The old Amish man and his $33 million fraud

Folk art carving of an Amish man.

A 77-year-old Amish man, Monroe L. Beachy, is accused of running a Ponzi scheme and bilking his Amish religious community in Ohio.

Mr. Beachy began investing other people's money in 1986. Twelve years later, he was broke. Yet he continued to solicit money from new investors to pay off his old investors. He sent his clients statements showing the money they had available, including interest.

He raised $33 million from over 2,600 investors, most of whom were Amish. Investors included school capital funds, a Mennonite church and the Amish Helping Fund, which makes real estate loans to "preserve the Amish way of life."

Over half of the money is gone, and Mr. Beachy has filed for bankruptcy.

Many Amish were stunned by the news, because the fraud is so contrary to Amish tradition.

Said Donald B. Kraybill, an expert on Anabaptist groups:
"The Amish view of finances can be summed up in these words: work hard, be frugal, save your pennies, make wise investments, be honest, and never spend money on yourself or a lavish lifestyle.

Monroe Beachy likely began his investment company with the good intention of helping people in his community earn higher returns on their savings than they could from local banks. With self-taught skills he had attained esteem as an investor who could produce steady returns. As a respected leader in the community he and garnered a widespread reservoir of unqualified trust. Because his business had no apparent financial problems Amish leaders were not suspicious.

Honesty and truth telling is one of the highest moral virtues in Amish life based on Jesus teaching, let your Yea be Yea and your Nay, Nay (Matthew 5:37), Amish people believe truthfulness reflects godliness and consider lying a sin. Children are promptly punished for lying.

In this oral-based culture, deals are sealed with a handshake and grounded in trust rather than legal documents. Attorneys and contracts are used for real estate transactions and major business agreements; nonetheless handshakes and verbal promises certify many transactions.

In a society where honesty is so deeply bred and trust is taken for granted, affinity fraud can easily happen. Beachy's moral transgressions are threefold: deceit, harming others, and violating the Amish taboo against bankruptcy."

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Related Posts with Thumbnails