Main Line investment manager pleads guilty to taking $17 million from clients, including his aunt
Scott Mason will unlikely be able to repay the millions he took from wealthy clients at his investment firm Rubicon Wealth Management.
Scott Mason, the Gladwyne investment adviser who ran Blue Bell-based Rubicon Wealth Management from 1996 until last year, when clients accused him of taking millions from their accounts without permission, pleaded guilty to federal fraud charges in a Philadelphia court hearing Tuesday morning.
“It’s a sad day,” said Star Sitron, Mason’s aunt by marriage and one of his victims.
She and others from her side of the family came to the hearing to witness Mason plead guilty to criminal charges of wire, securities, investment adviser, and tax fraud. Mason’s lawyer, Michael Rinaldi, declined to comment on the plea.
Mason, 66, assured U.S. District Judge Timothy Savage that he understood the criminal charges, which were filed Jan. 17. He agreed he had taken a total of more than $17 million from accounts belonging to Sitron, retired insurance executive Stanley Tulin, and a dozen others, while also failing to pay $2.3 million in federal taxes on undeclared income.
Rubicon had invested over $200 million for more than 100 clients as of last spring before the firm unraveled as its clients’ banks and brokers withdrew their funds, and Tulin, Sitron, and other investors sued Mason in Montgomery County Common Pleas Court.
As part of his plea agreement, Mason agreed to pay restitution. He has pledged proceeds from properties he owns in Barnegat Light and on Long Beach Island and from investment accounts with NewSpring Capital — all purchased with stolen funds.
But Mason’s accounts and holdings “are not adequate” to return all the millions Mason took, prosecutor Jessica Rice told the court.
Prison time and fines
Mason lied to investors about withdrawing their money and putting it in his own investment company, Orchard Park Real Estate. Sometimes Mason forged their signatures to make it look as if they had agreed. He failed to list Orchard Park on his Securities and Exchange Commission reports as required.
As a registered investment adviser during most of the 10 years he was stealing money, Mason had a fiduciary duty to do what was in his clients’ best interests, not his own, prosecutor Rice said in reviewing the charges before the court. “He abused [Tulin’s] trust,” after Tulin delegated Mason to handle a wide range of his financial affairs, she said.
Orchard Park owned several units of student housing near Hobart and William Smith Colleges, Mason’s alma mater, in western New York State, where he endowed a coaching job and served as a trustee.
Mason also used the real estate firm as a conduit, depositing clients’ funds in the firm, then using the money to pay for country club membership, a share in a Brigantine mini-golf course, and to cover up 10 years of stealing from Tulin’s account.
Prosecutors said Mason faces up to 80 years in prison and fines of over $6 million under federal guidelines. But white-collar criminals are seldom sentenced to more than a fraction of the maximum possible terms.
Mason was released on $100,000 unsecured bond. He was directed to surrender his passport, get rid of any firearms, and to travel only within the continental United States.
He is scheduled to be sentenced May 13.
Mason also faces a federal Securities and Exchange Commission civil complaint accusing him of securities and investment adviser fraud.
Family history
Mason’s father, Melvyn Beryle Mason, also pleaded guilty to federal financial charges. In 1975 he pleaded guilty to 10 counts of theft by deception and additional counts of fraud for cheating 15 customers of his former Bache & Co. brokerage office in Philadelphia of more than $1 million for what the SEC called “fictitious real estate ventures and stocks and bonds as part of a Ponzi type scheme.”
In 1996, the year his son opened Rubicon, the elder Mason agreed to pay a $50,000 penalty to the Securities and Exchange Commission and was blocked from serving as an officer of a public company for seven years to settle an accusation that he took a bribe while serving as vice president of suburban Philadelphia-based Healthcare Services Group Inc.
Editor’s note: This story has been updated to correct the name of prosecutor Jessica Rice.