'Amish Madoff' accused of $33m fraud involving 2,600 investors

 

Los Angeles

You don't need to drive a Porsche and jabber into a mobile telephone to commit a multimillion-dollar financial fraud. Just ask victims of Monroe Beachy, a 77-year-old Amish elder who has been accused of taking $33m from fellow members of his community in a Bernie Madoff-style Ponzi scheme.

More than 2,600 investors have seen their savings wiped out since the collapse of A&M Investments, the firm Mr Beachy ran from his home in the secluded village of Sugarcreek, Ohio, for almost 25 years, according to charges filed by the US Securities and Exchange Commission (SEC).

The vast majority of his clients were Amish, from a fundamentalist branch of the Mennonite Church whose followers shun modern technology such as electricity and motor vehicles. The personal effects listed in Mr Beachy's bankruptcy filing include his horse, cart, and leather harness. According to prosecutors, Mr Beachy began trading in 1986, telling potential customers that their money would be used to buy ultra-safe bonds and US government securities. Despite the low-risk nature of the investments, they were told to expect far higher rates of return than from a normal bank account.

Although investors were sent regular statements telling them their nest-eggs were growing steadily, the SEC claims A&M was in fact a Ponzi scheme. Its dungaree-wearing proprietor was losing vast sums on the markets, and using money from new clients to cover his commitments to existing ones.

Things started spiralling out of control afterthe dot-com crash of the late 1990s, it is claimed. Despite his community's supposed rejection of modernity, Mr Beachy decided to invest a hefty proportion of his funds in technology stocks. Many investments were completely wiped out. "In hindsight," his attorney declared in a bankruptcy filing, "[he probably] should have ... shut down at that point." Instead, he soldiered on, accepting fresh funds from churches, families and Amish community groups. Most of their cash was parked in risky stocks or junk bonds in an effort to recoup lost capital. His fund staggered on until last year, when it finally ran out of cash. Shortly afterwards, Mr Beachy was forced to file for bankruptcy.

"At the time this scheme was uncovered, the more than 2,600 investors believed they had a total of $33m," said the SEC, which cottoned on to the affair shortly after A&M's unfortunate clients were told the fund was insolvent. "In reality, on-hand assets were just below $18m."

The SEC is seeking an injunction and penalties against Mr Beachy for securities fraud. But getting to the bottom of the case may prove tough: a tranche of his financial records – some of which, in keeping with Amish tradition, were kept on paper rather than in computer files – appear to have been destroyed. Key witnesses are also proving tricky to contact, since many fundamentalist Amish do not own a telephone, let alone have use of email. Some prefer to communicate with the authorities by handwritten letter.

The notion of bankruptcy is taboo in Amish circles, meaning many of Mr Beachy's former clients have also been reluctant to pursue claims for compensation through the normal courts. They would rather settle the affair within their community, and argue that engaging with the US legal system violates their religious freedom.

Meanwhile, Mr Beachy is keeping a low profile. Reached via telephone by the Washington Post yesterday, he said: "My attorney advised me not to discuss [the case] with anyone." When asked about the huge losses his fund had accrued, he added: "Of course, it was not intentional."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
News
i100
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Sport
Dwight Gayle (left) celebrates making it 1-1 with Crystal Palace captain Mile Jedinak
premier leagueReds falter to humbling defeat
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Austen Lloyd: Corporate Solicitor NQ+ Oxford

Excellent Salary: Austen Lloyd: CORPORATE - Corporate Solicitor NQ+ An excelle...

Reach Volunteering: Financial Trustee and Company Secretary

Voluntary Only - Expenses Reimbursed: Reach Volunteering: A trustee (company d...

Recruitment Genius: Senior Project Manager

£45000 - £65000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Shopfitter

Negotiable: Recruitment Genius: This is an opportunity to join a successful an...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin