Rust Rare Coin in Utah Accused of Running Silver Ponzi


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North Dakota

I don't know why people keep falling for these. If you don't have the PM under your own physical control (boating accidents aside) you don't own anything but paper even more worthless than the fiat currency we use to exchange republik kredits with.

Authorities say ponzi scheme at Rust Rare Coin in Utah took hundreds of victims for $170 million

"SALT LAKE CITY, Utah (KSTU) — Authorities have filed a civil enforcement action against Rust Rare Coin and its owner after they say a ponzi scheme defrauded hundreds of people out of $170 million over several years.

In a press release issued Friday morning, Gaylen Dean Rust and Rust Rare Coin, Inc. of Layton and Salt Lake City are accused of defrauding at least 200 people from Utah and at least 16 other states.

The scheme netted at least $170 million since 2013 and may have been operating since 2008. The press release states Rust attempted to solicit new customers in the scheme as recently as October 8 of this year.

“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, Director of Enforcement for the Commodity Futures Trading Commission. “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.”

A judge froze the assets involved Thursday.

The complaint alleges that Rust defrauded friends, customers and business associates through a ponzi scheme involving an alleged “Silver Pool”.

Investors were told they were buying into a share of a pool that purchased precious metals when prices were low and sold them when prices were high. Rust allegedly promised returns of 20 to 25 percent per year and provided false documentation to back up his claims.

Rust also told investors the Silver Pool had about $80 million worth of silver stockpiled at various locations.

Prosecutors claim Rust did not spend the money on silver but instead used that incoming money to pay off earlier investors in the ponzi scheme and for personal expenses.

At this point it does not appear any criminal charges have been filed, but state and federal authorities are pursuing civil remedies.

The action is being brought by the Commodity Futures Trading Commission and the Utah Department of Commerce, Division of Securities through its Attorney General."


Here's their website -

Hahahahahaha Just like Hans Tuulving. That guy got away with it for a long time too.
The "silver pool" described in OP is more akin to these bullion trading clubs/exchanges than a mail order dealer like Tulving (was). I don't really understand the allure of unallocated accounts anyway. If you are buying PMs for monetary/currency insurance, you want physical in hand (or allocated physical at a vault you trust). If you want to trade the PM prices, I would think ETFs would be a safer vehicle.
probably still a better bet than gold but I aint selling any gold to buy even more silver ...........
Update on story in the OP:
Owner of Rust Rare Coin Sentenced to 19 Years in Prison for Running Fraudulent Silver Trading Program
Tuesday, March 8, 2022
For Immediate Release
U.S. Attorney's Office, District of Utah

SALT LAKE CITY – Gaylen Dean Rust, 62, of Layton, was sentenced to 19 years in federal prison by a U.S. District Court Judge on Tuesday, after being convicted of conspiracy to commit wire fraud, conspiracy to commit money laundering, and securities fraud. Rust was ordered to pay over $153 million dollars to the 568 victims of his criminal scheme, and an order of forfeiture in the same amount was entered against Rust for all money and assets owned by Rust and traceable to the criminal scheme. Rust has been ordered to report to federal prison on Wednesday, March 9, 2022.

In the plea agreement with federal prosecutors, Rust admitted that he was the owner and operator of Rust Rare Coin, Inc. (RRC) in Utah, from 2002 until 2018, and that he had previously worked as the manager of the business. Rust admitted that beginning in 2008, he began a scheme to defraud investors by inducing them to invest in RRC's fraudulent “silver trading program.” However, Rust’s “silver trading program” operated as a Ponzi scheme. Rust admitted to selling investments in the fraudulent program to approximately 500 investors located throughout the United States in amounts totaling $225 million dollars. Rust admitted that he paid out money from later investors to earlier investors to create the impression that his “silver trading program” was profitable and to keep the scheme operating.

