Cancer patient, blind client among victims in $3M fraud
A former advisor was sentenced to federal prison for an almost $3 million fraud that bilked mostly elderly retirees, including one client who was chronically ill with colon cancer and another who was legally blind.
Paul James Marshall, 53, was sentenced to six years and nine months in jail and ordered to pay $2.9 million in restitution in a federal court in Georgia. Marshall was convicted of wire fraud in November after he pleaded guilty.
The former Bear Stearns manager used relationships he forged over a two-decade career to turn clients into victims. He told them their funds were being invested in securities but actually deposited the money into checking accounts that were under his control. When clients sought information about their savings, Marshall mailed fake account statements showing investment accounts, lied to them or ignored them completely.
Marshall then used the money to expense luxury trips, private school tuition, country club fees, alimony payments to his ex-wife and to prop up an energy technology company.
“This defendant stole the life savings of retirees and seniors to fund his lavish lifestyle instead of investing his client’s money as promised,” U.S. Attorney Byung Pak said in a statement.
In 2011, Marshall founded an investment advisory firm, Bridge Securities, to help facilitate the fraud. He told clients to send funds via a wire transfer to JP Morgan or by check made payable to “JP Morgan.” Marshall then deposited the money into Bridge Equity checking accounts held at the bank.
In total, Marshall stole approximately $2.9 million from more than a dozen victims.
“Marshall’s sentencing will be little solace to the dozen victims who lost their life savings due to his greed and callous concern for their well-being,” said David LeValley, special agent in charge of FBI Atlanta.
One of Marshall’s victims was dying of colon cancer in early 2017, according to the sentencing memorandum. After her death, Marshall defrauded the deceased client’s family and used her life insurance money for personal use. He even visited her elderly mother to demand payment for purported tax work done on nonexistent accounts and collected an additional $5,000, court documents show.
Marshall’s attorney, Jerome Froelich, was surprised by the severity of the sentencing.
“He’s been remorseful, pled guilty and fully cooperated with the investigation,” Froelich says. “I think what affected the judge was that some of the victims came forward and testified.”
The victims’ letters described how the complete loss of their life savings forced many to return to the workforce, while others struggled to pay medical bills, court documents show. One client only spoke Spanish and another was legally blind.
One couple in their eighties invested more than $700,000 with the alleged schemers, representing almost the entirety of their cashed-out pension, regulators say.
Overall, the advisor defrauded at least nine clients out of $1 million, which he used to pay for tuition and mortgage payments, federal prosecutors say.
Marshall was also the managing director of Fog Fuels, a firm that developed patented technology to transform fats, oils and greases into biodiesel fuel that could potentially power city buses. The firm landed a potentially lucrative partnership with the city of Atlanta in 2013.
Marshall perpetrated the fraud, in part, to help Fog Fuel build a new factory, Froelich says. “He took the money for personal reasons, but a lot of it went into paying the rent, employees and trying to get Fog Fuel off the ground,” Froelich says, adding that the firm had 22 employees at the time. “He needed to build that factory.”
Marshall had stopped working and put all of his time into the project, according to sentencing memorandums. As for the luxury trips cited by federal prosecutors, Marshall was traveling for business to Detroit and cities in California to discuss similar contracts, Froelich says.
Marshall worked for eight firms over his two-decade career including Bear Stearns and Robert W. Baird, and most recently with the Atlanta-based firm American Wealth Management, per FINRA BrokerCheck records.
He was discharged from Oppenheimer in 2008 after a customer complaint revealed that he had taken a loan from a client and engaged in private securities transactions, according to a BrokerCheck dispute. Marshall said the allegations had “mitigating circumstances” and that the loan was from a business partner, per BrokerCheck.
“This case is not about mismanagement, poor investment decisions or bad luck,” argued federal prosecutors in the sentencing memorandum. “This is a case about outright theft from victims, many of whom were elderly, and the profound losses they suffered as a result.”