A 62-year-old Layton man is headed to federal prison for a massive Ponzi scheme based on phantom silver riches that fooled 568 investors out of $153 million.

Gaylen Dean Rust, owner of Rust Rare Coin, based in Salt Lake City, was sentenced Wednesday to 19 years behind bars on charges of wire and securities fraud and money laundering. In a plea bargain with the U.S. Attorney’s Office, Rust admitted running a “silver trading program” from 2008 until 2018.

“Gaylen Rust betrayed the trust of his hundreds of clients, many of them his own family, friends and members of his church. For years, he lived his life on their hard-earned money,” Special Agent in Charge Dennis Rice of the Salt Lake City FBI said in a U.S. Attorney’s Office news release.

Rice urged would-be investors to vet potential financial advisers before putting money into a venture. Utah has been fertile ground for affinity scams, in which perpetrators lull friends and fellow church members with false promises of big profits.

“Utah’s fraud problem is an embarrassment,” the U.S. Attorney’s Office said in a sentencing memorandum. “The Rust Rare Coin Ponzi scheme is another chapter in that regrettable, embarrassing story.”

Rust admitted to selling $225 million of fraudulent investments to people throughout the United States. He said he paid out money from later investors to earlier investors to create the impression that his phony silver venture was profitable and to keep the scam operating, a hallmark method of Ponzi schemes.

Prosecutors said Rust told investors the program involved the buying and selling of silver bullion, which was supposedly being stockpiled at Brinks Global Services in Salt Lake and Los Angeles. But he admitted in a plea bargain that little or no silver was stored with Brinks and that “no meaningful investor funds were ever used to purchase silver bullion during the scheme.”

According to the plea bargain, Rust poured nearly all of the investors’ funds into unrelated failing businesses, personal uses, and to making payments to earlier investors. He also opened three bank accounts in Salt Lake to launder $18 million of the stolen money.

“Rust also used investor funds to pay mistresses for their companionship and to buy expensive thoroughbred racehorses that were entered into the Kentucky Derby,” prosecutors said in a sentencing memorandum.

They said Rust went to a widow, just days after her husband died, and persuaded the woman and her son and daughter to invest their savings and inheritance in the silver scheme. Another victim said Rust stole savings meant to care for their father, an Alzheimer’s patient.

One couple, 71 and 63 years old, wrote a letter to the court urging the judge to impose a long sentence. They said Rust swindled them of $116,000. “We are just sick about this man, Gaylen, who we trusted our retirement money to,” the letter said.

Rust’s sentence, imposed by U.S. District Judge Ted Stewart, included an order that he repay $153 million to investors, although prosecutors said much of the money is gone. After serving the 19 years, Rust also will be on probation for three years.

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