Scams and scandals that make national headlines get all the attention. I’ve long been fascinated by small-town crimes; I think they deserve more attention. After all, the vast majority of us will never have occasion to meet a Bernie Madoff. A bad actor with a nice office in your charming downtown? That’s more likely — often because that nice man in the nice office might have banked decades’ worth of goodwill.
That’s why I’m proud to bring you the story of Burt Marshall, a man who financially terrorized a small town in upstate New York for decades. A tax preparer and insurance salesman turned investment “guru,” Marshall took money from seemingly everyone — and everything — in town. And when his Madoff-like Ponzi collapsed, even the fire department and local cemetery were victims. You can hear the whole story at AARP’s Perfect Scam podcast, which I host.
Marshall knew everyone in Hamilton, New York, a college town that hosts Colgate University. It seemed like he did everyone’s taxes in town. That gave him a privileged position. He knew everyone’s income, and he even knew how big their tax returns were. “Why not invest that money with me?” Burt would suggest. He “guaranteed” investors an 8% annual return, backed by his ever-growing portfolio of rental properties stuffed with Colgate students. The returns were unsustainable; he could only pay when he got new investors, and when Covid hit, the cracks in Marshall’s empire were slowly revealed. By the time it came crashing down, Marshall had collected $90 million from nearly 1,000 local residents. After he pled guilty, they got back about 5 cents on the dollar.
Meanwhile, as you’ll hear in the episode, some victims had everything stolen from them — their retirement cash, their homes, their futures. Even the local cemetery was nearly abandoned, showing Marshall’s crime cut so deep that victims couldn’t escape the consequences — even in death.
Burt Marshall isn’t unique; he’s far too common, really. Last year, we brought you the terrible story of Kota Youngblood. He wormed his way into a youth hockey community in Austin, Texas. After months playing the big man, buying team dinners, telling tall tales about his dinosaur head collection and his time in the Special Forces, Youngblood eventually convinced a set of families that they were at risk of execution by dangerous crime gangs. One family moved clear across the country based on his terrifying tall tales. Others paid Youngblood for protection. He was eventually exposed and convicted of wire fraud.
Both stories reveal the power of local connections. And they demonstrate the long game some criminals play. Normal human beings couldn’t imagine keeping up a farce like that for a few hours, let alone several years. Often, criminals have nothing but time — at least until their time runs out.
My opinion is that these stories reveal something else about our human nature. Hope is the most lovely and vital of human characteristics. But hope is often exploited by criminals. The romance scam criminal who says over and over, “I’ll meet you in person in two weeks!” The “financial manager” who promises you’ll get your money back next month. Heck, the tech company that says its product will be ready next quarter. All these people are counting on our natural, and wonderful, tendency to believe in the future. Politicians have been living off promises and false hope since the dawn of — well, politics. I would never want to tell any of you to abandon hope. But consider this: If you lend $100, or a tool from the garage, to a friend who promises you’ll get it back next week… and you hear “next week” for months and months…at what point do you just decide the money or the tool is gone? That mental experiment might help you build some healthy guardrails around the promises you hear and the hope you give.
I hope you’ll listen to our two-part series, Bad Neighbor, at The Perfect Scam. If podcasts aren’t your thing, I’ve included a partial transcript below. If the button appears for you, you can simply press play.
————————-Partial Transcript—————————–
[00:10:58] George Cowen: Yeah, I do. I had heard from people that I know and who I know to be good money managers, Rachael was one, but there were others, that they had been doing business with him and so I made an appointment to talk with him. And I went over to his office and did that. They had been dealing with him for decades before I got involved.
[00:11:24] Bob: And, and what did you think when you met him?
[00:11:26] George Cowen: Well, I, unlike Rachael, I was strictly doing business with him. He never became my friend or anything like that. As a matter of fact, I was quite skeptical about him. And because he, you know he seemed to be pretty good about reading people, and he knew that I was skeptical, he actually volunteered to give me a ride in his brand-new Chrysler New Yorker, to show me his holdings in Hamilton, New York. And, and it was effective because I was thinking, okay, if something does go wrong, there are things that could be liquidated and in that way my, whatever I had that I was going to entrust to him would be ensured in some way.
