Parr Brown Gee & Loveless today announced that shareholder Jonathan O. Hafen, the Court-appointed Receiver in the Rust Rare Coin Ponzi scheme, has made three initial distributions to victims totaling $23,273,521.88.
For well over a decade, Gaylen Rust defrauded hundreds of victims by falsely claiming that he was operating a lucrative silver bullion trading program.
Rust used the highly regarded Salt Lake City coin shop started by his father as a front for the fraud. Rust told prospective investors that all of the silver trades were conducted through a Rust Rare Coin account at HSBC Bank and that profits generated in trades would be used to repurchase ever larger amounts of silver at a lower price.
However, no meaningful investor funds were ever used to purchase silver bullion. Instead, Rust diverted nearly all investor funds to other businesses, for personal use, and to make payments to previous investors to hide his fraud.
Hundreds of millions of dollars ran through the Ponzi scheme over time. Rust eventually pled guilty to conspiracy to commit wire fraud, conspiracy to commit money laundering, and securities fraud. He is currently serving a sentence of nineteen years in federal prison.
“This kind of fraud will not be tolerated in Utah. Not only does it destroy people’s financial security, it destroys trust in our economy,” said Margaret Busse, Executive Director of the Utah Department of Commerce.
“We are grateful that the investors will be receiving restitution. The large-scale distribution is a silver lining of our enforcement efforts to put a stop to Utah’s largest Ponzi scheme. It’s a chilling example of why it’s crucial to check before investing,” said Jason Sterzer, Director of the Utah Division of Securities. “We are grateful for the collaborative partnerships with the CFTC, the SEC, the DOJ, and the Utah Attorney General’s Office, that have resulted in returning this money to the investors.”
Regarding the recent distributions, Hafen remarked that “after years of collective effort by many, I am pleased to announce that we recently distributed more than $23 million to victims of one of the largest Ponzi schemes in our nation’s history. I would like to thank those from the Commodity Futures Trading Commission, the Utah Department of Commerce, and the Utah Division of Securities for their hard work in bringing this scam to light and in working with me and my team in successfully recovering tens of millions of dollars in stolen funds.”
“While a tragic situation with hundreds of victims, each with a heart-breaking story, this case is a tremendous example of federal and state government agencies, the Federal District Court, private law firms and experts seamlessly working together to help those in need,” Hafen continued. “I also appreciate the excellent work of my legal counsel at Parr Brown, including Joe Covey, Jeff Balls, Claire McGuire and others, along with the meticulous efforts of the forensic accounting experts at BRG, especially Ray Strong and Jeff Shaw. This has been an incredibly complicated case, and the victims and I have been well-served by these professionals, who care deeply both about the quality of their work and about successfully assisting the victims in putting their financial lives back together.”
Mr. Hafen anticipates making additional distributions to victims in the coming months as pending litigation and remaining disputed claims are resolved.
About Parr Brown Gee & Loveless
Parr Brown Gee & Loveless is a commercial law firm based in Salt Lake City, Utah. Founded in 1975, Parr Brown attorneys assist corporate clients and individuals with a wide range of transactional, litigation, and regulatory matters on a local, regional, national, and international basis. For more information, visit www.parrbrown.com.
About The Commodity Futures Trading Commission
The Commodity Futures Trading Commission is a federal agency that oversees the U.S. derivatives markets. Its mission is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation. The CFTC represents the global standard for sound derivatives regulation. For more information, visit www.CFTC.gov.
About The Utah Department of Commerce
The Utah Department of Commerce is the licensing and registration agency for Utah’s professional and business community. It provides oversight of business registrations, trademarks, Uniform Commercial Code filings, occupational and professional licensing, consumer protection, public utilities, securities, real estate, and residential mortgage lending. The Department of Commerce responds to consumer complaints within our areas of jurisdiction. For more information, visit www.commerce.utah.gov.
About the Utah Division of Securities
The Utah Division of Securities (a Division of the Utah Department of Commerce) is the state agency responsible for regulating the securities (investment) industry in the state and enforcing Utah’s securities laws. The Division seeks to create a level playing field in the investment industry and ensure minimum standards of competence, training, and fair-dealing by issuing licenses to broker-dealers and investment advisers and all of their agents and representatives that do business in the state. In addition to regulating the securities industry, the Division’s mission includes a mandate to help educate and protect Utah’s investors For more information, visit www.utah.securities.gov.
About Berkeley Research Group
Berkeley Research Group, LLC (BRG) is a global consulting firm that helps leading organizations advance in three key areas: disputes and investigations, corporate finance, and performance improvement and advisory. Headquartered in California with offices around the world, BRG is an integrated group of experts, industry leaders, academics, data scientists, and professionals working across borders and disciplines. For more information, visit www.thinkbrg.com.