Affinity frauds and recovering from the scam
Picture this. You’re at a mixer for one of your business associations. The leader of the group, someone you truly respect, begins waxing poetic about a specific investment they’ve made, suggesting that you invest as well. Because you admire this person, you barely think twice about putting in your own money. You just know for certain that this person would not steer you toward a bad investment…or would they?
Well, not on purpose. What you don’t know is that someone else within the group — a scammer — has promoted this investment to your admired leader. This leader is an innocent victim, as are you. But by the time both of you figure out that you’ve been duped, this scammer has taken the money you’ve given them and the prospect of getting it back looks pretty bleak.
Welcome to the world of affinity fraud. It leverages the personal and professional relationships so common in small groups to convince people into putting their money into fraudulent investment schemes, quite often of the ponzi variety.
If a random stranger asked you to invest in something, you’d probably never even consider it. But with affinity fraud, trust is the active ingredient.
Beyond professional organizations, here are the groups that most often fall prey to affinity fraud:
Churches and religious organizations
A susceptible group, due to the high level of trust in religious leaders and the tight relationships between people of similar beliefs. In one scheme, a confidence man targeted the African American churchgoing community by having church members invest in small businesses with the promise of high returns.
Groups of people with the same nationality are particularly vulnerable to affinity fraud. One example is how a group of Chinese residents in the U.S. was fleeced out of $1.4 million — with one victim alone losing $700,000. Law enforcement speculated that the reason the amount was so high was cultural: Some of the victims were so embarrassed that they lost money that they never came forward.
The elderly are one of the most common groups to fall prey to affinity schemes, because many older individuals are looking for more income in their golden years.
How to fight back if you’re an affinity fraud victim
If you’d like to avoid making an affinity fraud scheme investment, you can start by doing your due diligence before putting any money on the table. However, if you’ve already lost money, don’t give up on recouping what you thought was your investment. There are certain things you can do to not only bring the scammer to justice, but improve your chances of getting your money back:
- Conduct an asset search
Start by conducting an asset search of the person you suspect started the scam. Look for things that are immediately findable: real estate, automobiles, and other expensive items. It’s entirely possible that the person who ran the scam is living above and beyond their means. What you find may help you decide if it’s worth trying to get your investment back.
- Seek out LLCs and other companies
Has the scammer recently started a new company? Look deep into the background of the scammer to find the names of businesses that may have been used to store fraudulent investments or give weight to their affinity scheme.
- Present what you’ve found to law enforcement
When you’ve gathered enough evidence, create a package to present to law enforcement to show how the scam was executed — and how you became the victim. From emails to records, bank transfers to text messages, let law enforcement know how they can continue investigating the person or group involved.
Many victims of affinity fraud believe that they’ll never get their investment back, and that justice will never be served. Fortunately, if you do your best to build a case, you can boost your chances of recovering your money.