Salt Lake City, Utah – Gaylen Dean Rust, 53, of Layton, Utah, is accused of orchestrating a $170 million Ponzi scheme involving the fraudulent sale of precious metals. The Commodity Futures Trading Commission (CFTC) and the Utah Department of Commerce jointly filed a civil enforcement action against Rust and his company, Rust Rare Coin, Inc. (RRC), on November 16, 2018, in the U.S. District Court for the District of Utah.
The complaint alleges that Rust and RRC defrauded at least 200 individuals from Utah and at least 16 other states since May 2013. The scheme, known as the “Silver Pool,” purported to pool investor money to buy and sell silver, promising returns of 20 to 25 percent annually, and sometimes as high as 40 percent or more. However, authorities claim the Silver Pool was a sham, with no legitimate trading activity taking place.
According to the CFTC, Rust falsely told investors that profits were generated through strategic silver trading, providing fabricated account statements to support the illusion. In the first eight months of 2018 alone, Rust and RRC allegedly received at least $42 million from investors and continued soliciting new investments as recently as October 8, 2018.
U.S. District Court Judge Tena Campbell issued a restraining order on November 15, 2018, freezing the assets of Rust, RRC, and related entities. The court also appointed Jonathan O. Hafes as a temporary receiver to take control of the company and its assets.
“As alleged, for at least a decade, the Defendants defrauded their friends, customers, and business associates out of more than $170 million,” stated James McDonald, CFTC Director of Enforcement. “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.”
The investigation revealed that Rust and RRC began the alleged fraudulent activity as early as 2008. The CFTC is seeking full restitution for the victims, as well as civil monetary penalties and a permanent injunction against future violations of the Commodity Exchange Act.
Source: CFTC.gov
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