Affinity Fraud

  • 2 min read

Today, we’re going to talk about affinity fraud, which is a fraud case where the fraudster or Ponzi scheme operator uses their affinity with a certain group. To extend the depth of the fraud or the length of the fraud groups, bring legitimacy and trust. So if a fraudster is a member of a group, it could be religious, or it could be a neighborhood. It could be an ethnic group, a club, or some other type of group of people or company. It creates a false sense of relationship between the victims and the fraudster. 

So just because the fraudster is a member of your church group or your social group, sometimes you think you have more of a relationship with that person than you really do. And that artificially gives that investment or that frog more credibility. Sometimes you might think that the group artificially vouch for that person. Some of the longest-running and most expensive frauds were affinity frauds. Scott Rothstein, Florida, and Bernie Madoff all used their associations with certain groups to extend the fraud. 

So when there’s some type of investment being offered or some type of money transfer being presented, it has to do with membership in a group or association with a group of people. I’ll take a look at that. How much of a factor is that in making a decision to invest in that venture? If a fraud occurs and there’s some effort to recover some of the funds or an effort to disband that fraud, the affinity group itself can sometimes be used as part of the investigation to discover where some of the money went, where the assets were concealed, and maybe even other actors that are third-party enablers of that fraud that may have liability to recover funds for the victims.

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