once noted the fossil riches in his correspondence back home. But the chapter on the modern discoveries dates only to 1973 when a farmer named Yan Zhiyou found a reddish strange-shaped rock while digging a well. A doctor in the commune thought it could be a part of a fossil. They carefully wrapped the rock and mailed it to the Institute of Vertebrate Paleontology and Paleo-anthropology in Beijing. A few weeks later, the leading dinosaur expert, Soviet-trained Zhao Xijin, came to the Victory Commune. He identified the fossil as belonging to a small dinosaur that roamed in groups about 145 million years ago. Thanks to the many well-preserved fossil specimens in Liaoning, scientists pieced together a rather complete picture of this dinosaur, Psittacosaurus. The abundance of fossil finds in Chaoyang ushered in a golden age of studying paleolithic birds and dinosaurs. Since the discovery of Archeopteryx - believed to be the ancestor of birds - in Germany in 1862, only six specimens have been found, while in Chaoyang hundreds and possibly thousands of early birds had been excavated. More than 20 kinds of birds and eight dinosaurs have been identified. From the mid-1990s, the pace of discovery and scientific inquiry quickened. A new generation of well-trained Chinese paleontologists and their international collaborators published research findings in academic journals which were picked up by the media. The fame of Chaoyang as a fossil treasure trove spread fast and attracted hordes of fossil diggers. A dozen or so quarries had been plundered. The landscape became deeply scored with gullies and pits. The predatory excavation led to loss of valuable scientific data as rare specimens were often unwittingly destroyed and some smuggled abroad. 'Fossil hunting requires no capital and some diggers got rich overnight,' Zhang said. A well-preserved paleolithic bird fossil could fetch 40,000 yuan (HK$37,600) from dealers, enough to build a house in Chaoyang. The same fossil could be sold for hundreds of thousands US dollars to museums and private collectors overseas. A 'composite' Archaeoraptor fossil specimen, which caused great embarrassment to the National Geographic, was sold for US$80,000 (HK$560,000). In Liaoning, fossil digging and trading are regulated by the land resources department, which focuses on the economic value of fossils as mineral resources. Although the 1982 Law on Cultural Relics specifies that fossils with scientific value will be protected like cultural relics, it is difficult to know what kind of new fossils should be protected before scientists determine the value. The loophole has encouraged wanton digging and smuggling. In 1998, the State Council established a nature preserve of fossils but policing the vast area was difficult. Zhang recalled spotting poachers working at night after harvest season before the ground froze. 'I saw piles of padded coats by the roadside. Over 100 men and women moved like ghosts in the dim light of kerosene lamps.' The poachers sank a well more than 10 metres deep and, after identifying the promising layer that might contain fossils, dug horizontally. 'The work was back-breaking and dangerous,' Zhang said. 'People got killed when the wall of the well collapsed.' Many farmers embellish the fossils in order to fetch better prices. Often they pulverise fossil fragments and shape missing features or join several unrelated fossil pieces together. Some forgeries are excellent.The National Geographic magazine got egg on its face when the specimen on which a 1999 cover story was based turned out to be a composite of the tail of a dinosaur glued to a bird. The Liaoning People's Congress also passed a law to protect the fossils, under which all the excavations must be sold only to the government, despite it not having enough funds. The 'July 18 case' galvanised the Ministry of Land and Resources to promulgate a regulation banning any private excavation of fossils. Violators will be fined up to 30,000 yuan. The Land Resources division of the Liaoning provincial government launched a crackdown on fossil trafficking in March. This has temporarily driven fossil digging underground. 'Diggers, traders and smugglers are taking a holiday for now,' Zhang said.