Bad Neighbor: The Man Who Defrauded a Small Town, Part 1

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[00:00:01] Bob: This week on The Perfect Scam.

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[00:00:05] Bob: Tom was buried there, right?  

[00:00:07] Rachael Owen: Yes, he was buried there 2020. Burt Marshall is not going to take this cemetery away from us. He is not.

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[00:00:22] Bob: Welcome back to The Perfect Scam. I'm your host, Bob Sullivan. It seems like every small town has a Burt Marshall. He handles everyone's insurance. He pays for the kids' sport jerseys. He bikes up and down Main Street all the time. He's the mayor without being the mayor. Often that's just small-town charm, but sometimes the neighbor everyone knows has a dark secret that no one knows, and it only comes to light when that charming town and that charming man are turned upside down. In this case, that charming town is Hamilton, New York, home of Colgate University not too far from Syracuse. That man with the secret is Burt Marshall. And the pain he caused his community cut so deep that you couldn't escape the fallout even in death.

[00:01:13] Bob: So describe Hamilton for people who aren't familiar with it.

[00:01:16] Ronda Winn: It's a picturesque university town, lovely buildings. Lovely, it's a lovely small town. Picture-perfect small town.

[00:01:28] Bob: That's Ronda Winn. She's lived in this upstate New York hamlet almost all her life. And it seems like she knew Burt Marshall the whole time. Burt, now 75, took over the family business decades ago. He did tax returns for half the town it seemed. He also sold insurance, and he was a big landlord too with more than 100 properties, many rented to college students. He even had a self-storage business on the side. He seemed to be a part of everything.

[00:01:58] Ronda Winn: You know he always donated to the school and the sports teams, contributing to the Boy Scouts and the Cub Scouts and the hockey team and the soccer team and, he couldn't have made himself more picture-perfect than he did.

[00:02:15] Bob: It seemed like everyone knew Burt for decades.

[00:02:19] Bob: Do you remember when you met him?

[00:02:21] Rachael Owen: It was the end of the '90s.

[00:02:24] Bob: That's Rachael Owen. You heard her a moment ago talking about her husband Tom, who died a few years ago and is buried in the town cemetery, a cemetery by the way, that was founded back in 1811, so this is a place that marks time more in centuries than decades. Anyway, like many residents, Rachael started small with Burt.

[00:02:46] Bob: How did you meet him?

[00:02:47] Rachael Owen: Well I was a claims examiner at an insurance company for homeowners, and he was an agent, and he wrote a lot of business through us. So through the homeowner business, I met Burt, and he did my taxes and I was on the phone with him workwise for a couple of years before I actually started doing business with him. He wasn't just a insurance guy, he was, he knew his stuff, and I first started, my husband and I started letting him do our taxes, and then we let him write our homeowner and auto policy, our umbrella policy, our rental policy, so he was running all, writing all of my insurance business.

[00:03:42] Bob: Burt's empire begins with his tax preparation business. He does roughly 2000 tax returns a year, so he's at the kitchen table for nearly every Hamilton family's financial conversation. And when you come in to do your taxes, well there's a sign on the wall in his office that offers an enticing deal; invest with Burt and earn higher interest than any bank will pay.

[00:04:04] Ronda Winn: Well if you know who's getting money back, you've got the pick of the crop. (chuckles)

[00:04:10] Bob: He knows what everybody's income is, right, he knows when to ask them for their money 'cause they get a big re--, fat refund or whatever, right?

[00:04:18] Ronda Winn: Right, so then that sign was there and of course everyone's thinking, alright, well I'm getting $5,000 back, so maybe I'll do that, or whatever. But...

[00:04:27] Bob: Yeah, sure.

[00:04:27] Ronda Winn: And at that time the banks were paying nothing, so it seemed like a great idea.

[00:04:33] Bob: And he seems ever present in his clients' lives, like when it's time to add a teenager to the auto insurance.

[00:04:41] Ronda Winn: "Well your kids are getting older; you're going to need more insurance." And it's just and then the way he would say it, you thought, oh well I guess I'd better do that. He did a lot of calling people and saying, "Well I can add this to your policy, and you won't even notice."

[00:04:59] Bob: You won't even notice because Burt also operates something of a bank. Residents would give their cash to him for safekeeping and he guaranteed a hearty return on their money. After years of banks paying 1% or less for savings accounts, that is indeed an attractive alternative. And after decades of on-time monthly interest payments, eventually it seems like everyone in town has a Burt investment account. People use it for their retirement savings too, so many accounts have well more than $100,000 in them. How do people find out about these high-yield Burt accounts? Well it's mainly word of mouth, and that sign.

