Which of the Masterson brothers profited from their Scientology stepdad’s Ponzi scheme?

Every few months we hear that the Los Angeles District Attorney’s office is about to make a decision whether to charge Scientology celebrity Danny Masterson after seven women came forward to the LAPD with rape allegations against the That ’70s Show actor. It’s been more than three years since the initial three women came forward, and now DA Jackie Lacey has her hands full with protesters who don’t like her poor record for prosecuting bad cops.

Lacey’s plenty busy, we understand. So while we wait for her to make up her mind, we thought we’d tell you about other legal matters that may have impacted Masterson because they have definitely impacted his family members.

In the photo above, you can see three people who are very close to Daniel. That’s his mother Carol on the left (who is also Danny’s manager), and her husband Robert Russell “Rusty” Tweed in the middle — he’s an OT Scientologist like the others. And the fellow on the right is Malcolm In The Middle actor Christopher Masterson, who is Carol’s son, Danny’s younger brother, and Rusty’s stepson.

Danny and Christopher are children from Carol Anne Nicholson’s first marriage, to Peter Masterson. She was subsequently married to Joe Reaiche, and they had two children of their own, Jordan and Alanna, who are both actors and who both took the name Masterson rather than their father’s name, and both of them “disconnected” from Reaiche after he left Scientology in 2005. Joe’s former stepsons, Danny and Christopher, also disconnected from him. He hears nothing at all from his former wife Carol or the four kids he helped raise.

Meanwhile, Rusty Tweed has three stepsons: Danny and Christopher from Carol’s first marriage, and Jordan Masterson from her second.

With us so far?

We should also pause to note, sadly, that Rusty also had a previous marriage, to a woman named Cathy Tweed, and he was stepfather to Cathy’s daughter Tayler Tweed. We’ve written about how Tayler struggled with life in a Scientology family, talked openly about leaving the church, and then committed suicide in 2014 at the age of 27. Tayler’s struggle with Scientology and her suicide were also the subject of an episode of Leah Remini: Scientology and the Aftermath.

Rusty and Cathy Tweed divorced in 1998, court records show, and then Rusty and Carol Masterson got together soon after.

Anyway, Rusty made a living as a financial advisor and in 2008 he started promoting a new opportunity for his clients. He called it the “Athenian Fund.” Over the next two years he convinced 24 investors to put $1.7 million into the fund, which is an average of about $70,000 from each investor.

Tweed told his investors that the Athenian Fund was going to be putting its money into something called PMI that would use sophisticated algorithms to produce big returns.

We’ve run into PMI before.

Back in 2013, we wrote about a Utah couple who were suing because they say they were duped into investing in a Scientologist-run Ponzi scheme called Portfolio Manager International. PMI was supposed to use computer algorithms to predict currency fluctuations and capitalize on them. But instead it turned out to be an investment scam.

One of the people involved in running PMI who ended up going to prison was a Mormon former mayor of Cedar Hills, Utah named Eric Richardson. In February 2010, Richardson signed a bank loan that ended up getting him convicted of bank fraud and a year-long prison sentence.

And right around that time, in March 2010, for some reason Rusty Tweed gave up on the idea of investing his Athenian Fund in PMI and instead gave it all to Richardson for something that Richardson had named Quantitative Analytics Master Fund.

Tweed didn’t tell his investors that he had changed his mind about where to invest their money.

Richardson’s QAMF was supposed to make a killing with a “quantitative trading platform that acts to actively manage the long and short side price cycles of a portfolio of liquid equity securities.”

Sounds legit.

By October, Tweed realized that he’d made a mistake. QAMF wasn’t delivering, and he asked Richardson to give back the $1.7 million. But by that time, Richardson had already lost about $650,000 of it. (Tweed later learned that Richardson had invested it in a Ghanian gold mine without telling him.) Richardson gave Tweed back $924,460 of the initial $1.7 million. Tweed then learned that Richardson was being investigated and criminally charged for bank fraud.

Now, here’s where we find out what Tweed was made of. He’d told 24 people who had handed over significant sums of money that he was going to help them beat the market by investing in something called PMI, but then, without telling them he handed the money over to one of the people he’d met at PMI, the good mayor of Cedar Hills, who had come up with his own betting operation called QAMF. Within a few months, however, nearly half of the money was gone and the former mayor was looking at prison time.

