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