CFTC revises estimate of investor losses caused by precious metals Ponzi scheme

Maria Nikolova

The losses are now estimated to top $200 million, compared to the original estimate of $170 million.

The United States Commodity Futures Trading Commission (CFTC) and the Utah Department of Commerce, Division of Securities, today announce that they have amended their complaint against the defendants in a precious metals Ponzi fraud case.

The amended complaint was filed earlier in December. Inter alia, it revises the estimates of losses caused by the participants in the fraudulent scheme. The amended complaint alleges that Denise Gunderson Rust and Joshua Daniel Rust actively participated and aided and abetted, in a precious metals Ponzi scheme with defendants Gaylen Dean Rust and Rust Rare Coin, Inc. (RRC).

Through this scheme, Gaylen Rust and RRC fraudulently solicited investments from investors since May 2013 for the purported purpose of pooling their money to purchase silver, a commodity in interstate commerce (Silver Pool).

Specifically, the Amended Complaint, alleges that Denise Rust and Joshua Rust knew the Silver Pool was a fraudulent scheme. Denise Rust and Joshua Rust signed checks issued to Silver Pool investors knowing that these checks were Ponzi payments involving money contributed by other investors. Denise Rust and Joshua Rust also transferred Silver Pool investor funds from bank accounts used by Gaylen Rust and RRC to one or more of the relief defendants or to help fund RRC’s other business activities.

The Amended Complaint also alleges that the Silver Pool fraud is larger than previously alleged and involves more than 430 individuals and at least $200 million in investor funds. This compares to estimates in the original complaint indicating that the defendants defrauded at least 200 individuals and fraudulently obtained more than $170 million from investors.

The CFTC and State of Utah filed the civil enforcement action against Gaylen Rust and RRC and several relief defendants on November 13, 2018 in the U.S. District Court for the District of Utah, Central Division. At that time, Denise Rust and Joshua Rust were named as relief defendants because they, among others, were alleged to have received Silver Pool investor funds to which they had no legitimate claim. On November 15, 2018, the Court entered a restraining order freezing the assets of the defendants and the relief defendants and permitting the CFTC and the State of Utah to inspect all relevant records of the defendants and the relief defendants.

The Court also appointed Jonathan Hafen of the law firm Parr Brown Gee & Loveless as receiver for the assets of defendants, relief defendants, and their affiliates. The receiver will establish a claims process through which Silver Pool investors will be able to submit information about claims for damages. The receiver will use the contact information obtained from Silver Pool investors to provide notice of that process. Silver Pool investors may submit their information to the receiver via: https://rustrarecoinreceiver.com/

The CFTC and the State of Utah seek disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, CFTC Regulations, and Utah securities laws, as charged.

Read this next

Digital Assets

Bybit under pressure from Ontario regulator after being forced out of the UK

Bybit has recently been forced to close its operations in the United Kingdom following the ban on Crypto CFD products earlier this year. 

Digital Assets

XRP, BTC, ETH, ADA, DOGE rebound despite being ‘rat poison’ to nearly half of surveyed by JP Morgan

While JP Morgan and its partners are institutionally staying back from the crypto markets, the investment bank is very much into blockchain technology.

Industry News

FTX and MLB partner together for brand awareness and innovation

FTX, one of the largest crypto exchanges in the world that has been on an expansion spree, has announced that it has tied up with Major League Baseball (MLB) in the US for brand awareness.

Digital Assets

Polygon (MATIC) and Aave grant recipient tie up to incentivise new users with rewards

Polygon (MATIC), a Layer 2 solution on Ethereum, has tied up with Aave grant recipient RabbitHole to incentivise new users for making deposits into Polygon.

Digital Assets

John McAfee, software pioneer and a big crypto supporter, dies in Spanish jail

John McAfee, the founder of the anti-virus software which was a household name a couple of decades back and a huge crypto enthusiast, has died in a Spanish jail on the same day that a court allowed him to be extradited to the US.

Industry News

TraderEvolution Global partners with TradingView: Brokers to enjoy direct access

The multi-asset platform is now connected to TradingView’s network of venues, liquidity pools, and asset classes 

Digital Assets

Visa and Paypal invest heavily into $300 million blockchain fund

Visa and Paypal, behemoths that have been known supporters of the blockchain domain, have invested in Fund V of Blockchain Capital.

Opinion

FX Trading is a business: If you want results, act like a professional. Go Prime of Prime!

Trading the markets is a business. It is no wonder that the ones that see it as gambling are willing to trade against the house, but retail traders that want results, they must act like professionals.

Digital Assets

Celsius acquires MVP workshop as it looks to build more on crypto

Celsius, one of the largest cryptocurrency lending and rewards earning platforms, has announced that it has acquired the development division of MVP Workshop as it looks to expand its development team.