SALT LAKE CITY — Calling it one of the largest Ponzi schemes in Utah history, a federal judge on Tuesday sentenced the mastermind behind the scam to 19 years in prison.
Gaylen D. Rust, 62, must surrender Wednesday to U.S. marshals. He pleaded guilty in December to three charges from running a $200 million silver trading scheme — two counts of fraud and one money laundering count.
On Tuesday, Rust apologized to his victims and his family.
According to civil and criminal court documents, beginning in at least 2008, Rust, who operated Rust Rare Coin with his family, induced investors to put money toward silver trading.
“Their money was going to be used by buy physical silver that was going to be stored at the warehouse,” Alan Rosca, an attorney representing some of Rust’s investors, told FOX 13 News in December.
“And it turned out that none of that was true,” Rosca said.” He was a fraud. It was all smoke and mirrors.”
Rosca spoke at Tuesday’s hearing, describing victims — 568 of them according to court records — now unable to retire; some are unable to make mortgage payments. U.S. District Court Judge Ted Stewart noted those impacts on victims in issuing Rust the 19-year sentence — the same amount requested by prosecutors.
Jacob Strain, the assistant U.S. attorney who prosecuted Rust, said 19 years is the longest fraud sentence ever issued by a judge in Utah's federal district.
“There was no silver," Strain said. "There was no trading, and there was no program. It was just taking money in and paying money out to investors to get the appearance of profitability.”
Stewart also ordered Rust to repay $153 million, though it seems unlikely he’ll be able to pay even a fraction of that.
Bryce Abplanalp, 35, and his father together lost about $150,000 after he invested when co-workers told him about the Rust silver trading program.
"I wish [the sentence] were longer, but I also realize that him spending time in jail doesn’t get anybody their money back.”said Abplanalp, who expects the receiver to pay him "pennies on the dollar."
Some of the fraud proceeds were diverted to a $2 million home in Layton, and other businesses, including racehorses, according to court records. The Rust family also sent money to music charities in Utah.
Rust’s now ex-wife, Denise Gunderson Rust, 62, has already served 18 months after pleading guilty to wire fraud. She filed for divorce after the fraud was exposed.
The former couple’s son, Joshua D. Rust, 39, pleaded guilty Tuesday — minutes after his father’s sentence — to one count of "misprision of a felony."
A receiver is liquidating the Rusts’ assets and pursuing money they donated to Utah State University and tithed to The Church of Jesus Christ of Latter-day Saints. There is also a lawsuit against a bank accused of not doing enough to detect and stop the fraud.