Clients Sue Berkshire Bank for Allegedly Enabling Massive Ponzi Scheme

Investors who allegedly lost tens of millions of dollars in a massive, long-running Ponzi scheme are suing Berkshire Bank, claiming the lender facilitated the fraud and ignored obvious warning signs about it.

In June, New York Attorney General Letitia James announced criminal charges against Miles Burton Marshall, an insurance agent and tax preparer accused of bilking investors out of $50 million over more than 30 years.

The new lawsuit, which is seeking certification as a class action, alleges that Berkshire Bank ignored suspicious movements of large sums of money among Burton’s accounts. It pegs the scope of the alleged fraud at closer to $100 million.

“Banks have incredibly sophisticated fraud-detection systems that alert them almost immediately to any suspected fraudulent behavior,” Dan Centner, a partner with the law firm Peiffer Wolf Carr Kane Conway & Wise who is representing Burton’s investors, said Wednesday during a media event announcing the lawsuit. “Berkshire Bank had those systems in place, and we know those systems worked,” he added, noting that the lender’s surveillance systems produced “dozens of alerts” about Marshall’s activity that went unheeded.

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Shock of a lifetime. One alleged victim involved in the class-action lawsuit, Darlene Stetson of Waterville, N.Y., said that she and her husband began working with Marshall as their tax preparer, and then started investing in the purported promissory notes, steadily contributing to what they thought was a stable, interest-generating investment over several years.

“We lost it all—about $70,000 in principal contributions, not to mention all of the interest we thought we were earning,” she said at this week’s media event. “It was one of the biggest shocks of our lives when this all came crashing down.”

Earlier this month, Berkshire Bank’s parent company, Berkshire Hills Bancorp, merged with Brookline Bancorp to create Beacon Financial Corporation, a Boston-based entity that is the parent of Beacon Bank, which serves New England and New York.

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The class-action lawsuit alleges that one of Burton’s former banks cut ties with him owing to suspicious activity and warned Berkshire in 2021 that he was likely running a Ponzi scheme.

“That’s simply incredible,” Centner said. “Marshall’s scheme was so apparent and so obvious that another bank, a bank that Marshall no longer had any relationship with whatsoever, reached out to Berkshire Bank to try to stop it.”

The criminal indictment against Marshall alleges that he tricked investors, including his tax and insurance clients, into putting money into a purported real estate fund, promising a guaranteed annual return of 8%. Participants in the so-called Eight Percent Fund thought their investments were supporting the purchase of properties, the refurbishment of rental homes, and other expenses associated with Marshall’s real estate business.

Commingling funds. The lawsuit filed this week alleges that Marshall maintained one account in his own name at Berkshire and six others that were jointly in his name and various “doing business as” entities. The lawsuit alleges that Berkshire was aware that Burton was selling promissory notes, that he was commingling the funds and making substantial, regular deposits and withdrawals, and that he lacked the funds to satisfy the future promissory notes.

“[T]hese were not mere ‘red flags’ that Berkshire could or should have detected,” the lawsuit states. “Specific reports disclosed this information to Berkshire on a nearly real-time basis. In short, throughout their banking relationship, Berkshire Bank possessed actual knowledge that Marshall was running a Ponzi scheme.”

The lawsuit alleges that after Berkshire announced it was closing the bank branch that Marshall used most frequently, it provided him with a check scanner that would allow him to deposit up to $300,000 a day.

Prosecutors in the criminal case allege that Marshall used some of the money he raised for personal expenses and to fund his other businesses, and that he made Ponzi-like payments to earlier investors, covering his tracks with falsified statements.

Source: Barrons September 11 2025