In July 2020, a US court sentenced Pennsylvania-based accountant Philip Elvin Riehl for defrauding 400 families of the Amish and Mennonite communities out of a combined $59 million in an affinity fraud scheme.
Riehl was known to the victims as a trusted person who did their taxes every year. Taking advantage of this position of trust, Riehl fraudulently promised the victims high returns if they let him invest their money in local businesses. However, Riehl did not have the license to invest the victims’ funds. Moreover, he invested the money without researching the companies in which he was investing. For instance, a substantial fraction of the funds went to a creamery that was failing and soon went out of business, leading to a huge loss for the investors. Riehl also forgave loans in a lot of cases, which made it impossible for the investors to regain their money.
Riehl’s affinity fraud exploited the trust and friendship that are common in close-knit communities. For many victims, the investments were long-term. This meant that they did not check up on their funds for several years. Their statements showed that their money was safe. However, in reality, this money was lost because Riehl had invested it in failing businesses.
With increasing monetary losses, state authorities informed the FBI of a possible fraudulent scheme. Eventually, in early 2020, Riehl pleaded guilty to conspiracy and fraud. In July 2020, a court sentenced him to 10 years in prison. Citing this case, the FBI has advised all investors to ensure that the person/entity investing their money is licensed and regulated.
Source: FBI, USA