[00:05:39] Ronda Winn: He always had a little sign in, in his office, not displayed anywhere else, that would say, 10% on return on all invested monies or 8% return, or that sign was always visible for the people who were getting their taxes done, but not anywhere else in the building.

[00:06:01] Bob: Burt would give his investors a promissory note and send them regular statements. They can reinvest the money or live off the interest. The accounts provided an added layer of financial security to this little college town. When someone occasionally asks how Burt could make these generous interest payments, well he'd explain that residents were simply investing in Burt, especially in his ever-expanding rental property empire.

[00:06:28] Rachael Owen: The pitch, it was like well I own, he, at the time he owned like probably 30, 35 houses in Hamilton. But he owned, then he started a rental for trucks. You could rent a truck and take it out of state, a rental business. And then he was buying apartments. And he kept buying houses and he kept telling us that this is where the money, this is where our money is, is it in houses, in, in rentals, and...

[00:07:04] Bob: So you already, he doesn't your taxes. You're, you're friendly with him, you respect him, and he comes to you and he says, look, I have this offer. Well tell me how he described it.

[00:07:13] Rachael Owen: It's a promissory note. He did say promissory note, and he says it's 8% a month, and he kept, kept saying that it was guaranteed. The banks weren't paying me any interest in the bank, so I was moving over like I'd cash my paycheck and I didn't give it all to him, but I gave him pretty well much of my cashed paycheck to put in my account.

[00:07:44] Bob: Residents like Rachael enjoyed those reliable interest payments for years and didn't mind telling other people about it.

[00:07:51] Rachael Owen: "Well, here's my paperwork, you can see it. I'll show you my paperwork," and it was like 10, 12, 15 years. Then I got up to 22 years of good business with him, so I wasn't afraid to tell other people about the 8%. My brother joined us...

[00:08:09] Bob: He sure seems like part of the family, or at least.

[00:08:12] Rachael Owen: Yeah, he, for 22 years I really thought he was a friend.

[00:08:18] Bob: So much a friend that, well Rachael and Burt celebrated each other's birthdays every year.

[00:08:23] Rachael Owen: His, his agency calls every person that insures their policies with him, calls them on their birthday. How many agents do that? And he's done it for years. Every birthday he would call Tom and myself.

[00:08:42] Bob: And you, apparently you would celebrate his birthday, right?

[00:08:45] Rachael Owen: Yep, yep. In August I would either bake him a cake or a pie or cookies, and I'd get him balloons. In his office he had like 15 people working there, and they worked very quiet. They were all women. He never had men working in his office, and every Monday they got a, a bouquet of fresh flowers put on their desk, but it was quiet as a mouse when you walk in there until I come in with some balloons and I'm yelling "Happy Birthday" and that's when the office got a little loud because I was not a quiet person.

[00:09:25] Bob: But not many people bake a cake for their financial advisor on their birthday. That just shows how friendly you were with him, right?

[00:09:33] Rachael Owen: Right. I could call him. In fact 2012 I retired. He helped me set up my retirement.

[00:09:44] Bob: And when her husband Tom passes away, Rachael leans on Burt for advice and security. And he, well he takes care of her finances.

[00:09:53] Rachael Owen: When my husband passed, I started using my money monthly, so I was getting notes from him every month, 'cause I would have him put $1000 in my checkbook, and then when my husband passed I bought a, a new tractor, and I gave Burt my payment book for the tractor, so he was putting $1000 in my checkbook and paying my tractor payment a month. I was getting $1500 a month on my 8%. I was using my money.

[00:10:34] Bob: By then, Rachael has persuaded two of her children and three of her grandchildren to get in on Burt's investment accounts. All told, the family has more than $200,000 invested with Burt. George Cowen, another neighbor, isn't quite sure what to think when Burt offers these 8% returns to him.

[00:10:55] Bob: Do you remember the first time that you encountered uh, Burt?

[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.

[00:21:59] Rachael Owen: I had Herald Post newspaper out of Syracuse call me for a statement, and when they called me, I said, "Look, I've got to think about this." I said, "He's my friend. I can't believe he did this to me. I can't believe it." And I, so I wouldn't give them a statement at that point. I had to accept that he was no good and he planned this.

[00:22:27] Bob: But you must have felt terribly betrayed.

[00:22:30] Rachael Owen: I was. As far as, I just, everybody else that was contacted, that I don't feel they had a relationship that I had. I trusted the man fully. He helped me retire. He helped me put my money in a safe place. He did that. He didn't suggest taking my money at that point. He didn't.

[00:22:54] Bob: You made him birthday cakes, for heavens' sake.

[00:22:56] Rachael Owen: I know, and I did it for a few years.

