[ by Howard Haykin ] An SEC Enforcement investigation into securities offered by the Amish Helping Fund, an Ohio non-profit corporation, led to allegation that the issuer knowingly or recklessly made material misrepresentations in the sale of its securities - apparent violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The Amish Helping Fund (AHF) ... was formed in 1995 by a group of Amish elders interested in furthering the Amish way of life.  AHF funds its loans by selling securities in the form of investment contracts.  AHF currently has nearly 3,500 investors, more than 1,200 borrowers, and approximately $125 million in mortgage receivables.  The SEC staff did not find any evidence of a foreclosure during AHF’s history. Prior to any action or proceeding being brought by the SEC against it, the AHF offered to accept responsibility for its conduct and to not contest or contradict SEC findings.  Based on that pledge, the SEC and the AHF entered into a deferred prosecution agreement which details terms and conditions to be followed with regard to AHF's securities offerings, namely:

when offering securities to fund mortgage and construction loans to young Amish families in Ohio, the Respondent will ensure that its investors receive more timely and accurate information in conformity with the agreement reached with the SEC.

SEC Investigation - Findings and Allegations. The SEC alleges that AHF’s offering memorandum, drafted in 1995 but not updated for 15 years, contained material misrepresentations about the fund and the securities being offered.  Yet, other than violating federal securities laws by disseminating a stale offering memorandum, the SEC found no evidence that AHF investors suffered any undue harm or investment losses as a result of these misrepresentations. When informed of its alleged violations by the SEC, AHF immediately cooperated, updated its offering memorandum, and took other significant remedial steps in an expedited manner.  This prompted the SEC to enter into a Deferred Prosecution Agreement (DPA) with AHF, in lieu of filing an enforcement action.  However, AHF must adhere to the provisions of the agreement. Use of a DPA in this case was conducted as part of the Cooperation Initiative that the Enforcement Division announced in 2010 to facilitate and reward cooperation in SEC investigations.

"Cooperation provides real and substa,” santial benefits for companies that respond appropriately to the discovery of wrongdoing in their ranksid“Here, the SEC acknowledged and rewarded AHF’s cooperation because, among other things, it acted swiftly and completely in correcting the misleading statements provided to investors, agreeing to annual audits of the fund holding the securities, and implementing significant remedial measures to prevent future violations of the securities laws." -- Robert Khuzami, Director of SEC Enforcement Division.

Efforts taken by AHF to remedy the situation:

• AHF updated and corrected its offering memorandum and provided existing investors with a corrected copy of it.
• AHF offered all existing investors the right of rescission.
• AHF retained an independent CPA to perform ongoing audits.
• AHF registered its securities offerings with the Ohio Division of Securities and consented to a cease-and-desist order with the agency.

Under terms of the DPA, the SEC will refrain from filing an enforcement action against AHF if the company complies with certain undertakings - including some of the above remedies.  Among other things, AHF also agreed to provide current investors with timely and accurate financial information. For further details, go to:  [SEC PR 12-138, 7/18/12] and [The Deferred Prosecution Agreement].