Amish Broker Loses $15 million for his Community

February 18th, 2011
in econ_news

Amish men Econintersect:  A member of the Amish community in Sugarcreek, Ohio has been charged with conducting a multi-million dollar investment scam over the last 25 years.  Amish stock broker Monroe L. Beachy has agreed to a settlement with the SEC without admitting or denying the allegations.

The targets of the investment scam were primarily members of Amish communities.

Follow up:

Beachy is reported to have raised $33 million from investors, starting in 1986.  His representation was that he had an investment process that invested in risk-free government securities paying interest rates higher than what could be obtained from banks.

According to Financial Advisor Magazine:

He invested it in speculative securities such as junk bonds, as well as stocks, bonds, mutual finds and Ginnie Mae securities. He began collecting money from investors in 1986 under the company name of A&M Investments, and was a registered rep of H.D. Vest Advisory Services Inc. until 2004.

He raised money from more than 2,600 investors in 29 states--the vast majority of them being Amish. As part of his Chapter 7 personal bankruptcy protection filing on June 30, 2010, Beachy said he lost roughly $15 million of the $33 million he collected.

The SEC says Beachy did his own books and made his own investment decisions. He mailed monthly statements that showed rates of return and account balances, and never disclosed the incurred losses. Beachy's scheme lasted long enough to where second-generation Amish were investing with him.

Beachy was not charged with running a Ponzi scheme because he did not divert any of the funds to his own use or enrichment; he simply invested in ways that lost almost half of the money invested with him.  He also was not subjected to a monetary civil penalty "due to his financial situation."

Source: Financial Advisor Magazine

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