SALT LAKE CITY — One member of a Utah family that ran a well-known rare coin business accused of running a $200 million silver trading scam has pleaded guilty to money laundering in federal court.
Denise Gunderson Rust, 60, of Layton, admitted to transferring $12,000 from a bank account in Utah, where investor money was pooled, to her daughter in Alaska. The payment was unrelated to the silver trading program, according to federal authorities.
“Denise Rust participated in one of largest and most financially destructive frauds Utah has ever seen,” U.S. Attorney John W. Huber said in a statement. “We remain committed to seek justice for the nearly 700 victims who have suffered catastrophic economic consequences from this fraud.”
A federal grand jury returned an indictment last year against Gaylen Rust, 59, his wife, Denise Rust, and their son, Joshua Rust, 37, of Draper, in connection with an alleged Ponzi scheme.
All three were charged with wire fraud and money laundering conspiracy. Gaylen Rust is also charged with two counts of securities fraud. Denise Rust and Joshua Rust were each charged with one count of money laundering.
Gaylen Rust owned and managed Rust Rare Coin Inc., R Legacy Entertainment LLC, R. Legacy Racing Inc., R Legacy Investments LLC, R Legacy Ranch, and Legacy Music Alliance. Denise Rust was listed as the secretary for Rust Rare Coin. Joshua Rust managed the coin shop from 2004 to 2018.
Federal prosecutors say the company defrauded at least 700 investors nationwide of at least $200 million. The Rusts are accused of tricking people into believing they were pooling their money to buy and sell silver bullion, but the funds were allegedly used to pay other investors.
Denise Rust admitted that she was aware that Gaylen Rust had misrepresented to investors that their money would be used to buy and trade silver.
“Instead of doing the right thing, Denise Rust helped perpetuate a multimillion dollar Ponzi scheme that duped investors for more than 20 years,” said Special Agent in Charge Paul Haertel of the FBI’s Salt Lake City office. “This case shows just how convincing fraudsters can be.”
Gaylen Rust made generous donations to school music programs 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’ statements in a civil lawsuit filed against Zions Bank in 2019.
Investors claim in the suit that the bank knew money being deposited in and withdrawn from Gaylen Rust’s account were not being used for silver trading but did nothing about it, thereby perpetuating the Ponzi scheme.
In exchange for pleading to one count of money laundering, prosecutors dropped the wire fraud and money laundering conspiracy charges against Denise Rust. The plea deal includes an agreement that the court will impose a sentence of between five years probation and 18 months in prison. She also agreed to pay $1.7 million in restitution.
The criminal cases against Gaylen Rust and Joshua Rust are pending.
The Securities and Exchange Commission, Commodity Futures Trading Commission and Utah Division of Securities filed a civil complaint against the Rusts and Rust Rare Coin in 2018. The case is on hold until the criminal case is resolved.