Utah rare-coin dealer indicted in alleged $200 million Ponzi scheme, with proceeds allegedly used to buy thoroughbred horses

(Chris Detrick | Tribune file photo) Gaylen Rust poses for a portrait at his home in Layton Wednesday May 22, 2013.

A grand jury has indicted a Utah rare-coin dealer on six felony counts related to money laundering after he allegedly defrauded investors in a $200 million Ponzi scheme.

Gaylen Dean Rust, 59, is charged in the federal indictment with running a fake silver trading program — called Rust Rare Coin Inc. — where more than 500 people were allegedly conned into investing in precious metals. Investigators said they found an additional $30 million more than the judge first estimated was laundered when he froze Rust’s accounts in November.

“[He] created the false impression that the silver trading program was profitable, that the investments were safe and secure, and that the promised returns were being generated,” the indictment read.

Rust’s wife, Denise Gunderson Rust, 59, and son, Joshua Daniel Rust, 37, also are named in the federal charges.

They all face counts of conspiring to commit wire fraud and money laundering. Rust is charged with an additional two counts of securities fraud. And his wife and son, who worked for the company, are indicted for money laundering, too.

The indictment alleges that from 1996 to November 2018, Rust conspired to defraud people by offering them stock in a silver trading program, using money from later individuals to pay back the promised return to early investors. The money was never used to purchase silver, though, according to the court documents, and there was never any silver placed in depositories.

Instead, the family spent the extra funds on thoroughbred horses, authorities say.

Additionally, Rust was not licensed to sell or trade commodities. The family is also accused of creating fake account statements.

Each family member could be sentenced to federal prison terms. The court docket does not yet show an attorney listed for any of them.

When the Securities and Exchange Commission filed a civil complaint in November, it accused Rust of defrauding people in Utah and 16 other states. Twenty investors who lost money also filed a lawsuit against Zions Bank, claiming bankers ignored red flags in the dealer’s deposits and withdrawals there.

In addition to his coin business, Russ also ran the Legacy Music Alliance charity, which supported art programs in Utah schools.