A federal judge has frozen the assets of a Utah rare-coin dealer after state officials accused the business of defrauding hundreds of people in a precious-metals Ponzi scheme.

A civil complaint was filed Thursday by the Securities and Exchange Commission against Gaylen Dean Rust and his company, Rust Rare Coin Inc.

The Utah Department of Commerce said in a Friday news release that Rust had fraudulently obtained more than $170 million from people in Utah and 16 other states in a scheme involving silver.

The complaint alleges that for more than 10 years, Rust “tricked” investors who believed they were pooling their money so Rust and his company would sell silver held in a pool as market prices rose, and buy silver for the pool when prices fell. Investors were told this would lead to “extraordinarily high profits.”

It was a sham, authorities say.

Rust told investors the silver was kept at a depository in Salt Lake City or Los Angeles — even though the company never purchased or stored anything of that value at those locations.

The investor money was not used to buy silver, either.

“Instead, the defendants misappropriated investor funds,” the news release states, “and used these funds to make payments to other investors in the manner of a Ponzi scheme, transfer money to other companies owned by Rust, and pay personal expenses.”

U.S. District Judge Tena Campbell issued a restraining order Thursday freezing Rust’s assets and the assets of his company. She also permitted the state to “inspect all relevant records,” the news release states.

(Chris Detrick | Tribune file photo) Gaylen Rust poses for a portrait at his home in Layton on Wednesday, May 22, 2013.

Along with his rare-coin business, Rust is the founder and chair of the Legacy Music Alliance, a charity that raises money for music education programs in Utah schools.