Affinity Fraud

Affinity fraud includes investment frauds that prey upon members of identifiable groups, such as religious or ethnic communities, language minorities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or pretend to be – members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster's ruse.

These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies, and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.

Many affinity scams involve "Ponzi schemes" or pyramid schemes, where new investor money is used to make payments to earlier investors to give the illusion that the investment is successful. This ploy is used to trick new investors to invest in the scheme and to lull existing investors into believing their investments are safe and secure. In reality, the fraudster almost always steals investor money for personal use. Both types of schemes depend on an unending supply of new investors; when the inevitable occurs, and the supply of investors dries up, the whole scheme collapses and investors discover that most or all of their money is gone.

Read more about Affinity Fraud:  Examples

Other articles related to "affinity fraud, affinity frauds":

Affinity Fraud - Examples
... Affinity frauds can target any group of people who take pride in their shared characteristics, whether they are religious, ethnic, or professional ... have investigated and taken action against affinity frauds targeting a wide spectrum of groups ... Armenian-American community loses $19 Million" The SEC's complaint alleges that this affinity fraud targeted Armenian-Americans with little investment experience, for some of whom English was ...

Famous quotes containing the words fraud and/or affinity:

    He saw, he wish’d, and to the prize aspir’d.
    Resolv’d to win, he meditates the way,
    By force to ravish, or by fraud betray;
    For when success a lover’s toil attends,
    Few ask, if fraud or force attain’d his ends.
    Alexander Pope (1688–1744)

    This is of the loon—I do not mean its laugh, but its looning,—is a long-drawn call, as it were, sometimes singularly human to my ear,—hoo-hoo-ooooo, like the hallooing of a man on a very high key, having thrown his voice into his head. I have heard a sound exactly like it when breathing heavily through my own nostrils, half awake at ten at night, suggesting my affinity to the loon; as if its language were but a dialect of my own, after all.
    Henry David Thoreau (1817–1862)