Amish and Mennonite Investors lose more than $50 million in Conestoga Log Cabin Leasing
John Sensenig, primarily through a small ad in a Pennsylvania Dutch German language newspaper, was able to raise in excess of $50 million dollars from over 1,000 Amish and Mennonite investors. Sensenig was even able to persuade some Bishops to help direct the funds of their Amish constituents to his company. These investors were promised attractive rates of return for demand and and short-term time deposits placed with Conestoga Log Cabin Leasing.
Unfortunately, contrary to what most of these unsophisticated investors understood, the investments that Mr. Sensenig was putting the money into were of a very high risk: land development and new product development investment. Sensenig operated many different businesses, from trailer parks to rubber granulators to fence post protectors, to name a few. None of them appear to have achieved any degree of success or, in the case of the development projects, completion.
In 2005, as some investors asked for the return of their funds, and Mr. Sensenig refused, there was a complaint made to the Pennsylvania Securities Commission. As a result, Sensenig was issued a cease and desist order forbidding him and his companies from raising any additional funds unless and until he properly registered his companies. Investors were given the opportunity to withdraw. Regrettably, only a handful of investors responded. Records show that Sensenig's Post Saver company continued to advertise for funds by including an unregistered offer in customer's quarterly statements. No further action was taken by the PA Securities Commission.
Sensenig was smart. By dealing with mostly Amish investors, he was virtually able to guarantee that no one would take legal action against him. One Amish investor did initiate action via a complaint in Federal court and this investor was inundated with letters from other Amish investors, from across the country, pleading with him to give Mr. Sensenig more time. How did they know this particular investor's name and address? Sensenig had printed it on his customer's quarterly statements. Fortunately, this particular investor continued to press Sensenig and was able to recover his entire investment.
Sensenig's other investors were not so fortunate. He was able to convince these investors that once the business, now to be known as Community Pioneers, was properly registered with the US Securities and Exchange Commission, that they would be able to start drawing out their funds. The quarterly statements indicated that the registration process was difficult and taking much longer than anticipated. Sensenig pleaded with investors to not get lawyers involved as this simply raised his costs and hurt the other investors.
In late 2009, in a statement from Mr. Sensenig, he explained that a group of Mennonite businessmen from his particular Mennonite conference, under pressure from the church, took control of Conestoga Log Cabin Leasing, "seized a tractor trailer load of records" and hired accountants and attorneys to pour over the records. According to Sensenig, this committee is comprised of Alan N. Hoover, Leon B. Martin and Ervin M. Zimmerman. Sensenig stated that they are looking for fraud, but he confidently says, "There isn't any." Attempts to reach Leon Martin at his AB Martin Roofing business in Ephrata were unsuccessful.
People close to the committee indicate that there is little to no hope of recovering any funds for investors. The losses likely will total in excess of $50 million dollars. Some of the personal stories are devastating:
* The 80 + year old Amish farmer who sold his farm for in excess of $1 million dollars, and lost it all, who now depends on the charity of his family and church to bring him coal and food.
*The young couple who placed all their savings, and lost them all, into Conestoga Log Cabin Leasing as they waited to find the right piece of property to buy.
*The Amish family whose husband and father was severely injured when a team of horses moved and a mower deck dropped on his head. They were convinced to place all their savings into Sensenig's company so they could benefit from the interest he would generate for them. Those funds are gone forever and this family now struggles to get by.
For his part, Sensenig still holds onto his vision and states that his "personal goal is to finish existing project one by one over many years, if given the opportunity. The projects have been on hold and unfinished projects have no value except for the steel."
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Committee Letter to Investors
February 3, 2010
In late October 2009, investors (lenders) in John M. Sensenig's Conestoga Log Cabin Leasing, Inc. (CLCL) received a letter from the "committee" that is overseeing the CLCL businesses. This letter paints a bleak picture and seems to warn investors that they should be prepared to lose their entire investment in CLCL.
Click here to read letter
The letter states that the committee has been working at unraveling Sensenig's businesses for nine months, yet goes on to say that "most of the information we have gathered has come from John Sensenig." Given Sensenig's prior statement, from early 2008, that he had been "advised to hide assets," one wonders if relying solely on Mr. Sensenig's information constitutes proper due diligence on the part of the committee.
The committee has not yet offered investors an explanation as to where the funds from the several apparently successful business have gone. Conestoga Log Cabins was sold in late 2007/early 2008 and continues operations in the facility where it had been prior to the sale. Sensenig retained some portion of Conestoga Log Cabin, Inc. and renamed it Conestoga Projects, Inc. This business, according to the committee report, has assets of $698,000 and liabilities of $13,012,400. This leads to an obvious question: Did Conestoga Projects, Inc. assume all the pre-exisitng debt of Conestoga Log Cabin, Inc. and, if so, Why? And what happened to the funds paid by the new investor group when they acquired Conestoga Log Cabin, Inc.? Everlast Roofing, another beneficiary of CLCL funds, was also sold and appears to be operating profitably. The committee letter indicates that Sensenig retained an interest in this business too.
The three member committee is comprised solely of representatives of Sensenig's particular Mennonite denomination (Wenger); however, many of the vicitms are Amish and they have not been given a voice on the committee. These hard-working people, who are unrepresented on the committee, are not sophisticated investors, generally, and did not understand the high risk nature of Sensenig's various enterprises. Sensenig, who stated that he was a licensed Public Accountant from the early 1970's into the 1990's, was censured by the PA Securities Commission in 2005 for failing to comply with registration requirements. If he had complied with registration requirements, the speculative nature of his ventures would have been disclosed in offering documents, likely preventing this debacle.
Most troubling is the failure of the Pennsylvania Securities Commission to take further, aggressive action against Sensenig to protect investors when they learned of this efforts to subvert their order. In their order, dated June 8, 2005, CLCL was directed to "halt the offer and sale of unregistered securities." (Click here to read the PA Securities Commission release). In January 2006, CLCL and Sensenig were barred from selling unregistered securities in Pennsylvania and ordered to advise all current investors that they were eligible to have their securities repurchased for face value plus interest. Sensenig complied, but first he sent a personal letter to investors pleading with them to disregard the recission letter they were about to receive.
Currently, according to the Committee letter, there are a total of 1500 investors and about $65 million invested in CLCL. This means that after being barred from offering or selling additonal securities in Pennsylvania in 2005/2006, Sensenig raised an additional $25 million and added about 400 investors. Why hasn't the Securities Commission responded to this blatant disregard of their order? Additionally, it is reported that the source of funds to "buy out" the one Amish investor who was able to get his funds back from CLCL is one of the current committee members. Why would this successful businessman put out over $100,000 of his own funds to avoid having Sensenig be deposed in the Federal lawsuit against him? There are few larger investment debacles in Pennsylvania. The Pennsylvania Securities Commission owes these vicitims an explanation of why it failed to act.