Rust Rare Coin owner admits $ 200 million Ponzi scheme in federal court
SALT LAKE CITY – The second of three Utah rare coin business owners indicted by the federal government over a Salt Lake City-based ponzi program pleaded guilty.
Gaylen Dean Rust, 62, pleaded guilty Monday to wire fraud, money laundering and securities fraud, according to court records.
Rust and two others – his current ex-wife Denise Rust and son Joshua Rust – were charged with multiple fraud and money laundering allegations in May 2019 after federal investigators said the three were conspiring to attract investors in a silver-trading Ponzi scheme to cheat.
The three operated Rust Rare Coin, then a well-known rare coin company based in Salt Lake City. The company has since closed because its business license expired in 2020, according to the Utah Division of Corporations and Commercial Code.
In addition to the coin business, Gaylen Rust owned and managed R Legacy Entertainment LLC, R. Legacy Racing Inc., R Legacy Investments LLC, R Legacy Ranch, and Legacy Music Alliance. He made generous donations to school music programs through the Legacy Music Alliance.
Some of the alleged victims of fraud – inside and outside Utah – came to invest in the silver pool through their joint membership in The Church of Jesus Christ of Latter-day Saints, according to investors who filed a lawsuit.
Indictment documents allege the Rusts sold investments to over 500 victims in 16 states and raised over $ 200 million in a program that began in 1996 and lasted through November 2018.
Federal prosecutors said the three told investors their money would be used to buy and trade silver, with most of the money instead going to other companies, their personal accounts, or other investors. Although Gaylen Rust accepted money to buy silver, she was not granted a license to sell any securities or trade in commodities.
The Rusts used money from new investors to pay returns to previous investors in what is a Ponzi scheme, the fee documents say. The alleged plans also resulted in a civil lawsuit filed by the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Utah Division of Securities against the Rusts. The plan also prompted investors to sue Zions Bank, claiming the bank supported the fraudulent deal.
Denise Rust pleaded guilty to money laundering on June 25, 2020. In September 2020, she was sentenced to 18 months in prison, followed by three years of supervised release. On Monday, the case against Joshua Rust was still pending in federal court.
Gaylen Rust was neither in police custody nor on remand on Monday. His next court date will be for his judgment hearing, due to take place on March 8, 2022.
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