1. Summary
  2. Affinity Fraud
  3. Understanding Affinity Fraud
  4. Examples of Affinity Fraud
  5. Affinity Fraud Most Prevalent in the U.S.


Fraud is an intentionally deceptive action designed to supply the offender with an unlawful gain or to deny a right to a victim. styles of fraud embrace tax fraud, MasterCard fraud, wire fraud, securities fraud, and bankruptcy fraud. fallacious activity is doled out by one individual, multiple people, or concern as a full.

  • Fraud involves deceit to lawlessly or unethically gain at the expense of another.
  • In finance, fraud will strive against several forms together with creating false insurance claims, preparation of the books, pump & dump schemes, and fraud resulting in unauthorized purchases.
  • Fraud prices the economy billions of greenbacks each year, and people who are caught are subject to fines and jail time.

Affinity Fraud

Affinity fraud may be a kind of investment fraud within which a scammer targets member of an identifiable cluster supported by things like race, age, religion, etc. The fraudster either is or pretends to be, a member of the cluster. typically the fraudster promotes a Ponzi scheme.

  • Affinity fraud targets a selected demographic cluster.
  • One of the foremost well-known samples of affinity fraud is Claude Bernard Madoff, wherever who targeted affluent someone communities.
  • While affinity fraud happens globally, it’s documented as the most effective in U.S. examples.

Understanding Affinity Fraud

Affinity fraud leverages and exploits the inherent trust at intervals in the cluster. As an example, a fraudster could target a selected spiritual congregation. Oftentimes, the person can attempt to enlist the assistance of the leader of the cluster to promote the investment theme. During this instance, the leader becomes an unwitting pawn within the enterprise.

Victims typically fail to apprize authorities or pursue their legal choices and instead attempt to work things out at intervals the cluster, significantly once the fraudsters have manipulated revered community or spiritual leaders to win over others to take a position.

Examples of Affinity Fraud

The U.S. Securities and Exchange Commission (SEC) investigates and acts against affinity frauds targeting a large spectrum of teams. Recent cases enclosed an ex-Marine’s hedge fund that targeted fellow military and daily merchandiser in Sugar Land, Texas, WHO defrauded investors among his fellow members of the Houston-area Lebanese and Druse communities. In another case, the SEC obtained an emergency judicial writ to halt a current Ponzi theme that targeted members of the Persian-Jewish community

However, the biggest affinity fraud in history was perpetrated by Claude Bernard L. Madoff Investment Securities that straight in late Nov 2008. Madoff’s sons turned him in once he confessed to the lads that his business was a “giant Ponzi scheme”. Madoff’s firm operated a $50 billion Ponzi theme that among several people and money corporations, conjointly targeted several rich Jews, someone organizations, and charitable teams, together with yeshivah University, philosopher faculty, Kehilath Jeshurun tabernacle, Ramaz, the SAR Academy, and Holocaust survivor Elie Wiesel’s foundation and his savings. Madoff’s theme was exposed throughout the economic collapse of 2008 which is sort of typical as a result of frauds tending to collapse during a weak economy as several investors attempt to withdraw cash resolute cowl shortfalls elsewhere.

Affinity Fraud Most Prevalent in the U.S.

The problem is world however best-documented within the U.S. A study of Ponzi schemes by Marquet International opposition. In 2011 studied 329 major U.S. investment fraud cases discovered within the previous decade of a minimum of $1 million in losses and total reported losses of nearly $50 billion. the foremost common affinity teams targeted by Ponzi schemers were the senior or retired; spiritual teams; and ethnic groups. These 3 target teams accounted for eighty-fifth of all the affinity cluster cases in their study.

According to the social scientist, UT sees the foremost affinity fraud per capita within the US, as a result of such a large amount of the state’s residents belonging to the LDS Church community. Members of the LDS community tend to be extraordinarily trusting of others WHO belong to the church leadership, or who gift themselves as happiness thereto, creating this community extraordinarily prone to this kind of scam. In 2010 alone, Utahns lost a calculable $1.4 billion to affinity scams. Affinity fraud is most current in UT County, particularly within the region between Alpine and the urban centre.