[00:23:00] Bob: From birthday wishes and cakes to Chapter 11 and finding out the money is frozen to finding out Burt is actually under investigation for a crime. That's how George and Crystal Cowen got the bad news anyway.

[00:23:16] Bob: So how much money did you give him over the years?

[00:23:19] George Cowen: Well, in the end with interest and so on over the years, I ended up with $260,000 invested.

[00:23:28] Bob: Wow. And, and does that represent a lot of your personal fortune?

[00:23:33] George Cowen: Well, it represented, oh, about half of it I would say.

[00:23:38] Bob: Hmm. How, how did you find out something was wrong?

[00:23:41] George Cowen: We received notice that he was being investigated by our New York State Attorney General, and his business was, and Leticia James, that is, here in New York State. And one of her agents who lives in Syracuse was assigned to getting in contact with me and we went from there.

[00:24:08] Bob: Tell me what it feels like to get a letter like that.

[00:24:11] George Cowen: Well, it's rather disheartening to know that you've been duped. But that was reality and not only I, but many other people fell prey to Burt.

[00:24:25] Bob: Burt Marshall said his 8% returns were guaranteed, but that guarantee is worthless. As long as new investment money was coming in, he could keep up the payments, but at some point in the waning days of the COVID crisis, Burt's house of cards fell. Maybe it was his own illness, maybe it was a softening of the college rental market during the remote learning experiment. But Burt wasn't running some kind of real estate investment vehicle. The Attorney General of New York now alleges that despite all the tax returns, all the rental properties, all the birthday calls, Burt Marshall was just running a Ponzi scheme.

[00:25:02] Ronda Winn: It was the perfect scam until it wasn't. But literally during that time I was drawing the payments, and they came every month with a statement, and the statement was already correct. And it kind of gave you a false sense of security like okay, well this looks okay and I'm getting my money, like they said I would, and everything seems fine until it wasn't fine.

[00:25:36] Bob: Everyone from Colgate college professors to the town accountant to the fire department and the cemetery, they're all victims, and now Burt Marshall is out of money. It all comes crashing down very fast.

[00:25:51] Bob: Now at this point you, somewhere along the line you realize it's everyone, right? It's all these people; it's all these people in the community. It's the fire department. When do you find out that it's this wide problem?

[00:26:00] Rachael Owen: I, well I, I, I realized it, it was like April or May of 2023 that the Herald Post called me for a statement, and at that point I was really mad, so I gave them a statement. I gave them a statement because I was mad at that point that he had done it, and he, it wasn't just me. It was everybody in Madison County.

[00:26:27] Bob: Rachael, Ronda, George, Crystal, and it seems everyone in Madison County has a lot to be mad about. And as they watch the investigation unfold and wonder if they'll ever see a penny of their money, it seems like Burt Marshall is just going on as if nothing is wrong.

[00:26:43] Ronda Winn: He used to ride his bicycle by my house every day and it drove me crazy for two years. So...

[00:26:50] Bob: Even after you, you knew all this, he would ride his bike right by your house.

[00:26:53] Ronda Winn: Yeah, for two years. He'd be riding his bike right in front of my house, just as happy and carefree and every time I saw him, it was just, that was like a punch in the stomach. Every single time I saw him pedal by, and I thought, my God. I can't believe no one has run you over yet.

[00:27:19] Bob: As Burt pedals carefully it seems past his victims' homes, the ramifications of Burt Marshall's crimes start to become clear. Remember, Rachael had convinced her two children and three grandchildren to invest with Burt. And even the town's cemetery had put all its operating funds into a Burt account. When her husband, Tom, died, Ronda buried him there. A cemetery can't function without operating funds, so the 200-year-old institution where he husband Tom is buried, well it might have to be abandoned. That's how deep the wound is from Burt Marshall's crimes. Can a cemetery be saved? Will Burt Marshall finally face justice? Where is that $94 million? And can the town of Hamilton ever recover? Well that's next week on The Perfect Scam.

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[00:28:25] Bob: If you have been targeted by a scam or fraud, you're not alone. Call the AARP Fraud Watch Network Helpline at 877-908-3360. Their trained fraud specialists can provide you with free support and guidance on what to do next. Our email address at The Perfect Scam is: theperfectscampodcast@aarp.org, and we want to hear from you. If you've been the victim of a scam or you know someone who has, and you'd like us to tell their story, write to us. That address again is: theperfectscampodcast@aarp.org. Thank you to our team of scambusters; Associate Producer, Annalea Embree; Researcher, Becky Dodson; Executive Producer, Julie Getz; and our Audio Engineer and Sound Designer, Julio Gonzalez. Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts. For AARP's The Perfect Scam, I'm Bob Sullivan.

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