The silver trade is alive, but 300 investors may not feel so well. The SEC filed charges in November against Gaylen Dean Rust and Rust Rare Coin of Utah. During a 20-month period in 2017 and 2018, Rust secured over $85 million from investors in a silver trading scheme. The details of this Ponzi scheme will give silver tarnish new meaning.

The Family Business

Rust’s father started a rare coin shop in 1966. Gaylen Rust took over the business, and now his son manages the retail shop and website. The business sells rare coins, collectible paper money and precious metal bullion, including early Mormon currency. Family businesses often struggle when handed down a generation. And, sometimes each generation builds on the prior’s successes, adding new products, services or divisions. Rust did bring a whole new division to the family business—a silver trading Ponzi scheme.

The Silver Scam Misrepresentations

Rust must be a heck of a salesman to get 300 people to invest $85 million in under two years. Here are just a few of the misrepresentations Rust is alleged to have shared with potential investors.  See SEC Complaint.

  • Rust traded only physical silver, not silver futures.
  • Rust traded only 50% of the silver purchased on behalf of an investor. The balance was stored with Brink’s Global Services USA in Salt Lake City or Los Angeles.
  • As of fall 2018, Rust told investors he had $80 million of silver stored with Brink’s.
  • Rust utilized an HSBC trading algorithm thereby never experiencing even a month of losses. He even told one investor he earned 12% in his worst year, and normally averaged a 20 to 25% return.

The Silver Scam Facts

According to the SEC Complaint,“Investor funds were not used to buy silver in the trading program.” Rust used the $85.7 million to fund his other businesses, for personal use and to pay prior investors. Most of the investors’ money was disbursed as follows:

  • $70 million was paid to prior investors.
  • Almost $2.7 million was withdrawn in cash.
  • Over $1.1 million was used in Rust’s horse racing entity, R Legacy Racing.
  • $9 million was transferred to another of Rust’s businesses involved in music production, R Legacy Entertainment
  • Another $2 million was transferred to R Legacy Investment.
  • No silver was stored at Brink’s.

Rust Rare Coin Silver Scam – Conclusion

Rust’s family name will forever be tarnished. And the once legitimate coin business may never recover. As for Rust’s other commercial businesses, can you imagine what commercial litigation lurks in their future?  How far a stretch would it be to find future commercial lawsuits claiming deceptive trade practices and breach of contract?

When it comes to investments and commercial transactions, you can never be too careful. Whether you are investing in a new business, embarking on a complex business transaction, or investing in real estate, we hope you earn great rewards. And, if you find yourself in need of commercial lawyer or a breach of contract attorney, we are ready to put our decades of winning experience to work for you.

Mark Alexander
5080 Spectrum, Suite 850E
Addison, Texas  75001
Ph: 972.544.6968
Fax: 972.421.1500


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Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed…

Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed to practice law by the Supreme Courts of the States of Texas (1985) and Michigan (1988), and holds licenses before the following courts: Supreme Court of Texas; Supreme Court of Michigan; United States Court of Appeals for the Fifth and Sixth Circuits; United States District Courts for the Northern, Southern, and Western Districts of Texas; and the Eastern and Western Districts of Michigan. In addition he has been admitted in several other Federal and State Courts to represent Texas clients, who have been engaged in significant litigation in those jurisdictions.

Courts have appointed Mr. Alexander to serve as a receiver, and facilitator in complex litigation lawsuits. Additionally he has been a frequent lecturer for organizations on a variety of business law matters.  Mr. Alexander has also served as an Adjunct Professor of Business Law at Henry Ford College in Dearborn, Michigan. Significantly, Mr. Alexander is AV-rated by Martindale-Hubbell, the highest rating an attorney can receive.

Additionally, due to the complex nature of its practice, the Firm has an on-going relationship with a legal group that provides litigation support services. This group is comprised of a team of attorneys, whose combined capabilities allow the group to provide nearly 24-hour coverage at crucial times for any case. This arrangement is but one example of the innovative, cutting-edge approach that the Firm provides to its clients in order to improve representation at reduced legal fees.