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Misplaced Trust — Current and Past Ponzi Schemes
A dairy which has gone bankrupt in Pennsylvania has defrauded local investors out of roughly $60 million. Trickling Springs Creamery developed a Ponzi scheme which targeted members of the local religious community including Amish and Mennonite investors. The premise of the Ponzi scheme was that Philip Riehl, an accountant and owner of the dairy, solicited investments in the business without informing investors from this tight-knit community of the company's mounting financial problems. Older investors were paid off with funds from newer investors. He raised $60 million over 10 years with the promissory notes becoming investments in his failing dairy. This is one of the largest Ponzi schemes in Pennsylvania history.
Riehl apologized and stated that he used a significant amount of the money to invest in "personal projects." Members of the community trusted Riehl, and they were supportive of a fellow member of their religious community. Riehl faces charges of conspiracy, securities fraud, and wire fraud. The potential sentence for these charges could be up to 45 years in prison and $5.5 million in fines.
On a much larger scale in a case that has already passed through the criminal justice system, Bernie Madoff is now serving a 150-year sentence—the longest possible—for a Ponzi scheme that cost his clients more than $17 billion. Madoff operated an investment business that supported his lavish lifestyle. He made returns to older investors by recruiting new investors. Ponzi schemes require constant inflows of cash and have no planned ending. The ending to a Ponzi scheme is typically to be caught engaging in illegal conduct. Madoff recently made the news for requesting a compassionate release from prison as he has chronic kidney disease and is expected to live less than 18 months. Steve Heimoff, an investor in Madoff's firm who lost nearly $2 million in retirement funds, stated that Madoff should stay in prison "for the rest of his days." Heimoff continued, "I'm not particularly interested in seeing Madoff obtain early release. His crime affected tens of thousands of people, throwing many of them into poverty."
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