Miles Burton Marshall, a long-time insurance agent and tax preparer from Madison County, New York, has been indicted on charges of orchestrating a Ponzi scheme that defrauded nearly 1,000 investors out of more than $50 million over a span of 30 years.
Authorities allege that Marshall exploited trust within his community to fuel the scheme, which promised lucrative returns through a real estate investment fund that was nothing more than a facade.
Trusted Professional Turned Fraudster
New York Attorney General Letitia James described Marshall as a figure who cultivated an image of reliability and professionalism in his community, leveraging his roles as a tax preparer and insurance agent to gain investors’ confidence. "For over three decades, Miles Burton Marshall fooled his community into believing he was a trusted businessman when, in reality, he was scamming his clients and neighbors out of their life savings," James said.
Marshall could not be immediately reached for comment, and it remains unclear whether he has legal representation. A lawyer who represented him in a 2023 bankruptcy proceeding did not respond to requests for comment.
The Eight Percent Fund: A False Promise
Marshall reportedly lured investors by marketing an investment vehicle he called the "Eight Percent Fund," which he claimed would deliver guaranteed annual returns of 8%. According to the indictment, he presented the fund as a real estate investment opportunity focused on acquiring, refurbishing, and managing rental properties. This narrative was reinforced by Marshall’s assurances that his real estate business was highly profitable.
However, prosecutors allege the fund was a sham. Instead of investing the money as promised, Marshall used it to sustain his other struggling businesses, including a printing operation and a storage facility. Additionally, significant sums were spent on personal expenses such as travel, dining, and other discretionary purchases.
A Classic Ponzi Scheme
The scheme relied on a Ponzi-like structure, with money from new investors being used to pay returns to earlier participants. To maintain the illusion of legitimacy, Marshall allegedly issued falsified summary statements that showed fabricated account balances and interest earnings. These documents encouraged investors to believe their funds were growing steadily and even prompted some to reinvest their returns.
“Marshall’s investors relied on these false statements, believing they were earning a steady income, and continued to invest,” James’ office stated. Unfortunately, many of these investors lost their life savings as the scheme unraveled.
Financial Collapse and Legal Fallout
The scale of the fraud became apparent during Marshall’s bankruptcy proceedings in March 2023, where he disclosed debts of over $90 million to investors, including the original $50 million principal. In contrast, his total assets were valued at less than $22 million, underscoring the devastating financial shortfall.
The 49-count indictment against Marshall includes charges of grand larceny, securities fraud, and a scheme to defraud. If convicted, he faces a maximum prison sentence of 20 years.
Lessons for Advisors
This case highlights the importance of conducting due diligence and maintaining transparency when advising clients on investment opportunities. Wealth advisors and RIAs can take several critical lessons from the situation:
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Beware of Guaranteed Returns: Promises of "guaranteed" returns, particularly those significantly above market rates, are often red flags. Advisors should caution clients against such claims and thoroughly vet investment vehicles.
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Scrutinize Documentation: Fraudsters often use falsified statements to create an illusion of legitimacy. Advisors should encourage clients to verify account balances and returns independently when possible.
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Prioritize Diversification: Concentrated investments in a single fund or individual pose significant risks. Encouraging clients to diversify their portfolios can help mitigate exposure to fraudulent schemes.
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Stay Alert for Behavioral Red Flags: Advisors should remain vigilant for patterns of behavior that might signal misconduct, such as sudden changes in spending habits, secrecy about financial details, or an unwillingness to provide transparent records.
Protecting Clients
For wealth advisors serving clients with significant investment portfolios, this case underscores the need for proactive measures to safeguard their assets. Conducting regular audits of third-party investments, encouraging independent custodianship of funds, and fostering open communication about investment goals and risk tolerance can help advisors build trust and minimize exposure to fraud.
The indictment of Miles Burton Marshall serves as a stark reminder of the potential consequences of misplaced trust and underscores the critical role advisors play in protecting clients from financial harm. As the legal process unfolds, the case will likely continue to serve as a cautionary tale for investors and advisors alike.