[00:12:19] Bob: Hm-hmm. Yes, you weren’t just sending money to air, there were hard assets behind what he was doing with the money, right?
[00:12:26] George Cowen: Right.
[00:12:27] Bob: Crystal, George’s wife, remembers that car ride.
[00:12:31] Crystal Cowen: George is very cautious, so he went to Burt and he was talking to him, and he told Burt, he’s like, “I’m skeptical.” So Burt took him, put him in his car, and drove him around and showed him all the properties and different things like that, and assured George that if anything was to happen to him, that his investments would be safe.
[00:12:59] Bob: And that, did that make you feel any better about it?
[00:13:02] Crystal Cowen: Well it made George feel better. And because Geroge knew a lot of people that invested with him that are very good with their money, he’s like, well it’s got to be on the up and up.
[00:13:14] Bob: Yeah, there’s all sorts of social proof; other people vouching for him, right? Yeah.
[00:13:17] Crystal Cowen: Exactly. Exactly.
[00:13:20] Bob: And that social proof, well it extends to the town’s institutions too. The local fire department keeps their cash with Burt, so does the local cemetery.
[00:13:31] Bob: This seems like the whole town and the whole area was invested with him, which if it were me sitting there, I would feel foolish to be the only one not doing this.
[00:13:39] Ronda Winn: He was well-known, he was well respected.
[00:13:43] Bob: Meanwhile, Ronda has an additional reason to trust Burt. She knew he was paying his bills on time.
[00:13:50] Ronda Winn: I was Treasurer for the village for I don’t know, 11, 12 years.
[00:13:56] Bob: Wow.
[00:13:57] Ronda Winn: And so I knew, I guess I shouldn’t say this, but I knew intimately that his taxes were always paid on time, and there was never any kind of red flag that I could have seen. But yes, he owned a great deal of properties, and he was the largest taxpayer in the village at that time.
[00:14:19] Bob: And so what would often begin as a small connection with Burt doing your taxes, and then your insurance, and perhaps a small investment, often led to Burt controlling all of a family’s wealth.
[00:14:32] Bob: When you decided to invest with him, how much did you put in?
[00:14:35] Ronda Winn: Initially 40, and then I invested 200 and whatever, 200, it ended up being 224.
[00:14:46] Bob: Burt reassured people like George, Ronda, Rachael, and nearly a thousand other clients, that his payouts were completely safe. Through the years those 1000 or so residents and local organizations invested nearly $94 million with Burt. Those investments were in theory backed by all those real estate holdings, and…
[00:15:07] Ronda Winn: He could and when I invested my money with him, I did say, when I invested the larger chunk, I said, “Well Burt, how is this insured?” And he said, “Well I have enough insurance policies to pay for everything.”
[00:15:24] Bob: And then he walked away, a busy man, this Burt, but well that is the one thing about Burt that bothers Rachael. He doesn’t really like it when customers ask questions about their money.
[00:15:37] Rachael Owen: He was sarcastic, you know, big me and little you. Kinda like that. But I got along with him ’cause I put him in his place and didn’t let him, get, talk to me like that.
[00:15:52] Bob: Can you give me an example of when he was playing the big man?
[00:15:54] Rachael Owen: When I was doing our taxes when we first started, he was kind of rude to Tom, my husband, and he would say, “Oh, here’s the claims denial letter, denial person,” because I worked in claims and I told him, I said, “Burt, when you sell the policy to the insured you read them the front of the policy with all the good stuff. You never go to the back of the policy where there’s no coverage. And that’s my job to tell those people at that time, but you rake in the money, and I have to tell them there’s no coverage.” So that was how I knew he, he had a disposition.
[00:16:39] Bob: Big me, little you. Ronda saw that too.
[00:16:45] Ronda Winn: Well his basic personality was very arrogant. If you went in and wanted to ask him a simple common question, he would be almost insulted. I always felt that he talked down to people. And I didn’t like that.
[00:17:01] Bob: Somebody might go and say, I just don’t understand, well what is comprehensive insurance, what does that really cover, and he’d say, right? Ronda, come on.
