Berks accountant charged in $60M fraud Feds say he targeted fellow Mennonites
A Berks County accountant represented himself as a trusted member of a Mennonite church, so when he offered an investment opportunity in line with the beliefs of the other members of the community, he got hundreds of takers in the Berks County area.
What Philip E. Riehl would tell them, according to federal authorities, was that he was diverting their money into his own business, Trickling Springs Creamery LLC, a Franklin County–based creamery of which he was the majority owner.
When that business collapsed “like a house of cards” recently, an estimated $60 million vanished, U.S. Attorney William McSwain of the Philadelphia-based Eastern District of Pennsylvania said Friday.
In a press conference in Reading to announce securities fraud charges against Riehl, McSwain called the case one of the largest Pennsylvania-based Ponzi schemes ever perpetrated.
Authorities did not specify if Riehl, 67, was in custody.
They said the scheme started around 2010, and Riehl skimmed some of the investors’ money for himself, propped up the failing creamery and paid later investors with the take from earlier investors.
Separate from the federal action, the Pennsylvania Department of Banking and Securities on Thursday proposed civil penalties against Riehl totaling of 4.375 million, believed by officials to be the largest such penalty in department history.
The estimated $60 million loss is shared among hundreds of members of the relatively small Mennonite and Amish community in the Bethel area, McSwain said during the press conference in the Madison Building at Fourth and Washington streets.
McSwain said Riehl, of Bethel Township is alleged to have engaged in affinity fraud, a type of fraud that preys upon members of identifiable groups, such as religious or ethnic communities or the elderly.
“These types of scams are particularly insidious because they exploit the trust and friendship that exist in groups of people who share common interests or common beliefs,” McSwain said.
Riehl was a member of Little Mountain Mennonite Church just inside the county line near Fredericksville, Lebanon County.
“The victims of this alleged scheme, which are in the hundreds, were generally members of the Mennonite or Amish religious communities who wanted a safe and secure investment that operated within their community in a manner consistent with their belief systems,” McSwain said. “These investors were looking for honesty and integrity, and they were looking for these qualities in one of their own, which was important.
Trickling Springs Creamery announced it was ceasing operations in September and filed a bankruptcy petition in December.
Michael T. Harpster, special agent in charge of the FBI’s Philadelphia division, which investigated the case with state officials, said Riehl repeatedly misrepresented what he was doing with his investors’ money — people who took him at his word.
“The FBI will continue to investigate and hold accountable those who engage in such financial fraud,” he said.
McSwain said his office has made rooting out fraud one its highest priorities. He credited a cooperative relationship with state securities regulators with bringing the case to the attention of federal authorities. That partnership serves as a “significant watchdog” that protects state citizens.
The pain felt by the victim is exacerbated by the fact that many in the Mennonite and Amish religious communities don’t take advantage of safety net programs such as Social Security. In some cases, he said, the alleged scheme cost
them their life savings.
McSwain said the case is unique in that the victim and the accused were from the plain communities: “He was not someone who was out there buying boats and superexpensive cars and gigantic houses and all of that. He was in a lot of ways taking people’s money and plowing it into his creamery, which was a failing business. The money was disappearing.”
That lack of material assets makes it particularly difficult to recover money for the victims, he said.
The investigation is continuing, and others could potentially be charged. The charging documents refer to a co-conspirator, McSwain said.
“We certainly are continuing to aggressively pursue this case and follow the paper trail,” McSwain said.
“There are a lot of people who are feeling the pain,” the U.S. attorney said when asked to describe the general plight of the victims.
“There are a lot of people who are hurting because of this.
“It is a supportive, generally forgiving community so when these people are hurting they aren’t necessarily standing on a on a platform, grabbing a megaphone and shouting at the top of their lungs, but they’re hurting and a lot of them have cooperated with us, spoken to us, and we appreciate that.”
If convicted, Riehl faces a maximum possible sentence of 45 years in prison and a $5.5 million fine.