A 77-year-old Amish man has been indicted for mail fraud as part of an investment scam that caused more than 2,000 people in 29 states to lose nearly $17 million. Monroe Beachy, accused of running an investment scam for five years, could face 20 years in prison.
Bankruptcy and SEC lawsuit preceded federal charges
Monroe Beachy of Sugarcreek, Ohio, could face 20 years in prison for mail fraud, according to the Daily Mail. Beachy is accused of defrauding investors by lying in mailed statements and bleeding thousands of people in 29 states of $16.8 million through his investment firm, A&M Investments. Federal charges were filed Friday, Sept. 16.
Not his first fraud charge
Beachy had already been accused of running a scam and defrauding investors, which included an Amish community loan fund and non-Amish people. According to ABC, the Securities and Exchange Commission filed a complaint against Beachy in February, saying he had raised at least $33 million from investors and misled them about the nature of their investments and returns.
By February, according to The Telegraph, Beachy’s investing strategy had resulted in $15 million in losses but was repeatedly mailing statements showing gains to investors. His company, according to ABC, filed for Chapter 7 in June 2010.
Lied about investment strategy
Beachy promised investors that he would channel investments into mortgage-backed securities, through the independent government agency Ginnie Mae Bond Fund, according to ABC. Instead, he was investing money in government bonds, mutual funds and stock. Those investments also included putting money into internet companies, according to The Telegraph.
By the time that A&M filed for bankruptcy, the company listed $18 million in assets and $33 million in debts. However, the bankruptcy filing in 2010 was dismissed after A&M’s investors filed for a dismissal to resolve the financial issues in-house. The Amish are an insular group and prefer to settle disputes without involving outside authorities, according to the Daily Mail. Residents of Sugarcreek are said to be more disappointed in the case being taken to court outside the church and the community than in the loss of money. Though Beachy is being referred to as an “Amish Bernie Madoff,” his crime doesn’t resemble Madoff’s in that he didn’t profit financially.
Fraud of affinity
The crime Beachy is accused of is referred to as a “fraud of affinity,” which is when a person commits a fraud by seeking out people they share commonalities with such as religion, race or background and exploits that implicit trust.
According to the Wall Street Journal, Bernie Madoff’s crimes fit that definition, as Madoff and many of Madoff’s victims were Jewish.
According to the Salt Lake Tribune, affinity fraud among Mormons is disturbingly high. The state of Utah has a dark reputation as being the capital of fraud for the U.S. It was estimated in 2010 that up to $1.4 billion had been lost to affinity fraud in Utah in “recent years.”
Daily Mail: http://www.dailymail.co.uk/news/article-2038056/Amish-Madoff-charged-defrauding-investors-17m.html
The Telegraph: http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8332139/Amish-Madoff-accused-of-20m-fraud.html
Wall Street Journal: http://online.wsj.com/article/SB122956340954216799.html
Salt Lake Tribune: http://www.sltrib.com/sltrib/opinion/50306723-82/fraud-mcadams-utah-affinity.html.csp
Deseret News: http://www.deseretnews.com/article/705386044/How-affinity-fraud-hurts-LDS-church-members.html
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