$17M Fraud Scheme Lands Main Line Investment Advisor In Prison

GLADWYNE, PA — A Gladwyne man will spend eight years in federal prison for stealing millions of dollars from his clients through his investment advisory firm.

United States Attorney David Metcalf said Scott Mason, 66, of Gladwyne, was sentenced to 97 months’ imprisonment and three years of supervised release. Upon release, he will have two years of supervision, and was also ordered to pay $25 million to his fraud victims and restitution of $2.35 million to the IRS.

Mason pleaded guilty in January this year to two counts of wire fraud, securities fraud, investment adviser fraud, and five counts of filing a false tax return, after being charged that same month.

As detailed in court documents and admitted to by Mason — who had a fiduciary duty to make investment decisions in his clients’ best interests — transferred more than $17 million from 13 Rubicon Wealth Management LLC 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," Wayne A. Jacobs, Special Agent in Charge of FBI Philadelphia said. "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," Yury Kruty, Special Agent in Charge, IRS-Criminal Investigation, Philadelphia Field Office. "Today’s sentencing shows how seriously the courts take federal tax crimes."