INFO [050fe961] Running mkdir -p /home/rails/rails-
capistrano/releases/20140114234157 on staging-rails
DEBUG [050fe961] Command: cd /home/rails/rails-capistrano/re
I think that folder gets populated via a git pull, so it shouldn't be empty. If you do see it empty the issue is from the git not the tarball.
The issue I had was my capistrano deploy.rb repository URL was set to a different one than that project i was working in. In order to fix this issue, I also had to logon to the server and delete the app_name/repo folder which must have been caching the original bad remote URL.