SEC: 77-Year-Old Amish Man Ran $33 Million Fraud Scheme Targeted At Fellow Amish; Meanwhile, CFTC Says North Carolina Pastor And Colleague Ran Forex Ponzi Scheme

UPDATED 2:50 P.M. ET (U.S.A.) A 77-year old Amish man in Sugarcreek, Ohio, ran a fraud scheme that gathered at least $33 million and affected 2,600 investors in 29 states, the SEC has alleged.

Monroe L. Beachy’s long-running scheme mostly targeted fellow Amish, the agency charged. The scheme, which operated under the name of A&M Investments and began in 1986 during the Reagan administration, eventually got out of control and resulted in a June 2010 bankruptcy filing by Beachy.

“Because Beachy’s offer and sale of investment contracts continued for such a long period of time, some members of the older generation of Amish investors recommended to their children that they invest with Beachy,” the SEC said. “Amish children did in fact purchase investment contracts from Beachy.”

Investors opened accounts by hand-delivering money to Beachy or sending checks and cash in the mail.

“At the time of the investment, Beachy did not give his investors any documents regarding the investment other than a handwritten receipt showing the amount invested,” the SEC alleged.

Meanwhile, the CFTC has gone to federal court in North Carolina to accuse a church pastor and his business colleague of operating a Forex Ponzi scheme that used a business address at a UPS store.

It was at least the second time since November that the CFTC has alleged that a pastor presided over a Forex Ponzi scheme.

Charged in the North Carolina case were Timothy Bailey, the pastor of Mount Olive AME Zion Church in Monroe, and Michael Hudspeth of Statesville.

Bailey and Hudspeth operated a company known as PMC Strategy LLC.

While Hudspeth solicited funds for the scheme and interacted with customers, Bailey performed the trading as losses mounted, the CFTC charged.

Neither man was registered with the CFTC in “any capacity,” the CFTC charged.

The scheme began in 2008 and ultimately involved at least 22 investors while raising about $669,000, the CFTC charged. Hudspeth, Bailey and the firm “misappropriated” $129,000 of customer funds for their personal use, according to the CFTC.

A federal judge has frozen their assets. The CFTC alleged the defendants concealed their losses and sent “false profit checks to customers.”

“As recently as November 2010, the defendants were still soliciting funds from current and prospective customers, but since February 2010, they failed to make promised monthly customer payments and to honor customers’ redemption requests,” the CFTC charged.

In November, the CFTC accused Rev. Ronald E. Satterfield, the now-former pastor of St. John’s Reformed Episcopal Church in Charleston, S.C., of operating a Forex Ponzi scheme from inside the historic church facility.

Satterfield, 63, was arrested last month on criminal charges of bank fraud.

Satterfield claimed he traded Forex between 3 a.m. and 6 a.m., went back to bed until 8 a.m., and then resumed trading until 10 a.m. or 11 a.m., according to court records.

Mixing Forex trading with his ministry worked well, Satterfield wrote in a letter to a federal judge, because most church activities were in the afternoon or evening. And because Forex is a 24-hour activity, he advised the judge, he had the “ability to respond even in the morning hours if a pastoral need or commitment emerged.”

Beachy, the alleged Amish fraudster, told his investors that he was purchasing “risk-free U.S. government securities,” the SEC charged.

In reality, the SEC charged, Beachy plowed the money into junk bonds and made speculative investments in mutual funds and stocks.

He settled the SEC case without admitting or denying the allegations. The agency said Beachy’s illegal investment-contract scheme ultimately put him upside down to the tune of $15 million and that his assets were under the control of a bankruptcy trustee.

“During at least the last decade of Beachy’s scheme, based on the loss of investor principal, Beachy would not have had the ability to meet redemptions if there were a ‘run on the bank,'” the SEC said.

“Beachy did not disclose his losses to investors,” the SEC said. Instead, he issued “fabricated statements” and “maintained the charade that the investors were making money.”