What Is Affinity Fraud?
“Affinity Fraud” Can Ravage a Community
We often hear stories about Ponzi schemes that target a particular group
or community, such as a church congregation. When a con artist chooses
to target a specific group in this manner, it’s called “affinity
fraud.” There have been dozens of cases of affinity fraud related
to Ponzi schemes just over the last year, which have affected investors
all over the nation. Unfortunately, con artists are generally willing
to manipulate any advantage they can find that might get you to hand over
your cash—and sometimes that means taking your cash and moving on
to milk your loved ones.
Who Is a Common Victim of Affinity Fraud?
Affinity fraud targets members of specific, identifiable groups. The most commonly targeted groups include religious, ethnic, racial, professional,
and senior groups, but any group whose members share a common interest
or background is at risk. Affinity fraudsters use their affiliation with
or membership in these groups to gain the trust of the other group members.
Con artist Amjed Mahmood, for example, targeted 300 fellow members of the
Des Plaines Muslim community in a $40 million
Ponzi scheme uncovered last year, and Ahmed Alabadi, a dual citizen of Iraq and the
United States, cheated approximately 3,000 Iraqis (living in the U.S.
and overseas) out of more than $2 million in a separate investment scheme.
As is the case with most affinity fraud schemes, both Mahmood and Alabadi
used their group memberships to gain their victims’ trust. However,
affinity fraudsters do not have to be members of their target group. Instead,
he or she can use his or her connection to an influential group member
to gain access to the group. That’s what Anthony Ray, operator of
Key Funding Group and a recidivist con artist, did. Ray managed to defraud
more than a dozen members of the Pine Grove Baptist Church out of nearly
$660,000 by getting the church’s pastor to trust him and introduce
him to members of the congregation. The victims of Ray’s scheme
so believed his claims that several of them refinanced their homes and/or
took out additional loans to invest more.
Unfortunately, that level of trust—and degree of financial devastation—isn’t
unusual for an affinity fraud scheme. In fact, many victims of affinity
fraud suffer significant losses because they believe wholeheartedly in
the con artist and whatever “investment” he or she is pitching.
That’s why identifying affinity fraud and knowing how to avoid it
is so important – by the time a particular affinity fraud scheme
is uncovered, many of its victims have already lost everything
Why Is Affinity Fraud So Effective?
It works because it narrows the focus. The benefit of doing this is twofold
for the con artist:
Investors feel more comfortable with the fraudster. If you have something in common with the person pitching an investment,
you’re more likely to feel extend your trust. A skilled con artist
who has your trust can use this to talk you into (and out of) all kinds
Investors tell their friends and families about the “deal.” When you hear about an investment deal from a friend or acquaintance,
you’re more likely to take the investment seriously. If you hear
about a great investment opportunity from 5 or 6 people at your church
or school, then you really take notice and get interested—the con
almost sells itself!
How to Get Help If You’ve Lost Money in a Ponzi Scheme
If you or a family member has lost money in a Ponzi or pyramid scheme,
don’t wait until it’s too late to get help. A Ponzi scheme
attorney with Meyer Wilson can help recover your losses if you have become
the victim of a scam. Reach out to us today by phone or
fill out our online form.