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Utah man, company charged with taking $170M from hundreds of people in ponzi scheme

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A Utah man and his company are accused of fraudulently obtaining more than $170 million from at least 200 people since May 2013 in a precious metals ponzi scheme. (Photo: KUTV)

(KUTV) -- A Utah man and his company are accused of fraudulently obtaining more than $170 million from at least 200 people since May 2013 in a precious metals ponzi scheme.

Gaylen Dead Rust, of Layton, Utah, and Rust Rare Coin Inc., of Salt Lake City, have been charged in the case, according to a press release.

The victims of the ponzi scheme are from Utah and at least 16 people are from other U.S. states.

The Commodity Futures Trading Commission (CFTC) and the Utah Department of Commerce, Division of Securities have filed a civil enforcement action in the U.S. District Court for the District of Utah, Central Division through its Attorney General. The Director of Enforcement James McDonald commented in a press release saying,

“As alleged, for at least a decade, the Defendants defrauded their friends, customers, and business associates out of more than $170 million. The Defendants allegedly concealed their fraud with false account statements and Ponzi payments; however, their scheme was brought to light through the combined efforts of the CFTC and our law enforcement partners. This is yet another example of the CFTC’s commitment to coordinate with our law enforcement partners both to protect our markets from fraud and to ensure that wrongdoers are held accountable. I’m grateful to the Utah Department of Commerce, Division of Securities and Utah's Attorney General and their staffs for their assistance in this matter.

According to the complaint, the defendants' fraud is ongoing.

During the first eight months of 2018, the defendants received at least $42 million from investors in a pool that purportedly bought and sold silver, a press release stated.

Rust and his company also tried to recruit new investors as recently as October 8.

Based on the evidence provided in the complaint, the Honorable Tena Campbell, a U.S. District Court Judge for the District of Utah, entered a restraining order to freeze to the assets of the defendants. Campbell also permitted the CFTC and the state of Utah to inspect all records of the defendants and the relief defendants.

The complaint states that the defendants starting tricking investors into believing that the defendants were pooling money for the purpose of entering into contracts of sale for silver, a commodity in interstate commerce, a press release stated.

The defendants allegedly told the investors that they would buy and sell silver as the market prices fell in order to make a big profit.

The idea, known as the Silver Pool, was a scam, the complaint stated. Investors and potential investors were told that the Silver Pool possessed approximately $77 to $80 million of silver. The money investors gave to Rust, he used for personal and company expenses and to make payments "in the manner of a ponzi scheme."

During the litigation process, the CFTC and Utah will seek disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, CFTC Regulations and Utah securities laws, as charged, a press release stated.


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