SALT LAKE CITY — The Utah man who prosecutors and investors have accused of running a $200 million silver trading scheme to fund charitable causes and lure more victims, pleaded guilty in federal court Monday.
Gaylen D. Rust, 62, pleaded guilty to wire fraud, securities fraud and money laundering conspiracy. The plea agreement calls for prosecutors to recommend 19 years in prison.
Another count of securities fraud was dismissed as part of the agreement with prosecutors. Rust answered routine questions from U.S. Magistrate Judge Cecilia Romero. He was represented by public defenders.
Rust and his family operated Rust Rare Coin. According to civil and criminal court documents, beginning in at least 2008, Rust 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,” explained Alan Rosca, an attorney representing some of Rust’s investors.
“And it turned out that none of that was true,” Rosca said. "He was a fraud. It was all smoke and mirrors.”
Court records have placed the money Rust and his family solicited at $200 million. Some of the 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, is already serving 18 months after pleading guilty to wire fraud, though she appears to be have been released to a home confinement or halfway house. Someone with her name appeared in the list of Zoom call participants. She filed for divorce after the fraud was exposed.
The former couple’s son, Joshua D. Rust, 39, is awaiting trial on counts of money laundering and attempted conspiracy to commit fraud. He has pleaded not guilty. His trial is scheduled for April.
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. And there is a lawsuit against a bank accused of not doing enough to detect and stop the fraud.
“I think the receiver is doing a great job trying to locate money for the investors,” Rosca said, “but in terms of being able to pay everybody back everything that they lost, I’m not seeing it.”
Rust also agreed to pay $153 million in restitution to more than 500 victims, though it's unlikely he'll be able to pay.
Rust's sentencing is scheduled for March 8, 2022.