Hundreds of Utahns and others across the country put millions into a silver Ponzi scheme thinking they were making smart investments.
They later learned the man they trusted was using their money to repay other investors or for purposes unrelated to what he pitched them.
In 2019, Gaylen Rust of Layton was indicted for connections with an alleged scheme. In 2022, he was sentenced to 19 years in federal prison. The Layton man owned a rare coin shop in Salt Lake City, and the U.S. Attorney’s office in Utah says he advertised his scheme as an investment opportunity through his business.
Attorney Jonathan Hafen was appointed as the receiver, to try to recover the money the fraudulent coin-shop owner took from people. Hafen estimated investors’ losses were around $125 million.
On Monday, Hafen’s firm announced his latest distribution of $5.9 million to victims. It brings the total recovered amount to just shy of $30 million.
Using a court-approved method of distributing lost funds that pay people back at a relatively even percentage, he said he’s been able to recover 25-30% of the losses.
“I would say that being able to recover this much money with this type of a Ponzi scheme is the exception rather than the rule,” he told The Salt Lake Tribune. “If you look at most of Utah’s Ponzi schemes and other Ponzi schemes around the country, the likelihood of receiving a significant percentage back to the defrauded investors is low.”
He said finding and recovering the money is a “complicated, arduous, time-consuming task.”
In some cases, he said Rust would use incoming money to pay tithing to The Church of Jesus Christ of Latter-day Saints for another person who had bought into his scheme, and the individual thought they had a lot of money in their account.
Another source of the funds came from investors that Rust paid significant returns, with claims that the investment had paid off.
“We’ve needed to go back to those investors and request that they pay back the money over 100 cents on the dollar to be provided to other victims,” Hafen said.
He hopes to make at least one more distribution payment to victims of Gaylen’s scheme.
“We have money that we anticipate arriving,” he said. “We really wanted to get a distribution out by the end of the year.”
