A former accountant and majority owner in a Pennsylvania creamery has pleaded guilty to conspiracy and fraud charges related to a Ponzi scheme he operated worth approximately $60 million.

U.S. attorney for the Eastern District of Pennsylvania William McSwain explained that Philip Elvin Riehl of Bethel Township in Berks County, Pa., targeted members of the Mennonite and Amish religious communities in Pennsylvania and elsewhere, of which the defendant is a member.

Riehl was charged in January 2020 with one count each of conspiracy to commit securities fraud and wire fraud, one count of securities fraud and one count of wire fraud for fraudulently soliciting tens of millions of dollars in investments from his accounting clients and others into an investment program that he operated.

Riehl then diverted funds from the program to Trickling Springs Creamery LLC, a Franklin County-based creamery of which he was the majority owner. Riehl also fraudulently solicited direct investments in Trickling Springs Creamery. The defendant made material misrepresentations about the safety and security of these investments in his program and the performance of the program, as well as making misrepresentations and omissions about the creamery’s business and financial condition. Trickling Springs announced that it was ceasing operations in September 2019 and filed a bankruptcy petition in December 2019. Investor losses are estimated to be around $60 million, making this one of the largest Pennsylvania-based Ponzi schemes ever.

Riehl faces a maximum possible sentence of 45 years in prison, a $5.5 million fine, a three-year term of supervised release, forfeiture and mandatory restitution.

The U.S. Securities & Exchange Commission (SEC) is also charging Riehl with violating the anti-fraud provisions of federal securities laws. SEC began investigating Riehl’s investment program in 2015, but Riehl told SEC staff at the time that he was no longer accepting new investments, was in the process of winding down his investment program and always required two co-signers for loans made from his investment program. All of these statements were not true, SEC noted in a complaint.

The U.S. Attorney’s Office explained that the entire scheme is what is commonly referred to as “affinity fraud,” which typically involves investment scams that prey upon members of identifiable groups, such as religious or ethnic communities.

“These types of scams exploit the trust and friendship that exist in groups of people who share common interests or beliefs,” the office added.

McSwain said Riehl’s victims trusted him to handle their investments with honesty and integrity, but “instead, he took advantage of their trust based on their mutual religious affiliation.”

In some cases, McSwain said Riehl swindled individuals out of millions of dollars.

“It is only natural for members of a tightly knit community to want to take care of one another, but Riehl wasn’t concerned with taking care of anyone but himself, and he doesn’t deserve the loyalty of his victims now. These types of devastating crimes must be reported, and the guilty parties must be held accountable under the law,” McSwain said.

Tara McMahon, acting special agent in charge of the Federal Bureau of Investigation’s (FBI) Philadelphia, Pa., division, said investment fraud can be devastating for its victims, “with nest eggs or even life savings lost in a flash.”

“When criminals are willing to exploit trusting members of their own church or community in such a way, it adds significant insult to that financial injury," McMahon stated. "Philip Riehl repeatedly misled his investors, drawing them into a giant Ponzi scheme that swallowed up some $60 million of their money. The FBI is gratified to help hold him accountable for his crimes and bring some measure of justice for his victims.”