Federal prosecutors in Pennsylvania announced the sentencing of a former financial advisor who defrauded his clients out of millions of dollars, Financial Advisor reports.
United States District Judge Timothy J. Savage sentenced 66-year-old Scott Jeffrey Mason of Gladwyne, Pennsylvania to 97 months in prison and three years of supervised release.
U.S. Attorney David Metcalf of the Eastern District of Pennsylvania said Mason orchestrated two fraudulent schemes through his investment advisory firm Rubicon Wealth Management LLC to divert client funds in order to finance his lavish lifestyle. Mason pleaded guilty in January to two counts of wire fraud, securities fraud, investment adviser fraud, and five counts of filing a false tax return.
Court documents and Mason’s own admissions revealed that he transferred over $17 million from 13 Rubicon clients to an entity that he owned and controlled, and used that money to finance his personal spending, 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.
Prosecutors said 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.”
Mason allegedly 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.
Mason was actually converting client funds to his own personal use, it was alleged, and also used a portion of the fraud proceeds to repay another Rubicon client from whom he had allegedly misappropriated an additional several million dollars dating back to at least 2014, in order to avoid detection by that victim.
Mason allegedly 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.”
Along with the prison term, Mason 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. He will begin serving his sentence on August 11.
The Securities and Exchange Commission filed parallel civil charges against Mason in connection with the theft. He consented to being barred from the industry in a settlement with the SEC.
Mason’s attorney, Michael J. Rinaldi of Duane Morris LLP in Philadelphia, said his client accepts the judgment of the court.
“He is looking forward to making amends to his victims the best he can, and to his rehabilitation during this time and incarceration thereafter,” Rinaldi said.
“Obviously, it’s a very significant cost, but Mr. Mason cooperated with the government investigation and admitted to the conduct and honed up to what he did here,” Rinaldi said. He added that Mason has some of the money to repay clients, “but far from all of it.”
The attorneys at Hyman Cotter PC have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Hyman Cotter PC at 312-291-4600 or through our online contact form for a no-cost evaluation of your matter.
