Affinity fraud is the name for the type of fraud where people put undeserved trust in someone offering an investment opportunity because that person is “someone like me.” Affinity fraud works because people trust other people who may share a common bond, such as family, religion or some other group affiliation. The list goes on and on. Scammers take advantage of every connection they can make with their victims to gain their trust and then steal their money Over the years I have reported on many instances of affinity fraud perpetrated against a wide variety of people. Scammers take advantage of every connection they can make with their victims to gain their trust and then steal their money.
Earlier this week, Lamor Whitehead a Brooklyn, New York pastor was sentenced to nine years in prison for preying upon his parishioners luring them into investing in phony financial scams.
TIPS
Before investing with anyone, you should investigate the person offering to sell you the investment with the Securities and Exchange Commission’s Central Registration Depository. This will tell you if the broker is licensed and if there have been disciplinary procedures against him or her. You can also check with your own state’s securities regulation office for similar information. Many investment advisers will not be required to register with the SEC, but are required to register with your individual state’s securities regulators. You can find your state’s agency by going to the website of the North American Securities Administrators Association. Many investment advisers will not be required to register with the SEC, but are required to register with your individual state securities regulators. You can find your state’s agency by going to the website of the North American Securities Administrators Association. You should also check with the Financial Industry Regulatory Authority (FINRA) for information about the particular investment adviser.
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