Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
a businessman holding a burlap money bag

Regulation and Compliance > Litigation

Advisor Accused of Stealing Millions From Widowed Aunt, Former Exec

By Dinah Wisenberg Brin

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Advisor Scott Mason's aunt alleges he took over $3.2 million without consent.
  • A retired AXA Equitable CFO contends Mason and his firm drained at least $20 million.
  • Mason spent the money on, among other things, an investment in a mianature golf course and an endowed head hockey coach position at his alma mater, the suits allege.

Financial advisor Scott J. Mason and his suburban Philadelphia investment firm face at least two civil lawsuits alleging they siphoned millions of dollars from clients, including his widowed aunt and a retired AXA Equitable executive who contends the advisor plundered his life savings.

The Securities and Exchange Commission and the Federal Bureau of Investigation are investigating Mason, according to a plaintiff’s attorney. Another plaintiff’s lawyer suggested there may be several other investors in similar straits.

A third civil complaint targets the same defendants but details weren’t immediately available.

A Retired Executive

Stanley B. Tulin, a 74-year-old former chief financial officer of AXA Equitable who retired to Florida, filed suit in Montgomery County Common Pleas Court in Pennsylvania against registered investment advisor Rubicon Wealth Management, based in Blue Bell, Pennsylvania; Mason and his wife, Lynne Nowadly Mason; and a business, Orchard Park Real Estate Holdings, that shares an address with the couple.

Tulin filed the suit in early August after an FBI agent contacted him on July 15 and advised him that the bureau was conducting a criminal investigation of Mason and that the advisor may have stolen money from him, the lawsuit alleges. 

Tulin contacted accountants and lawyers, according to the suit, which contends Mason and Rubicon drained his accounts, either closing them or leaving them with few assets. 

The complaint alleges Mason and Rubicon ultimately converted over $20 million from Tulin and his wife, Riki Tulin. The defendants used those funds to pay for vacations, real estate, elaborate weddings for their children, donations to the advisor’s alma mater and other personal expenses, it says.

Hobart and William Smith Colleges announced last year that the Masons, both alumni, had provided a gift that the schools were using to create an endowed head hockey coach position.

“Instead of protecting the wealth of Mr. Tulin and his family, as directed, Mason plundered it,”  the complaint states. “Operating through Rubicon, Mason stole tens of millions of dollars from Mr. Tulin — the vast majority of Mr. Tulin’s savings over the past 30+ years.”

Tulin engaged Mason, through Rubicon, in the late 1990s to serve as his investment advisor, with “limited discretion to pursue an extremely conservative investment strategy,” it says. Mason also served as administrative assistant to manage Tulin’s bills, charitable contributions, children’s and grandchildren’s school costs and other expenses, the lawsuit states.

Lynne Mason assisted with these tasks, the complaint says, alleging that Rubicon and the Masons, rather than Tulin himself, received all account statements and notices. Tulin paid Rubicon 1% of his assets under management starting in the 1990s for these services; around 2010 and later, these payments averaged $275,000 a year, the lawsuit says.

“Mr. Tulin trusted Rubicon and the Masons completely, and he was willing to pay these significant sums for peace of mind knowing that they were protecting and managing his finances,” the suit says. 

Tulin’s net worth should have grown to more than $30 million based on his executive compensation and the returns his investments should have received, the lawsuit contends. In March, Rubicon and Mason reported they were managing about $28 million in Tulin’s assets and projected that $22 million should last at least 20 years, the suit alleges.

Mason and Rubicon “unlawfully stole for their personal use tens of millions of dollars of Mr. Tulin’s money. They grossly abused Mr. Tulin’s trust and violated their fiduciary duties to Mr. Tulin,” the suit asserts.

From at least 2010 through mid-2024, Mason and Rubicon perpetrated a fraudulent scheme through different methods, including transferring funds from accounts associated with Tulin to Orchard Park, a shell company that shares the Masons’ home address in Gladwyne, Pennsylvania, the suit alleges.

Mason and Rubicon also obtained a $5 million credit line from JPMorgan Chase in the Tulins’ names and used the money for themselves, later forging the Tulins’ signatures to extend the credit line, the lawsuit asserts, citing other allegations involving theft, a falsified signature and fake financial documents.

Tulin has yet to trace the full scope of the misappropriation and how his funds were used, the suit says. He claims breach of fiduciary duty and fraud against Mason and Rubicon, among other allegations, and unjust enrichment against Lynne Mason.

Stephen Miller, Tulin’s attorney and the co-chair of white-collar defense and investigations at Cozen O’Connor, told ThinkAdvisor by email Tuesday that the FBI and SEC are investigating and interviewed Tulin last month.

“The case is unusual in its scale and depravity. Stan Tulin saved his whole life to be able to provide for his family and the charitable causes he valued. Scott Mason stole almost all of that money,” Miller said.

Attorneys representing Mason didn’t immediately respond to emails seeking comment. A message sent to Rubicon Wealth Management’s LinkedIn account didn’t prompt an immediate response, and the link to the firm’s website was broken.

The SEC doesn’t comment on the existence or nonexistence of a possible investigation, a spokesperson told ThinkAdvisor by email. The FBI made a similar statement, citing Justice Department policy. 

Mason has been registered as an investment advisor through Rubicon since 2008, and also was registered with Lansing Street Advisors from March 15, 2023, through July 31 this year,  according to his Investment Adviser Public Disclosure report, which shows no disclosures.

