The fault is not in the materials.... it's how you handle them. Poorly graded fine sands are suitable for fill material, suitable for foundations and for embankment soils. If that were not so, we wouldn't have any buildings in the southeastern coastal plains. But we do. They perform quite well on these soils as long as you understand the effects of water and the needed confinement.
Your example, OG, appears to be an overzealous pump with no filtering to prevent removal of materials...thus the delta.
When we are dewatering a footing excavation, we require that pumping be done outside the footing from an adjacent sump. This allows the water to filter into the sump without disturbing the bearing soils of the footing. The same concept applies when you are trying to control groundwater under a building. It is imperative that the pumping process not remove material. This can be accomplished through a variety of preventive measures.