[00:17:08] Ronda Winn: Oh, I can’t even imagine somebody saying to him that, I can’t.
[00:17:14] Bob: Really?
[00:17:14] Ronda Winn: Yeah.
[00:17:15] Bob: You were that afraid to ask him questions.
[00:17:16] Ronda Winn: God help their soul. Well he was always extremely busy in his office, and I remember when I went in and deposited that money, and he was kind of walking by to a tax client in the back room, and I said, “Well Burt, how is this protected?” And that’s when he just kind of waved it off and said, “I have enough health and life insurance to pay everybody.” Like, willy nilly, like don’t ask questions. (chuckles). So that is something that I should have picked up on, but I didn’t.
[00:17:54] Bob: Well so many of us are groomed to not ask questions.
[00:17:58] Ronda Winn: He had a very narcissistic sense, person and was very um, short. And quite honestly, often very rude. No, people didn’t want to ask questions because they felt uncomfortable.
[00:18:14] Bob: And he certainly never had time for you if you walked in there?
[00:18:17] Ronda Winn: Oh, God, no.
[00:18:19] Bob: Burt Marshall didn’t have time for questions, but he had time to bike around town, to walk in parades, to upsell insurance, and for decades, to send out statements to his 1,000 clients showing they’re earning 8% returns on their investments. For decades. But then, on one day in 2022, time runs out on Burt Marshall. It begins with a simple question — can I have my money back?
[00:18:46] Ronda Winn: I asked for my mother’s money because as in the case with most families, my eldest brother, the eldest son, was technically in charge of my mother and her funds.
[00:19:00] Bob: So you call and say, hey Burt, I want my mother’s money, and what was his first response?
[00:19:05] Ronda Winn: It’ll take some time.
[00:19:07] Bob: So give me a couple of weeks or that kind of thing.
[00:19:08] Ronda Winn: Yeah. You said that so well. Yes, that’s exactly right. Give me a couple weeks, and for that first week you’re trying to believe him.
[00:19:19] Bob: Trying to still believe him because the alternative is so dark, but Chip, Ronda’s brother, keeps pressing for answers that don’t come.
[00:19:29] Ronda Winn: And he saw that transaction and picked it up and said, “Ronda, I’m uncomfortable.” And I said, “Okay. Well I will call tomorrow.” And I did. And then it kind of turned into Chip calling me saying, “What’s going on?” And my calling Burt saying, “What’s going on?” And of course, he never admitted a thing at that point. But weeks passed and I still couldn’t get her money. And then I realized I need to ask for my money pretty quick, but at that point it was too late.
[00:20:05] Bob: A few weeks later, Rachael Owen also learns it is too late.
[00:20:11] Rachael Owen: January 19th, 2023, he called me on my birthday. I had heard back in December that he was sick and in the hospital with a major heart issue. But when January came and he was in the office for a couple of days, he called me on my birthday, the 23rd of, of January in 2023, I received my payment book back from him saying he was no longer in business. He had filed Chapter 11.
[00:20:49] Bob: And when, when, did you, you get that payment book back, but what does that really mean to you?
[00:20:54] Rachael Owen: That means that he’s not making my payments and Chapter 11 means his money’s been froze. Everything he had that, by then was froze.
[00:21:06] Bob: Everything he had was frozen. Rachael has no idea where her money is. She knows she can’t get at it.
[00:21:14] Bob: Well what is it like to get a note like that?
[00:21:16] Rachael Owen: I was, I didn’t believe it, Bob. I didn’t.
[00:21:21] Bob: But pretty soon that dark reality starts to hit.
[00:21:26] Bob: And did you start talking to neighbors around that time about him?
[00:21:28] Ronda Winn: Yeah. Yeah, yeah, we all started saying, oh my God, what have we done?
[00:21:34] Bob: Oh my God, what have we done? News spreads through Hamilton like wildfire as one by one, it seems like the whole town learns that no one can access the money in their Burt accounts, not the fire department, not Ronda, not Rachael, and not the town cemetery. Soon, everyone seems to know that Burt Marshall has single-handedly crushed an entire hamlet in upstate New York.
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