The 74-year-old turned himself in at a county jail after an arrest warrant was issued, accusing him of molesting two teenagers in 2010. His arrest follows the filing of several lawsuits against him for allegedly paying 10 teens for sex acts.
The charges could go before a grand jury in the next few weeks or soon after the first of the year, special prosecutor Matt Powell said.
"This is the beginning of the process," Powell said. "This is what we felt like we needed to do."
According to criminal complaints filed in Potter County, Marsh had the teens engage in sexual acts, including masturbation and oral sex, on three days in 2010. He was charged with six counts of child sexual assault and five counts of sexual performance by a child.
Marsh's criminal attorneys, Paul Nugent and Heather Peterson of Houston, denied the charges, saying in a statement that the teens in the civil cases waited until Marsh suffered a massive stroke last year to move forward with a plan "to become multimillionaires" by signing with a Houston personal injury attorney.
"The investigation into the group's claims is far from complete," the attorneys wrote in their statement. "There should be no premature rush to judgment. Stanley Marsh 3 is not guilty of the group's allegations, and will fight as vigorously as his declining health permits."
The six lawsuits claim Marsh paid the boys, ages 15 and 16, for sexual acts. One claimed that Marsh provided him drugs and alcohol, bought him two cars, and paid him at several points during a year in sums of as much as $10,000.
Marsh's civil attorney, Kelly Utsinger, has denied those allegations. He did not immediately return a call seeking comment on Wednesday's criminal complaints.
The teens' Houston-based civil attorney, Anthony Buzbee, said two of the teens went to police in late summer before the lawsuits were filed, but two others didn't speak with investigators until early November -- about the time Marsh's offices were searched. One teen's mother sought out a civil attorney when she didn't hear back from police, according to the lawsuits.
Marsh is probably best known for planting 10 brightly painted Cadillacs nose down along Interstate 40 in the Panhandle in the 1970s. The cars, ranging from a 1948 club coupe to a 1963 sedan and gathered from junkyards, private collectors and used car lots, have since become a pop art landmark.
Visitors through the years have splattered them with graffiti and in 2005 they were coated in pink to honor breast cancer victims, survivors and their families. Marsh also has painted them black and yellow to honor the passing of longtime friends.
An Amarillo native and philanthropist, Marsh and his wife have donated to local art and education causes. After he suffered the massive stroke and a series of smaller ones, his wife was appointed his guardian.
Marsh was indicted on charges of indecency with a child in 1996, but the charges were eventually dismissed. That same year Marsh acknowledged no wrongdoing in a settlement with a youth who claimed Marsh sexually abused him.
In 2001, parties in four lawsuits that alleged imprisonment, sexual misconduct and harassment of teens were settled. Marsh apologized but no other details were made public.