The Securities and Exchange Commission filed charges against
Monroe L. Beachy, a 77-year-old Amish man from Sugarcreek, Ohio. They found
the Bernie Madoff of the Amish.
Beachy targeted his fellow Amish in his alleged fraud. He
raised more than $33 million from as early as 1986. Beachy enticed investors by
promising interest rates that were greater than banks were offering at the
time. Beachy told his investors that their money would be used to purchase
risk-free U.S. government securities. Many of Beachy's investors treated their
investment accounts with Beachy like money market accounts, from which they
could withdraw their money at any time. In reality, Beachy used the money to
make speculative investments in junk bonds, mutual funds, and stocks.
By the time Mr. Beachy filed for bankruptcy in June 2010,
less than $18 million of the original $33 million of investor money remained.
I would guess that Beachy started off doing the right
thing, but made a bad investment along the way. Rather than be honest with his
investors, he took greater risks to try and make back the earlier loss, missing
again and again.
Like Madoff, it sounds like he was offering a modest rate
of return. That would allow this Ponzi scheme to go on longer and longer.
Like Madoff, the fraud continued for decades. Because of
the length of Mr. Beachy's alleged scheme, generations of families were
affected. Older generations of Amish investors would referred their children to
Unlike Madoff, Beachy had actually invested the money.
Just not in the safe investments he promised to his investors.
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