The Amish Bernie Madoff
Monroe Beachy doesn't particularly stand out in the Amish community of Sugarcreek, Ohio.
"He's a little under 6 feet tall, has short gray-white hair," Beverly Keller, the editor of the Budget newspaper in Sugarcreek, tells Weekend All Things Considered host Guy Raz. "He is your typical Amish man with a beard and wearing the suspenders."
She's only met Beachy, 77, in passing, but has become well-acquainted with his story. Federal investigators say that Beachy was using his business, A&M Investments, as a front for a multimillion dollar Ponzi scheme.
It came to light when Keller was walking to work last June and noticed something odd.
"I saw this sign on the front of A&M Investments that said 'Closed due to investigation' and I scratched my head and I said, 'Oh, there's got to be something to this,'" Keller says.
Keller started to investigate and found out that Beachy, a pillar of the Amish community, was under investigation by the Securities and Exchange Commission for fraud.
Like most Amish men, Beachy has an eighth grade education. In the 1980s, he took a few classes at H&R Block, set up an investment fund for his fellow Amish and came to be regarded as a kind of financial guru for the community.
"He was paying 5, 6, 7 8 percent," Keller says. "And that's not something you're going to get at the bank."
Investors would send him cash in the mail. Every month, Beachy sent out handwritten statements, outlining investors' supposed new balances.
"In reality, he was not earning that," Keller says.
Over the next two decades, he acquired $33 million from investors in 29 states. He took the money and put it into junk bonds and Internet schemes. But he never made any profit. In fact, the fund hemorrhaged money.
Beachey was seen by his fellow Amish as a Warren Buffett-type figure with the power of Treasury Secretary Timothy Geithner and the methods of convicted financier Bernie Madoff. When the SEC caught up with him, it figured out he had almost nothing to show for.
"Really, his only assets were his horse, his buggy, and his harnesses," says Keller.
But to his community, Beachy's biggest sin was filing for bankruptcy rather than working it out within the Amish legal system. In December, he filed a motion in federal court to have his bankruptcy rescinded, a move the SEC is challenging. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.
GUY RAZ, host:
Monroe Beachy doesn't particularly stand out in his community of Sugarcreek, Ohio. He's 77 years old.
Ms. BEVERLY KELLER (Editor, Budget): ...a little under six feet tall, short gray-white hair. He is your typical Amish man with a beard and suspenders and that type of thing.
RAZ: That's Beverly Keller. She's the editor of the Budget in Sugarcreek. It's the national newspaper that covers the Amish community. About a year ago, she was on her way to the office...
Ms. KELLER: It was a Monday. And actually on my way to work, I saw this sign on the front of A&M Investments that said: Closed due to investigation. And I scratched my head and I said, oh, there's got to be something to this.
RAZ: A&M Investments stands for Amish and Mennonite Investments. It was run by Monroe Beachy. So Beverly started calling around to see what was going on. And what was happening was that Monroe Beachy, a pillar of the Amish community, was under investigation by the Securities and Exchange Commission, under investigation for fraud. And the news hit northwest Ohio fast.
Unidentified Man #1: ...$33 million from investors between...
Unidentified Woman: ...and what is described as a case involving a multimillion-dollar fraudulent offering scheme...
Unidentified Man #2: It all came crashing down after the broker filed for bankruptcy.
RAZ: Now, like most Amish men, Monroe Beachy has an eighth grade education. Back in the 1980s, he took a few classes at H&R Block and came to be regarded as a kind of financial guru for the community.
Ms. KELLER: He was a very reputable man. He was someone you went to, you know, for financial questions and answers. I mean, he - you have to understand he was a very trusted man in this community.
RAZ: And in the late 1980s, he started up an investment fund for his fellow Amish, and his record was great.
Ms. KELLER: He was paying five, six, seven, 8 percent. And that's not something you're going to get at the bank.
RAZ: Every month, Monroe Beachy would walk through the village, handing people handwritten statements.
Ms. KELLER: Saying, hey, you earned this much. Yay, congratulations. And in reality, he wasn't earning that.
RAZ: Over the next two decades, Amish folks in 29 states handed Monroe Beachy $33 million.
Ms. KELLER: As silly as that sounds to us, that you would put money in an envelope and mail it, they did.
RAZ: Beachy took their money and put it into junk bonds and Internet schemes. But it turns out his investment never made any profit. In fact, the fund was hemorrhaging money. It was a Ponzi scheme, and there was something else.
Ms. KELLER: Monroe Beachy was also the treasurer for a group known as the Amish Helping Fund. Now, the Amish Helping Fund could be considered a bank in and of itself.
RAZ: As Beverly explains, Monroe Beachy was seen by his fellow Amish as a Warren Buffett-type figure with the power of Timothy Geithner and the methods of Bernie Madoff. When the SEC finally caught up with him, they soon figured out he had almost nothing to show for.
Ms. KELLER: ...and really, his only assets were his horse and buggy and harnesses.
RAZ: But to the community, his biggest sin wasn't ripping people off but filing for bankruptcy rather than working it out within the Amish legal system. So last December, Monroe Beachy filed a motion in federal court to have his bankruptcy rescinded. The SEC is currently challenging it. And Beverly Keller is still following the story for the Budget newspaper in Sugarcreek, Ohio. Transcript provided by NPR, Copyright National Public Radio.