A woman from Marion, Iowa, has pled guilty to wire fraud after misusing funds from a special needs trust. Megan Middaugh, 39, admitted in federal court in Cedar Rapids on March 20, 2025, that she spent nearly all the money intended for the trust on personal expenses.
Middaugh had petitioned a state court in September 2019 to settle a personal injury lawsuit and establish a special needs trust for the victim. The court approved her request in October 2019. By February 2020, she opened a checking account under the medical assistance special needs trust and deposited $67,070.50 from the settlement. As trustee of the account, Middaugh used almost all of these funds for her own expenses, including $52,000 on online gaming between February 2020 and January 2021.
Middaugh did not file required annual accountings of the trust with the state court for three consecutive years: 2020, 2021, and 2022. After being summoned to a compliance hearing by the court, she submitted false reports indicating regular expenditures on behalf of the victim.
Sentencing will be scheduled following the preparation of a presentence report by United States District Court Chief Judge C.J. Williams. Middaugh is currently free on bond but faces up to 20 years in prison, a fine of $250,000, and up to three years of supervised release post-imprisonment.
The case is being prosecuted by Assistant United States Attorney Kyndra Lundquist and was investigated by Marion Police Department.