The Securities and Exchange Commission today announced charges against a Utah-based company and its principal in an ongoing investment scheme that has defrauded hundreds of investors in several states.

The SEC alleges that Gaylen D. Rust and his company Rust Rare Coin, Inc. (RRC) are engaged in an ongoing investment scheme involving a purported silver trading program. Through this scheme, Rust and RRC have allegedly raised over $85 million since January 2017. According to the SEC, Rust told investors that he has access to a trading algorithm that enables him to capitalize on fluctuations in the price of silver bullion and thereby make profitable trades, regardless of the actual price of silver. He also told investors that he stores millions of tons of physical silver on behalf of investors at Brink’s Global Services U.S.A. Inc. Rust claimed that his silver trading program results in average annual returns of 20% to 25%, with some years experiencing significantly higher returns. Rust also told investors that his silver trading program has almost no risk. The SEC alleges that, contrary to these representations, Rust has been using new investor funds to make payments to earlier investors and to pay for his personal expenses and the business expenses of other entities he controls.

The SEC’s complaint, filed in federal district court in Salt Lake City, Utah, charges Rust and RRC with violating the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act, Section10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Under the direction of Regional Director Daniel Wadley, the SEC’s investigation was conducted by Alison Okinaka, Scott Frost, and Laurie Abbott, and litigation will be led by David Whipple and Amy Oliver. The SEC wishes to thank the Utah Division of Securities, the Utah Attorney General’s Office, the U.S. Commodities Futures Trading Commission, the U.S. Attorney’s Office for the District of Utah, and the Federal Bureau of Investigation for their assistance in this matter.