NEW YORK — New York Attorney General Letitia James recently announced the arrest of Miles Burton Marshall, a Madison County tax preparer and insurance agent, for allegedly operating a massive Ponzi scheme for over three decades.
According to a press release from the attorney general’s office, the scheme stole more than $50 million from 988 investors in Madison County and other nearby counties.
Marshall allegedly solicited unsuspecting clients to invest millions of dollars into his so-called “Eight Percent Fund,” claiming that their funds would be primarily used for real property investments. Instead, Marshall allegedly used funds to pay investment returns to prior investors, as well as to pay his personal expenses and the expenses of his other businesses.
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. It’s a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
James unsealed a 49-count indictment today that charges Marshall with multiple counts of grand larceny, securities fraud and scheme to defraud.
“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 in the release. “Fraud of any kind is not acceptable in New York. My office will continue to ensure all those who cheat New Yorkers out of their life savings are held accountable.”
The investigation by the DOJ involves allegations of mortgage fraud related to several properties. Allegations include falsely claiming a Virginia home as a primary residence, misrepresenting a Brooklyn property as a four-unit building instead of five and alleged misrepresentations on a 1983 mortgage document.
A long-term investigation led by the Office of the Attorney General’s Criminal Enforcement and Financial Crimes Bureau revealed that beginning in the early 1990s and continuing through March 2023, Marshall solicited potential investors, including his tax and insurance clients, to invest tens of millions of dollars into his so-called “Eight Percent Fund.”
Marshall allegedly told investors that their funds would be primarily used to purchase property, refurbish rental houses and pay expenses for rental properties. When soliciting investments, he falsely represented the profitability of his real estate business, claiming it was so profitable that he could promise investors eight percent yearly returns.
After soliciting investments, Marshall allegedly used investors’ money to pay investment returns to prior investors, and finance operating expenses for his other businesses. Those expenses include tax preparation, printing press, maintenance and storage unit businesses.
In addition to business expenses, OAG alleges Marshall used hundreds of thousands of investors’ dollars for personal expenditures. These include travel purchases at American Airlines, Priceline and United Airlines, at retail and online stores, such as Amazon, Lululemon, and Target, and at grocery stores, restaurants and yoga studios.
To further his scheme, Marshall allegedly directed his staff to generate “Transaction Summaries” for investors, falsely representing their account balances and the interest they purportedly earned. Marshall’s investors relied on these false statements, believing they were earning a steady income, and continued to invest. As a result of Marshall’s investment scheme, many investors lost their life savings.
CEFC’s investigation revealed that by 2016, Marshall’s total liabilities exceeded his assets by over $40 million. Still, he continued to solicit new investors and represent to prior investors that their investments were profitable for the next seven years until he could no longer repay investors, and filed for bankruptcy.
Marshall made sworn statements in the bankruptcy proceedings that as of March 2023, his total assets were less than $22 million, and he owed 988 victim investors over $90 million, including over $50 million in principal they invested.
The OAG’s 49-count indictment – unsealed in Madison County Court – charges Marshall with the following:
• 21 counts of second-degree grand larceny, a class C felony.
• three counts of third-degree grand larceny, a class D felony.
• 24 counts of securities fraud under the Martin Act, a class E felony.
• one count of first-degree scheme to defraud, a class E felony.
Authorities arraigned Marshall before the Honorable Rhonda Youngs. Youngs released Marshall on his own recognizance and required to surrender his passport and not leave New York State. If convicted, Marshall faces a maximum sentence of up to 10 to 20 years in prison.
“This arrest once again shows that those who scheme to swindle New Yorkers out of their hard-earned money for their own personal gain will be held accountable for their actions,” New York State Police Superintendent Steven G. James said in the release. “Mr. Marshall allegedly misled his clients on the usage of their money, spending the cash on his own expenses and leaving his victims with a false sense of financial security.
“I commend our State Police members and the Attorney General’s Office for their outstanding work on this case.”
The charges are merely accusations, and the defendant is presumed innocent unless and until proven guilty in a court of law.
