A businessman from upstate New York has pleaded guilty to stealing $50 million from several victims in a large Ponzi scheme, according to the New York State Attorney General’s Office.
74-year-old Miles “Burt” Marshall was charged with second-degree grand larceny, securities fraud, and first-degree scheme to defraud on Tuesday. Prosecutors say Marshall may face four to 12 years in prison. The charges come from an indictment issued by the attorney general’s office last summer.
A Ponzi scheme is an investment fraud that pays existing investors with money collected from new investors. The scheme is named after Charles Ponzi, who defrauded investors in the 1920s with a fake investment involving postage stamps.
In such schemes, organizers do not generate real profits. Instead, they use money from new investors to pay returns to earlier investors, creating the illusion of a successful investment.
Promoters lure inventors by promising high returns with low risk. Instead of investing the money, they use it to pay old investors and keep a portion for themselves. Investors do not recognize the false growth because regular payments seem legitimate.
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According to AOL, Miles Marshall reportedly filed taxes and sold insurance in the village of Hamilton, New York, near Colgate University. Over the past few years, the businessman also ran what is commonly known as the “8% Fund,” promising investors an annual return on their money.
Meanwhile, Marshall expanded his network through word-of-mouth referrals, a common technique used by fraudsters in Ponzi schemes to expand their networks.
Just as these scammers target close-knit communities such as social groups or places of worship, allowing the scheme to grow and manipulate people into an endless loop, Marshall also collected funds from local organizations, churches, and relatives.
A bankruptcy trustee later found that his scheme had persisted for so long that by 2011, he was using funds from new investors to pay earlier investors. He ultimately owed nearly 1,000 individuals and organizations a total of $95 million in principal and interest.
Additionally, Attorney General Letitia James said that Marshall was also spending investors’ money on personal expenses, including shopping, holidays, and dining out.
“Miles Burton Marshall scammed his clients out of their life savings and used their hard-earned money to fuel a classic Ponzi scheme,” James said in a prepared release.
A person named Dennis Sullivan, who became the victim of Marshall’s scheme, revealed that he is owed about $40,000. Sullivan also claimed that several lives were affected by the scam and expressed disappointment after learning the truth. He also said that he felt like justice had not been fully served.
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“I am shocked and a little upset that he didn’t get more time. I don’t feel justice was served,” Dennis Sullivan, who was owed about $40,000, wrote in a text after the plea. “He has ruined so many of our lives.” Dennis Sullivan said.
Despite the charges, Miles Marshall consistently kept the appearance of legitimacy by paying interest and allowing withdrawals. However, he filed for Chapter 11 bankruptcy in 2023 after a hospitalization for a heart condition and a surge of investors seeking their funds.
In his bankruptcy filing, Marshall reported more than $90 million in liabilities compared to $21.5 million in assets. While his attorney has been requested to provide a statement, Marshall is scheduled to be sentenced on June 11 in Madison County Court.
Ponzi schemes are relatively common across the United States and are regarded as an old and persistent method for making money by manipulating victims. These have been increasingly highlighted by the Federal Bureau of Investigation (FBI) in recent years.
