Con artists with an affinity for big swindles often find the best pickings among members of their own demographic groups. Exploiting connections of race, religion, ethnicity, age, politics, profession, or other common bonds, some fraud perpetrators prey on the unwary in scams that can involve Ponzi and pyramid schemes. When they do, it is called affinity fraud.

Keeping it in the community

Even people who usually are skeptical of offers that seem ‘too good to be true’ are more likely to let down their guard and trust an individual with a common background. In one case, a Hispanic-operated group in Texas lured fellow Latinos with promised returns of almost 10 percent per month for investments in non-existent oil wells. In another, a Colorado investment manager swindled more than $20 million from members of his church, including his own mother, in an elaborate Ponzi scheme.

Although affinity fraud primarily targets individuals, it also can hurt businesses that, for example, hire many immigrants. If employees are defrauded and left penniless, they may be more susceptible to committing fraud of their own in an effort to recoup their losses. Businesses also need to beware of employees and others who use common bonds to solicit ‘philanthropic’ contributions.

Avoid making assumptions

The bottom line: do not assume you can spot affinity scams. Many are recommended by friends, neighbors, and colleagues whom you may have known for years. Instead:

• Research any investment opportunity or fundraising organization that approaches you
• Refuse to be pressured into making a quick decision
• Be skeptical if you are asked to keep an opportunity confidential or cannot get anything about it in writing

Finally, if you become a victim of affinity fraud, report it. Many victims of affinity fraud are ashamed to come forward or they try to ‘keep it in the community,’ thus making it difficult for authorities to stop the fraud and prosecute the criminals involved. Contact us for more information about fraud.