Rust carried out the fraudulent scheme by explaining to victims that RRC's silver trading program was a lucrative investment that involved the buying and selling of actual silver bullion; that 100% of investor funds would be used to buy actual silver; that all the silver bullion purchased would be stored at Brinks Global Services in Salt Lake City or Los Angeles; and, that RRC was storing almost $80 million dollars of silver bullion at Brinks.

Rust further told investors that all of the silver trades were conducted through an RRC account at HSBC Bank; that profit generated in trades would be used to repurchase a larger amount of silver at a lower price, thereby continually increasing the amount of silver for investors; and, that by using algorithms, the silver trading program had never experienced a losing month, much less a losing year, and that the worst year had generated a 12 percent return, and that the average rate of return was 20 percent to 25 percent per year.

However, Rust had little to no silver stored at Brinks; Rust had not stored silver bullion at Brinks since 2016, and no meaningful investor funds were ever used to purchase silver bullion during the scheme; RRC had no mechanism to generate meaningful returns on silver trading; and HSBC Bank had never maintained an account on behalf of RRC. Rust diverted nearly all investor funds to other businesses, personal uses, and to making payments to previous investors. Rust also admitted that in January of 2016, he opened three personal accounts at Zions bank and used these accounts to launder approximately $18 million dollars from the fraudulent trading scheme.

“We hope that a 19-year prison sentence and an order to pay over $153 million dollars sends a message to the community that the U.S. Attorney’s Office is committed to prosecuting financial crimes,” said United States Attorney Andrea T. Martinez. “Those who defraud their family, friends, and associates out of their hard-earned savings will be held accountable. Unfortunately, the reality of these cases is that victims’ money is nearly always spent by the perpetrator of the crime or paid out to other victims. This should be a stark reminder to all Utahns that it is imperative to vet your financial advisor or anyone who attempts to persuade you to invest in their business or financial dealings.”

“Gaylen Rust betrayed the trust of his hundreds of clients, many of them his own family, friends and members of his church. For years, he lived his life on their hard-earned money,” said Special Agent in Charge Dennis Rice of the Salt Lake City FBI. “Mr. Rust’s deceit has now caught up to him and he will face the consequences for his fraudulent actions. The FBI encourages anyone looking to invest to do their due diligence and be wary of promises of investment returns that seem too good to be true.”

“IRS-Criminal Investigation specializes in finding and exposing financial fraud. Our agents working with our law enforcement partners continually strive to put a stop to this kind of fraud and send a message to those who may be considering defrauding others,” said IRS-Criminal Investigation Special Agent in Charge Albert Childress. “This case was a significant fraud in the community and left an impact affecting hundreds of lives. Through the efforts of our agents combined with those of our law enforcement partners, we have been able to bring some measure of justice.”

“The actions of Mr. Rust represent some of the biggest consumer harm we’ve seen,” said Department of Commerce Executive Director Margaret Busse. “Ponzi schemes absolutely destroy trust in the investment industry. Without trust, individuals aren’t willing to participate in future opportunities and that affects our entire economy.”

"We're proud to have been able to partner with the U.S. Attorney's office and other agencies in uncovering this awful scam,” said Division of Securities Director Jason Sterzer. “The most common sign that an investment is a scam is an offer of high returns with little or no risk. Education remains the best defense against securities fraud.

Assistant U.S. Attorneys Jacob Strain, Carl LeSueur, and Tyler Murray in Salt Lake City prosecuted the case. Securities Investigator Elizabeth Blaylock of the Utah Division of Securities and Special Agents Jason Henrikson and James Malpede (retired) of the FBI investigated the case along with agents on the FBI’s White Collar Task Force, including Special Agent Jeff Kirkwood of IRS-Criminal Investigation. Related civil cases were filed by the Securities Exchange Commission, the Commodity Futures Trading Commission, and the Utah Attorney General’s Office.

Updated March 8, 2022

I read the first part, but did not finish. It looks like simple fraud.
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