SALT LAKE CITY — The second of three owners of a Utah rare coins business federally indicted in a Salt Lake City-based Ponzi scheme has 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 now ex-wife Denise Rust and son Joshua Rust — were indicted in May 2019 on multiple fraud and money laundering charges after federal investigators say the three conspired to defraud investors in a silver trading Ponzi scheme.
The three operated Rust Rare Coin, then a well-known rare coin business based in Salt Lake City. The business has since closed, as 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 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 in the case.
Charging documents allege that the Rusts sold investments to over 500 victims in 16 states and collected over $200 million in a scheme that began in 1996 and lasted until November 2018.
Federal prosecutors say the three told investors their money would be used to buy and trade silver, when instead most of the money went into other businesses, their personal accounts or to other investors. Despite taking money for silver purchases, Gaylen Rust was not licensed to sell securities or trade commodities.
The Rusts used money from new investors to pay returns to earlier investors, which is a Ponzi scheme, charging documents say. The alleged schemes also prompted a civil lawsuit filed by the Securities and Exchange Commission, Commodity Futures Trading Commission and Utah Division of Securities against the Rusts. The scheme also prompted investors to sue Zions Bank, claiming the bank aided the fraudulent business.
On June 25, 2020, Denise Rust pleaded guilty to money laundering. In September 2020, she was sentenced to serve 18 months in prison, followed by three years of supervised release. As of Monday, the case against Joshua Rust was still ongoing in federal court.
Gaylen Rust was not in police or jail custody as of Monday. His next court appearance will be for his sentencing hearing, which is slated to take place on March 8, 2022.