So Tweed was a stand up guy, went back to his investors, admitted that he hadn’t told them that he’d trusted a guy who turned out to be going to prison, and that they would have to accept only half of what they’d put in, right?

No, that’s not what he did.

Instead, according to the SEC, which investigated the matter, Tweed lied to his investors, telling them that their money was “tied up” and not refundable for another year, and then he produced false reports that the money was secure.

In March 2011 Tweed made matters worse by carving out $200,000 of the $924,460 that he’d managed to get back from Richardson and loaned it to a Clearwater software business, Teamwork Retail, run by a Scientologist friend of his, Michael Mauerer. The loan was supposed to generate 18 percent interest when it came due in September 2011, but no interest was paid and neither was the loan. Teamwork Retail declared bankruptcy in 2013.

Through 2014, Tweed’s company continued to lie to its clients, telling them that these investments were secure and making money.

And even worse, Tweed made sure that some investors got paid as if their investments had actually made money before he eventually revealed to the others that they were screwed. (This is what happens in a Ponzi scheme, a few investors come out all right while the rest lose their shirts.)

For example, in the first quarter of 2012 Tweed gave one person who had invested $50,000 in the Athenian Fund a check for $50,103.25 as if the losses had never happened, the losses that other investors would have to eat.

In court documents filed by the SEC and FINRA, which also investigated the matter, that investor who got a check for $50,103.25 is identified only partially.

In those documents he is only referred to as Tweed’s “stepson.”

Again, we will remind you that Rusty Tweed has three stepsons: Danny, Christopher, and Jordan Masterson.

One of them, according to the SEC, was made whole by their stepfather as his small Ponzi scheme was falling apart, leaving other investors holding the bag.

In 2017 the SEC sued Tweed for fraud and FINRA banned him from trading securities for life.

We sent a message to the SEC attorney who filed the 2017 complaint against Tweed to ask if she could reveal which stepson profited by Tweed’s scheme, but we didn’t hear back. We also sent a message to Tweed through one of his two new businesses, Mold Zero, a mold removal company, and we’ll let you know if he responds. (His other new business is Rusty Tweed Solar, which will put solar panels on your house.)

Meanwhile, Carol has some issues of her own.

In 2006, before Tweed had dreamed up the Athenian Fund, his wife Carol took out a loan for $1.4 million in order to purchase a deluxe home in the resort town of Park City, Utah. Four years later, in 2010, she defaulted on the loan, which was then taken over by a company called Nationstar Mortgage, which notified Carol in 2012 that it was servicing the loan.

In 2018, a few months after her son Danny lost his job at Netflix acting in The Ranch, Carol sued Nationstar, saying that the deed hadn’t been properly transferred. Nationstar filed a motion for summary judgment, arguing that Masterson — who was representing herself in court — was raising bogus issues about the way deeds were handled by the county. Carol filed her own motion for summary judgment, charging that her requests for discovery (requests for documents from the other side) were never responded to. Nationstar denied that it had received such requests, and pointed out that Carol’s proof that she sent them was an affidavit by her husband Rusty, whose credibility was essentially zero since his debacle with the SEC.

The federal magistrate handling the case pointed out that character issues weren’t addressed at the summary judgment stage and ignored that shot at Rusty, but still found for Nationstar, granting its motion and ending Carol’s lawsuit.

But in January, still representing herself, Carol filed an appeal in the Tenth Circuit, and even for us non-lawyer types this thing is a bit nutty. Making several references to her husband, Carol argues the facts of the case all over again, which isn’t really what you do at the appeal level. And Nationstar’s attorney, Robert Scott, carves up her appeal rather surgically in his reply.

To be sure, we don’t like to be in the position of praising a bank in a tug-of-war over the ownership of a house, but purely from an informational point of view, it’s somewhat interesting to view the back and forth between Carol Masterson and her lender. Here’s her appeal and Scott’s reply for you document hounds…

— Carol Masterson’s appeal
— Nationstar’s reply to the appeal brief

So, like we said, we’re still waiting for Los Angeles DA Jackie Lacey to announce what she’s going to do in regards to the rape allegations against Danny, and maybe, perhaps, that decision might finally come soon. But in the meantime, we thought you might be interested in these other issues his family is dealing with.

