Lawyers say Scott Mason’s clients will not recover millions from investment firm Rubicon

Montgomery County Investment Manager Lawyers Scott Mason for more than a dozen clients who have filed civil fraud lawsuits seeking to recover up to $42 million from Rubicon Asset Management, Mason’s 30-year-old investment firm, told a judge Thursday that Mason was putting his properties up for sale so he could repay the money he owed he owes them.

But the proceeds “will not come close” to covering the investors’ full claims, Mason’s attorney, Michael J. Rinaldi, said during a hearing before Montgomery County Judge Gail Weilheimer.

“At least it will be fair,” Rinaldi said, adding that Mason is cooperating with the federal Securities and Exchange Commission and lawyers for more than a dozen investors who sued his client to recover the money.

The lawsuit alleges that Mason, without their authorization, withdrew millions from their accounts that were supposed to be invested in publicly traded stocks and bonds at little risk to the principal and instead spent it on his real estate projects and family expenses, including fancy parties.

Among the properties proposed for sale, the proceeds of which will be placed in escrow, are Mason’s interest in the Shore miniature golf course, Jen’s Links and the surrounding Barnegat property; his vacation home on Long Beach Island; and New York State student rental properties near Hobart and William Smith Colleges. Mason is a Hobart graduate and former trustee.

Rinaldi, a former federal fraud prosecutor, said the SEC reached an agreement with Mason to delay possible civil charges. Such agreements give the agency time to negotiate a settlement instead of paying fees.

Lawyers for the investors, including Benjamin Picker, a Kaplin Stewart principal, representing Mason’s aunt Star Sitron and others, and Robert Hayes, a partner at Cozen O’Connor, representing retired insurance executive Stanley Tulin, Rubicon’s largest investor, asked the judge to order Mason providing more detailed data and selling specific assets to ensure timely returns to investors.

Hayes objected to defense suggestions that clients wait until federal investigators complete their investigation.

“We’re not satisfied with relying on what the SEC or the FBI is doing,” he said, noting that the bonds that Rubicon said were in his account at the company “just disappeared.” If you can’t give us a bond, give us money.”

Judge Weilheimer said investors “don’t trust” Mason’s promises. She asked if Mason would be willing to disclose more information beyond what is in Rubicon’s files because he already faces a federal “target list” and the possibility of “pending criminal charges.”

Rinaldi said Mason has already released many financial records and would provide additional documents if Weilheimer guaranteed privacy for some of the people named in the records.

Weilheimer warned investors that “we’re not close” to getting their money back.

Rubiconwhich closed its former Blue Bell office last summer, had a total of $231 million invested, mostly in mainstream stocks and bonds, for 115 clients as of March 31, according to the company’s SEC filings.

Lawyers for Picker and Hayes said in court that they are also reviewing the role played by other financial institutions that failed to prevent Mason from withdrawing funds without the client’s consent.