Affinity fraud is not an actual type of fraud. The term refers to different types of fraud that targets an identifiable group of people. For example, there have been frauds that have targeted different types of religious groups, ethnic groups, age groups or professional groups. Usually what happens is that the fraudster has an ‘affinity’ with a specific group and this allows him or her to fleece members of the group. It is all about trust betrayed.

Law enforcement can find it difficult to investigate affinity frauds because often the victims don’t want to turn in a member of their own group. I have seen cases where victims could not believe that someone in their group would commit a fraud against them. This delays witnesses coming forward and investigators getting the information they need to stop the fraud and arrest the criminal.

Many affinity scams involve fraudulent investments or ponzi type schemes.

Here are some descriptions of a few affinity frauds that are found on the Securities & Exchange Commission web site.

Case 1

The SEC complaint alleges that the defendants operated a Ponzi scheme and used investor funds to pay lavish personal expenses. The defendants raised over $16 million from more than 190 investors nationwide. Many of the victims were elderly members of Jehovah’s Witnesses congregations and were promised returns of up to 75 percent.

Case 2

Defendants perpetrated an affinity fraud, raising at least $16.5 million from mostly African-Americans and Christians by falsely representing they would receive returns through investments in, among other things, real estate, small businesses, and "markets of the world."

Case 3

The fraudsters allegedly sold members non-existent "prime bank" trading programs by using a sales pitch heavily laden with Biblical references and by enlisting members of the church communities to unwittingly spread the word about the bogus investment.

Case 4

The fraudsters obtained information about the assets and financial condition of the elderly victims who were encouraged to liquidate their safe retirement savings and to invest in securities with higher returns. In reality, the fraudsters never invested the money and stole the funds.

Just because a person offering an investment opportunity to you is part of your religious, ethnic, or other group does not mean that you should stop asking questions about the investment. Always check into an investment before parting with your hard earned money. If you don’t, you might lose it.

We at Fraud Squad TV are always looking for stories about fraud experiences. If you have been the victim of an Affinity fraud and want to share your story, contact us.

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Ponzi schemes
Investment fraud
Real Estate fraud

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