Lansing Street is not mentioned in the lawsuits filed against Mason and has never had a fee-sharing agreement with him, Lansing President Matt Topley told ThinkAdvisor by email Thursday.

Lansing explored a succession plan with Mason, who at the time showed no compliance issues, but after due diligence chose months ago not to purse a merger, Topley said. Lansing appears on the IAPD because during this process, it agreed to park one new Mason client under Lansing Schwab custody, he said.

A Widowed Aunt

Star Sitron of Lansdale, Pennsylvania, a widow who turns 78 this month, filed suit in July seeking $3.7 million trebled, or tripled, against the same defendants and alleging breach of fiduciary duty, unfair trade practices and consumer protection violations against Mason and Rubicon.

The plaintiff, Mason’s aunt, alleges Rubicon and Mason wired more than $3.2 million from her accounts without consent and didn’t advise her of the trades before or after making them.

Sitron contends she relied exclusively on Mason and Rubicon after her husband of 40 years died in 2017, as her late husband had handled the couple’s finances and Mason is her nephew.

The Sitrons had $2.4 million in investable net worth in 2010 when they opened investment and retirement accounts, with Rubicon and Mason as investment advisor and representative, respectively, and SEI Private Trust Co. as custodian, the lawsuit asserts.

The Sitrons indicated they had conservative investment objectives and sought steady income with low risk, according to the complaint. A 2019 agreement between Sitron and Rubicon didn’t allow the firm to withdraw assets without prompt notice and confirmation from her, the suit says.

The accounts initially were invested mostly in mutual funds and municipal bonds, but from late 2019 to late 2023, Rubicon liquidated assets in one account and transferred them to Orchard Park, the complaint alleges. Funds transferred to Orchard Park exceeded 60% of Sitron’s portfolio, it says.

Sitron discovered the transfers in March 2023, when a 1099 form from SEI indicated she owed more than $130,000 in capital gains arising from her assets being liquidated, the complaint alleges. When she asked him about the situation, Mason falsely stated the funds were transferred to Orchard Park to be invested in a diversified bond fund, the lawsuit alleges.

“At this time, plaintiff does not know where the funds might be,” the complaint says. In April, Mason promised the funds would be returned by the end of May. “Mason’s attorney has advised that the funds ‘are gone,’” the suit alleges.

Like Tulin, Sitron alleges the Masons used the funds for personal expenses, including investment in a miniature golf course at the New Jersey shore.

“Scott Mason was in a position of trust, but not only as an investment advisor. Most of the people he stole millions from were his friends and, in my client’s case, family. It’s inexcusably criminal and immoral,” Benjamin Picker, Kaplin Stewart Meloff Reiter & Stein principal and Sitron’s lawyer, told ThinkAdvisor by email.

“The pressing question is, where (are) the tens of millions of dollars he stole?” he said. “This is people’s hard-earned money; it’s their retirement nest eggs. Hopefully, the FBI can find it. Better yet, Mr. Mason should do the right thing and immediately return whatever money remains.” 

Defendants Respond

The defendants have filed preliminary objections asking the court to dismiss Sitron’s lawsuit and to move the case to arbitration. 

Among their many objections, they say an argument that Lynne Mason “knew or should have known” that her husband didn’t actually earn the funds is insufficient to hold her accountable.

Even if Sitron’s claims against her nephew were true, “a husband’s improper acts or omissions cannot be imputed to his wife” without proof that she intended to convert funds knowing fully that they were obtained by fraud, the defendants contend. “Ms. Mason’s marriage to Mr. Mason does not transform her into a co-conspirator,” they argue in a brief.

Sitron, in response, conditionally agreed to enter arbitration with Scott Mason and Rubicon if they agree to pay all required fees; she also agreed on dismissing a civil conspiracy claim against Lynne Mason, but asked the court to deny the defendants’ other requests, including those seeking dismissal of other claims against Scott Mason’s wife. 

SEI Suit

Sitron separately sued custodian SEI, which Picker told ThinkAdvisor appears to have been “asleep at the wheel” and “had a duty to safeguard the money.” 

Instead, SEI allowed Mason to wire millions of dollars from client accounts using its platform “over clearly forged signatures and in violation of promises that it made to customers. SEI should take responsibility for its failures,” he said.

SEI doesn’t comment on pending litigation, a spokesperson told ThinkAdvisor by email Tuesday.

In preliminary objections to Sitron’s complaint, SEI contends it wasn’t responsible for monitoring Mason’s and Rubicon’s trades, that Sitron authorized Rubicon to provide the company with transaction instructions, and that SEI itself was victimized by the alleged fraud.

SEI seeks dismissal of Sitron’s negligence and breach-of-fiduciary-duty claims and all other allegations against it.

Picker said he’s been told there are numerous other victims — about a dozen in the same or similar situation as Sitron, with losses totaling roughly $15 million, in addition to Tulin’s larger claim.

Another Case

In late July, a lawyer for Charles Murray of Fort Washington, Pennsylvania, asked the Montgomery County court to issue a writ of summons notifying the same four defendants — Rubicon, the Masons and Orchard Park — that Murray had commenced an action against them. The court filing contained no specific allegations but indicates the case involves a securities custodial contract.

Murray’s lawyer didn’t immediately respond to emails seeking comment.

The Philadelphia Business Journal first reported on the complaints against Mason.

Image: Shutterstock

Dinah Wisenberg Brin

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.