Affinity Investment Fraud

Affinity investment fraud refers to investment scams that prey upon members of identifiable groups, such as i.e. 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 themselves 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 their own 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 various 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.

Those schemes always 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.

How to Avoid Affinity Fraud

Investing always involves some degree of risk. You can minimize your risk of investing unwisely by asking questions and getting the facts about any investment before you buy.

To avoid affinity and other scams, you should:

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