If you’ve seen links going around about a number of Thoroughbreds going up for internet auction, wonder no more — they’re the equine bystanders of a longstanding fraudulent scheme called “Silver Pool.”
Wading through the formal complaint by the Commodity Futures Trading Commission and the State of Utah Division of Securities, filed against Rust Rare Coin, Inc (RRC) and Gaylean Dean Rust, it’s easy to get lost in the depth and breadth of this long-running scam. In reality, it’s a shockingly simple con that defrauded investors of over $170 million between May 2013 and August 2018 — though the scheme ran at least as early as 2008.
Rust and RRC managed to convince over 200 investors that they were pooling money in order to purchase silver as a commodity, called “Silver Pool.” Silver Pool would sell silver as market prices rose and purchase it as the market fell, promising returns from 20-25%, sometimes ranging as high as 40% in good years. Account statements backed up the claims, and investors got on board.
Unfortunately for them, Silver Pool was a sham. The funds were used not for purchasing silver, but for such applications as paying the mortgage on a Rust family member’s home, R. Legacy Entertainment (including a music recording studio, video production business and event management) and R. Legacy Racing, a Thoroughbred racing and breeding enterprise. The method of paying out to investors classified Silver Pool as a Ponzi scheme.
The court-mandated auction of the 70 horses owned by R. Legacy Racing will start on February 22 and close on February 25; the catalog is now available to view online. The horses include a breeding stallion (a Grade 3 winning son of Scat Daddy, Finale), broodmares, yearlings and two-year-olds. Many of the mares are well-bred by Thoroughbred breeding standards.
Flashpoint Bloodstock, LLC, which manages the online horse auction, has managed many Internet sales as well as live auctions. One of its most infamous recent internet auctions was the 2012 U.S. Marshalls Service Auction of Assets of Rita Crundwell, who embezzled from the city in which she was comptroller in order to fund her lavish Quarter horse breeding and showing empire.
We might all joke that the only way to make a small fortune in the horse business is to start with a large one, but please — amass your large fortune responsibly. Go riding.
Further reading: Online New Mexico-Based Dispersal Auction Takes Place Feb. 22-25