PHILADELPHIA — This is an official press release from the U.S. Department of Justice (Federal Bureau of Investigation (FBI)), published as received.
PHILADELPHIA – United States Attorney David Metcalf announced that Scott Mason, 66, of Gladwyne, Pennsylvania, was sentenced today to 97 months’ imprisonment and three years of supervised release by United States District Judge Timothy J. Savage, in connection with two fraudulent schemes that Mason, through his investment advisory firm Rubicon Wealth Management LLC, orchestrated to divert millions of dollars in client funds in order to finance his own lavish lifestyle. The defendant was also ordered to pay restitution in the amount of $24,998,596.46 to his fraud victims and restitution of $2,353,355 to the IRS.
In January of this year, Mason was charged by information with two counts of wire fraud, securities fraud, investment adviser fraud, and five counts of filing a false tax return, and pleaded guilty to all charges later that month.
As detailed in court documents and admitted to by the defendant, Mason — who had a fiduciary duty to make investment decisions in his clients’ best interests — transferred more than $17 million from 13 Rubicon clients to an entity that he owned and controlled, and ultimately used that money to finance his personal expenditures, including international travel, country club membership dues, credit card bill payments, and the purchase of an ownership stake in a Jersey Shore-based miniature golf course.
Mason targeted clients with whom he had a longstanding relationship and who trusted him implicitly, including longtime friends and family members, and he often liquidated those clients’ securities holdings in order to finance the fraudulent transfers. He either forged client signatures on distribution authorization forms or omitted all pertinent details of the so-called “investments” when seeking client authorization for the transfers and instead falsely represented that he was investing client funds in diversified short-term bonds.
In reality, Mason was converting client funds to his own personal use. He also used a portion of the fraud proceeds to partially repay another Rubicon client from whom Mason gradually misappropriated millions of dollars since 2007, in order to avoid detection by that victim. Even after factoring in the partial repayments, Mason stole a net total of more than $6 million from that additional victim.
Finally, Mason failed to report any of his fraud proceeds on his personal income tax returns, generating a tax loss of approximately $3.225 million.
“Frauds like the one Mr. Mason perpetrated on his clients damage the trust and integrity of our financial systems,” said Wayne A. Jacobs, Special Agent in Charge of FBI Philadelphia. “The FBI and our law enforcement partners continue to strive to protect the honesty of our financial institutions and bring to justice the criminals responsible for deceiving the public through their financial schemes.”
“IRS-Criminal Investigation is diligent when it comes to enforcing the laws directed at those who attempt to defraud our nation’s tax system,” stated Yury Kruty, Special Agent in Charge, IRS-Criminal Investigation, Philadelphia Field Office. “Today’s sentencing shows how seriously the courts take federal tax crimes.”
The case was investigated by the FBI and IRS-Criminal Investigation, with valuable assistance from the Securities and Exchange Commission's Philadelphia Regional Office, and is being prosecuted by Assistant United States Attorney Jessica Rice.
