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SEC Seeks to Recover Funds from NC Insurance Agent’s Alleged Investment Scam

By | May 31, 2023

The U.S. Securities and Exchange Commission has asked a federal court to bar a North Carolina insurance agent and financial advisor from trading securities and to disgorge ill-gotten gains from a real estate scam, according to court papers filed Tuesday.

It’s the second time in the last 25 years that Marshall E. Melton, of Greensboro, has been sanctioned by the SEC. In 1997, Melton pleaded guilty and served one year of supervised probation. In 2003 he was ordered by the federal agency to avoid all association with the securities industry.

The latest complaint, filed in U.S. District Court in Greensboro, charges that Melton, 65, ran a scheme from 2016 to 2021 that defrauded elderly investors out of as much as $1.5 million. He promised to purchase seven run-down properties in Laurinburg, in southeast North Carolina, renovate them, then pay the investors from rentals and sales of the properties, the SEC attorneys said in the filing.

“Melton’s representations were false,” the complaint reads.

The man purchased the properties but did little to renovate them. He never paid the investors their promised returns, the SEC said.

“Instead, Melton misappropriated for his own use nearly two-thirds of the investors’ funds,” the complaint notes.

In 2021, to mollify two complaining investors, Melton transferred ownership of five of the sites to those investors. But he also fraudulently induced two other investors to relinquish their interests in those properties and promised to “get something better,” the agency said.

The North Carolina Department of Insurance shows that Melton has been an insurance agent since 1988 and holds an active insurance producer’s license, due to expire at the end of June 2023. He is appointed with American General Life Insurance, EMC National Life and EquiTrust Life Insurance. Melton could not be reached Wednesday morning. A phone number for Integrated Consulting did not go through and another number was not answered.

In recent years, Melton also was managing partner of Integrated Consulting and Management Inc., which handled the real estate investments, the court document shows. But regulators said it was never a legitimate operation, with Melton diverting much of the investors’ money to his personal account.

“In fact, a pattern emerged with Melton’s receipt of each investor’s funds, namely, that (as) the balance of Integrated Consulting’s bank account had become nearly depleted, Melton received new investor funds into the account, and thereafter diverted much of those investor funds to his own use,” the SEC complaint contends.

The SEC is asking the court to enjoin Melton from participating in the sale or purchase of any securities related to real estate, except for his own use; to give up the fraudulently obtained proceeds; and to pay penalties and other relief the court deems appropriate.

It’s unclear if Melton will also face criminal prosecution. An SEC attorney declined to comment Tuesday.

The action against the insurance agent comes four months after two insurance agents in Whiteville, North Carolina, pleaded guilty to running a multi-million Ponzi scheme.

Topics Agencies North Carolina

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