SALT LAKE CITY — The owners of a well-known Utah rare coin business already in trouble with federal financial regulators now face criminal charges for allegedly running a $200 million silver trading scam.
A federal grand jury returned a six-count indictment Wednesday against Gaylen Dean Rust, 59, his wife, Denise Gunderson Rust, 59, both of Layton, and their son, Joshua Daniel Rust, 37, of Draper, in connection with an alleged Ponzi scheme.
All three are charged with wire fraud conspiracy and money laundering conspiracy. Gaylen Rust is also charged with two counts of securities fraud. Denise Rust and Joshua Rust are each charged with one count of money laundering.
Last November, the Securities and Exchange Commission, Commodity Futures Trading Commission and Utah Division of Securities filed a civil complaint against the Rusts and their company, Rust Rare Coin.
The government claimed the company had defrauded at least 500 investors nationwide of at least $200 million since 2008. The Rusts are accused of tricking people into believing they were pooling their money to buy and sell silver, but the funds were allegedly used to pay other investors.
U.S. District Judge Tena Campbell froze the company's assets last November.
Gaylen Rust owned and managed Rust Rare Coin Inc., R Legacy Entertainment LLC, R. Legacy Racing Inc., R Legacy Investments LLC, R Legacy Ranch, and Legacy Music Alliance. Denise Rust was listed as the secretary for Rust Rare Coin. Joshua Rust managed the coin shop from 2004 to November 15, 2018.
Gaylen Rust made generous donations to school music programs the Legacy Music Alliance. Some of the alleged fraud victims — inside and outside Utah — came to invest in the silver pool through their shared membership in The Church of Jesus Christ Latter-day Saints, according to investors who filed a lawsuit last year.
The indictment alleges that from around 1996 and through Nov. 15, 2018, the Rusts conspired to defraud investors and potential investors in the silver trading program.
According to the indictment, Gaylen Rust, who offered and sold investments in the program, made false and fraudulent statements about the investments to investors and potential investors in meetings, phone calls, mailings and emails.
Gaylen Rust was not licensed to sell securities, trade commodities or run a commodity pool, the indictment says.
The indictment alleges the Rusts failed to tell investors, among other things, that their money would be used for purposes other than to invest in silver and trading silver. Gaylen Rust also allegedly provided false accounting statements to investors that were not based on real silver trades.
The Rusts used investment money from later investors to pay the promised returns to earlier investors, creating the false impression that the silver trading program was profitable, the investments were safe and secure, and that returns were being generated, according to the indictment.
They made $150 million in Ponzi to investors, representing those payments as profits from the silver trading program, the indictment alleges.