 
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Source Code

“I call to your attention something that every motorist has noted and no motorist had quite understood: that when he failed to drive his car it went to pieces. Have you ever noticed that? You park it in the garage the battery goes down, the tires go flat. Maybe it was up on blocks, maybe the battery was taken over to the service station and put on continuous charge and all of this was done. That’s some small prevention of the situation. But then three months later you put the battery back in, you take it down off the blocks and oil smoke goes out the rear end, won’t steer. That’s an oddity. The only reason it stayed there at all is because Earth is going around and it was being changed in space, at least to some degree. If it were not being changed in space at all, it would not be there; it would cease to persist. Now this is a great oddity. I don’t call upon your superstition in this regard, I merely call upon you to observe in its crude form something else.” — L. Ron Hubbard, June 4, 1955

 
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Overheard in the FreeZone

“Andy never got a standard ethics handling on his wog ethics cycle (defacing Eurydice Dixon’s memorial) and faking a change of sex. After Andy said he was a student at the AO-GP, he began to promote the use of drugs to ‘go up the bridge’ (increase awareness). The AO-GP never handled Andy’s out-ethics case, with the consequence that he is now in jail, not as an expelled member of the Freezone but as a student at the AO-GP. Andy Nolch and the Advanced Organization of the Great Plains should be applied standard ethics to handle this Public Relations flap.”

 
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Random Howdy

“They do what’s called in Scientology ‘off-loading’ which is when some elderly staff member can no longer perform on the most basic level they throw their meager belongings into a garbage bag and drive them what they consider to be a safe distance from the org and they stop and open the door and tell them to get out. And I’m not joking.”

 
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Full Court Press: What we’re watching at the Underground Bunker

Criminal prosecutions:
— Jay Spina: Sentencing was set for April 3 in White Plains
— Hanan and Rizza Islam and other family members: Trial set for October 7 in Los Angeles

Civil litigation:
— Luis and Rocio Garcia v. Scientology: Waiting for an appellate decision from the Eleventh Circuit
— Valerie Haney v. Scientology: Forced to ‘religious arbitration.’ Hearing on motion for reconsideration set for August 11
— Chrissie Bixler et al. v. Scientology and Danny Masterson: July 8 (plaintiff attorneys pro hac vice), August 31-Sept 1 (CSI/RTC demurrer against Riales, Masterson demurrer), Oct 7-19 (motions to compel arbitration)
— Jane Doe v. Scientology (in Miami): Jane Doe dismissed the lawsuit on May 15 after the Clearwater Police dropped their criminal investigation of her allegations.
— Matt and Kathy Feschbach bankruptcy appeal: Oral arguments were heard on March 11 in Jacksonville
— Brian Statler Sr v. City of Inglewood: Amended complaint filed.

 
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Scientology’s celebrities, ‘Ideal Orgs,’ and more!

We’ve been building landing pages about David Miscavige’s favorite playthings, including celebrities and ‘Ideal Orgs,’ and we’re hoping you’ll join in and help us gather as much information as we can about them. Head on over and help us with links and photos and comments.

Scientology’s celebrities, from A to Z! Find your favorite Hubbardite celeb at this index page — or suggest someone to add to the list!

Scientology’s ‘Ideal Orgs,’ from one end of the planet to the other! Help us build up pages about each these worldwide locations!

Scientology’s sneaky front groups, spreading the good news about L. Ron Hubbard while pretending to benefit society!

Scientology Lit: Books reviewed or excerpted in our weekly series. How many have you read?

 
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THE WHOLE TRACK

[ONE year ago] Why is the YMCA helping spread Scientology to kids?
[TWO years ago] Why don’t Scientologists go to authorities about the abuses they have seen or experienced?
[THREE years ago] Around the globe, Scientology relies on guys like this to promote L. Ron Hubbard to your kids
[FOUR years ago] That time Muhammad Ali got blindsided by the Church of Scientology
[FIVE years ago] Scientology’s plan to take over the planet: All Ideal Orgs ‘Saint Hill size’ by 2016!
[SIX years ago] OY VEY: Scientology invokes Jewish Law to answer lawsuit by attorney Vance Woodward
[SEVEN years ago] CLASS-ACTION LAWSUIT ALLEGING FRAUD FILED AGAINST SCIENTOLOGY AND NARCONON

 
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Posted by Tony Ortega on June 4, 2020 at 07:00

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