The Amish Investment Fund Bankruptcy
The failure of A&M investments tests the Holmes County community
A financial controversy has been playing out in the Holmes County, Ohio Amish settlement over the past few months. Amishman Monroe Beachy operated A&M Investments, a fund in which hundreds of locals, mainly Amish, invested money.
One day early last summer, a sign appeared on the door of A&M Investments’ Sugarcreek office, reading simply: “Due to an investigation A&M Investments is closed”, and listing a phone number. It was later revealed that Beachy’s fund had lost over half of its value, with liabilities of over $33 million and assets of $16.4 million.
On June 28 Beachy declared Chapter 7 bankruptcy, which means federal involvement in deciding how remaining assets would be doled out to the fund’s 2,700 creditors.
But Beachy was later counseled by his church to retract the bankruptcy claim, so that the matter could be handled by the community. Beachy agreed to do so. But it’s not so easy to dismiss a bankruptcy claim.
The story has been covered by the Sugarcreek Budget newspaper as well as other local papers since breaking back in June. I hadn’t noticed it on the radar of larger papers, until recently when it was covered by the Columbus Dispatch, in an article which describes recent controversy over the bankruptcy filing.
Trust, failure, forgiveness…
Monroe Beachy garnered respect and trust in the community, which had to be the case in order to amass such a large number of investors. Everyone invested with him–from widows and older folks putting away retirement money to successful Amish entrepreneurs seeking an investment vehicle for their profits. Mennonites and some English entrusted their cash to him as well.
Of course, in fact not “everyone” invested with A&M. No doubt there are those shaking their heads and saying that this is what happens when men acquire too many material riches. With fewer Amish farming, and acreage harder to come by, land has not been the preferred investment choice that it once might have been. Amish, many of them successful business people, have thus invested in vehicles that they once would have steered clear of.
The case brings to mind another financial controversy in Lancaster County earlier this year, in which an Old Order Mennonite fund manager lost large sums of money invested by around 1500 Team Mennonites and Amish. I wouldn’t be surprised if failures such as these lead to greater interest in hard assets such as land again.
I suppose it is not totally clear whether the failure of A&M was due to bad intentions, negligence or something else (poor luck..?) However the case against Beachy does not sound good.
The SEC is investigating Beachy, and he has been portrayed as an “Amish con man” by the feds. The Dispatch article states that Beachy paid off a personal bank loan of $2.4 million shortly before declaring bankruptcy. Money which he said was invested in government-backed securities in fact was used in riskier venues such as dot-com stocks. Apparently he also continued to accept new investors’ money up until just before closing his doors.
True to form, Beachy’s community has forgiven him, though as some Amish wrote in a court filing, “Forgiving a brother, however, is not shielding or protecting a brother from what he has done.”
An Amish Alternative
Amish, who represent 94% of creditors, seek to handle the case themselves. Accordingly, they have proposed an “Amish Alternative Plan”, the purpose of which is “to perform the remaining administrative tasks of the bankruptcy trustee in a manner consistent with the practices of the Amish faith.”
Amish wish to avoid bankruptcy court, in accordance with Biblically-based principles against legal involvement. They also believe they can resolve the matter more cheaply and quickly than the federal plan. However, two federal agencies object to removing the case from federal jurisdiction.
One positive is that Amish, as you’d expect, want to first help those hardest hit. A Budget article noted that wealthier Amish wished to use the remainder of their stake to help those who had lost more essential moneys, such as savings for retirement or other necessities. This has been described as “needs-based disbursement” by a local bishop involved in the case.
Investing always involves risk. Even when it’s one of your own in charge. It can be easy to lose sight of that, especially in a community where social bonds and trust play such a strong role.
Not exactly a heartwarming story. But hopefully it will finish as well as it can for those involved.
Too bad this happened. Another reason why to invest our riches where moth and rust does not corrupt!
Very sad to hear of this happening. It does show that even the Amish are susceptible to today’s economy. Whether Mr. Beachy intentionally scammed the people or just had poor judgment remains to be seen. Naturally, most people will suspect the worse, especially outsiders, after all, it makes for good headlines.
Keeping the community in my prayers.
Mary, I agree, storing our treasures in heaven is always the best choice. However, it is not proven yet whether Mr. Beachy was corrupt or just made mistakes.
Can’t seem to trust anyone these days……sounds like another Madoff situation…….but maybe not…..we shall wait and see tho……
i think as the amish become alittle more worldly as time goes on, things like this are going to happen more and more. maybe remaining and keeping things simple has its advantages sometimes, like in this case.i wonder if the amish as we know them now, will be the same in say 20,30,or even 50 years from now?. its a question only they will be able to answer, this is a question one day they are going to have to face, and one of those questions will be ” when will we stop, and how far are we willing to go”. i think alot of us look at the amish and see how things used to be, strong family ties, hard working,faith. a pure goodness thats not really seen much anymore in our non amish world, i only hope that maybe we are trying to become more like the amish, instead of them wanting to become more like us. only time will tell, and if i were a betting man, my money would be on the amish………….. richard….. trying to stay warm in lebanon,pa
Just goes to prove……Being Amish does not make you exempt from financial failure or guarantee financial success. The economy seems to affect everyone these days.
In times past, wouldn’t the Amish have been more immune to the ups and downs of the secular markets, or maybe just less tempted to be involved?
Amish more affected by the economy today than in the past?
Hi Plain lady, it’s a good question. Way back when most Amish were on the farm, they were of course subject to fluctuations in milk prices and prices for other crops they raised, most of which they sold in non-Amish markets. Small industry of today focuses on consumer goods like furniture, necessities such as food, and also the tourist trade.
So we’d have to look at how those markets are affected, which would vary. Amish who work in industries producing non-essential items (such as Amish working in RV plants in northern Indiana) have been pretty hard hit, it is true.
On this Ohio fund failure case, I would say it sounds like it mostly comes down to one individual’s actions rather than Amish as a whole. Though the 2,700 investors in question did make the decision to trust the individual with their money.
Steven Nolt has described the trust level among Amish as potentially a great strength or a great weakness (ie in the pretty rare cases when it is broken).