Feb. 18, 2011 -- Daniel Miller, a victim of the Amish "Madoff" scheme in Sugarcreek, Ohio, and dozens of other Amish creditors say they prefer the bankruptcy proceedings related to their $33 million in investments be dismissed.
Miller was one of 2,600 creditors in 29 states, mostly from the Amish community, who invested money with Monroe Beachy, a 77-year old Amish man accused of running a Madoff-like Ponzi scheme, according to the Securities and Exchange Commission.
"I think the Amish can do a lot better job for the creditors than what the government can do," Miller said. "Instead of the bankruptcy attorneys handling everything and dragging into the court system, they will take it and distribute it to the creditors involved. It makes more sense to me."
Miller, 55, does not believe Beachy intentionally tried to defraud his Amish neighbors but actually hoped to recoup unanticipated losses, such as from crashes in the stock market, for his investors.
"I really don't think he is the kind of person who intentionally dragged it down," said Miller, who said he invested with Beachy more than 10 years ago. "I think he figured he could bail it out again."
Beachy, doing business as A&M Investments, raised at least $33 million, according to the S.E.C. complaint filed this week. He sold investment contracts from as early as 1986 through June 2010, telling investors their money would be used to purchase risk-free U.S. government securities, but instead he made speculative investments, according to the filing.
Media headlines are comparing Beachy to Bernie Madoff, the investment advisor who choreographed a $50 billion Ponzi scheme since the early '90s, because of the long period in which they both falsified positive returns to investors.
As part of the investigation, Beachy filed for Chapter 7 bankruptcy in June with a court in the Northern District of Ohio. Court documents indicate he has less than $18 million of investors' money left.
In an unusual twist, according to a motion to dismiss the bankruptcy proceedings filed by members of the Amish community, about 2,550, or 94 percent, of creditors are in favor of dismissal. The bankruptcy court received 67 filings each containing multiple form letters from Miller and other members of the Amish community in Sugarcreek.
Amish Alternative Plan Aims to Attend to Poor And Needy
One excerpt from the letter states: "I take strong objection to my investment in A&M Investments being made the subject of a bankruptcy proceeding, because my participation as a creditor is abhorrent to deeply held spiritual principles on which my family and I have based our way of life."
Instead, the filing indicates they proposed an "Amish Alternative Plan" in which a committee of Amish leaders from Sugarcreek will distribute the less-than-$18 million of Beachy's assets. The committee aims to distribute the funds "based on Christian principles of love and care for the poor and needy," according to a court filing.
"The Alternative Plan is the least restrictive means of achieving the interests of everyone involved ... without the substantial burden this bankruptcy case imposes on the religious beliefs of the vast majority of creditors," they stated in a court document.
Those creditors owe 97 percent of the debts, according to the filing.
Beachy also filed a motion to dismiss the bankruptcy proceedings.
"After initiating these bankruptcy proceedings, I consulted with community and religious leaders and have decided that I no longer wish to participate in these proceedings," Beachy stated in the filing.
Beachy acknowledged that he would not accept the cash currently held by the bankruptcy court trustee and instead hopes the Amish community leaders will resolve disputes and distribute to the creditors.
Sherry Dahl, the attorney representing Beachy in bankruptcy court, said because of the unusual nature of the motion by the community to dismiss the bankruptcy proceedings, "We have no way of knowing how the judge will rule."
Miller said it is common for members of the Amish community to pool their money together, as they did with Beachy, and try to settle disputes among themselves. He said Beachy did not pocket the collected money, and instead lived a simple lifestyle, even with a horse and buggy.
Beachy Led A Simple Lifestyle; No Madoff
Tim Warren, associate regional director in the Chicago office of the SEC, conceded that Beachy was not living an extravagant lifestyle, unlike other fraudulent financial managers.
"I think this case is unique because he was not pocketing investor money like other cases," said Warren. "Here he wasn't."
Miller said he drives a car but still adheres to the principles of the Amish community of simplicity and generosity towards others.
"They are very giving," said Miller. "When somebody has a tragedy, people come together and give of themselves to help those people get back on their feet again. There's no other sect in the world like the Amish."
Miller said Sugarcreek has one of the largest communities of Amish people in the country.
"Everybody gives of themselves to help when somebody's hurting," said Miler. "The Bible teaches that it's more blessed to give than to receive. That's their agenda."
Warren said Beachy's case is an affinity fraud, in which a member of a religious or ethnic group may prey upon other members.
"They prey upon the trust from such a close-knit community and really exploit that trust," said Warren. "Unfortunately, I have seen a number of situations like that."
But Warren said he has never seen a case involving the Amish community in his 25 year career with the S.E.C.
Saying concerns that the distribution will not be impartial and not all creditors are a part of the Amish community, the S.E.C. and bankruptcy trustee each filed an opposition to the motion for bankruptcy dismissal.
Miller acknowledged that the chances were slim that the bankruptcy proceedings would be dismissed.
Though he was initially "upset" and "disappointed" upon hearing about Beachy's bankruptcy and his personal financial loss last summer, he acknowledged that the investment was risky.
"I knew there was money in there that wasn't insured and that's just a risky take," said Miller, who would not reveal the amount of his investment. "It's the same with the stock market. We have no guarantee that the money in the stock market will be there tomorrow."