fbpx

Affinity Fraud–Scamming Churchgoers and Other Groups

Affinity Fraud–Scamming Churchgoers and Other Groups

Affinity Fraud–Scamming Churchgoers and Other Groups 150 150 Rex Securities Law

On their “How to Avoid Investment Scams That Target Groups” website,  the US Securities & Exchange Commission (SEC) defines Affinity Fraud as:

“Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, 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” or pyramid schemes, where new investor money is used to make payments to earlier investors to give the false 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.”

In addition to church groups, recent affinity fraud schemes have targeted military groups, the Houston-area Lebanese and Druze communities, African-Americans, the Persian-Jewish communities in Los Angeles, the South Florida Cuban community, and the Caribbean and African-American communities in Brooklyn.

If you have questions about losses in your investment account, call to speak with an experienced securities attorney.

Rex Securities Law provides nationwide representation to investors seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.  Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

%d bloggers like this: