Monday, March 21, 2011

Judge Rejects Amish Request to Let Faith Community Deal With Alleged Ponzi Schemer

Today's Washington Post  is reporting that federal bankruptcy judge, Russ Kendig, on Friday refused to dismiss a case involving alleged Ponzi schemer, Monroe Beachy, and cede control of the matter to members of the Amish community of which Beachy is a member.  According to Judge Kendig, a dismissal on the grounds requested by Beachy and about 2,000 members of the Amish community would violate the Establishment Clause of the First Amendment.  

When Beachy sought refuge in bankruptcy court last year, many of his investors and fellow members of the Amish community complained that their deeply held religious beliefs had been violated.  According to the Post, 

In court filings, they focused less on any financial fraud Beachy might have perpetrated than on his decision to draw them into a judicial proceeding. Resolving financial disputes through the courts is contrary to their faith, they said, and more than 2,000 of them urged the court to let them resolve the matter among themselves. Amid the backlash, Beachy had a change of heart and asked the court to let him withdraw his bankruptcy filing.

The Amish had proposed setting up a private alternative to court-supervised bankruptcy. In fact, they formed a committee to oversee the matter under the supervision of Amish bishops and an Amish church.

But Judge Kendig will have none of this.  The Post reports him as saying that any such delegation of the court's authority is forbidden by the Establishment Clause.

Although I have little -- if any -- sympathy for Beachy, this case troubles me.  On the one hand, I understand Judge Kendig's concern that delegating the court's authority to the Amish committee would violate the Establishment Clause.  Yet, I understand the Amish who, if they wish to pursue their claims against Beachy, must now do so through the courts, in violation of their deeply-held religious beliefs.  Maybe we need the Supreme Court so speak on this matter.


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I just posted a paper on the SSRN about Wisconsin v. Yoder, which exempted the Amish from secondary education requirements. My take on the alleged Beachy fraud (based mainly on the same source as in this blog post) is that it is different from Yoder in an important respect. The Amish in Yoder were compelled to send their children to high school. They had no choice in the matter (though they could have established an Amish high school, which they also held was contrary to their religion.) The Supreme Court decision (based on free exercise and seemingly contradicting the establishment clause) said they did not have to attend beyond 8th grade. The difference here may be that the state is not compelling the Amish to go to bankruptcy court. They can make private settlements if parties agree, but this can be done parallel to the court proceedings. And apparently moving out of bankruptcy court would deprive some non-Amish creditors of a neutral forum.

Posted by: Bill Fischel | Apr 2, 2011 12:43:47 PM

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