Affinity fraud preys on trust

Affinity fraud is one of the big forms of fraud being perpetrated today — big because it is becoming more common and because it involves groups of people, most notably new immigrants, religious and minority groups, and social clubs.

Affinity fraud is one of the big forms of fraud being perpetrated today — big because it is becoming more common and because it involves groups of people, most notably new immigrants, religious and minority groups, and social clubs.

It’s also one of the most insidious forms of fraud because it preys on people’s basic need for human companionship and trust in people who share similar ethnic backgrounds, values, principles and interests.

“Affinity fraud is definitely one of the two big forms of fraud out there today, the other being Ponzi schemes,” said Tom Hamza, president of the Investor Education Fund.

The pattern of most affinity frauds is very similar.

The perpetrator joins a group or community of some kind — often a church — and gains the trust of its members. This individual convinces members to invest in a scheme and then walks away with the money.

Affinity fraud among religious groups and church congregations has grown rapidly over the last few years.

Church groups, congregations and denominations are particularly vulnerable because it’s human nature to trust someone who purports to be religious.

Affinity fraud has been a major problem over the last few years in British Columbia’s Fraser Valley, where 300 investors were swindled out of more than $11 million through an affinity scam perpetrated by a defrocked pastor.

It became such a problem that, in 2003, a Catholic priest and Presbyterian minister approached the B.C. Securities Commission and created God’s Fraud Squad to draw attention to the problem and educate the estimated 200 churches and 30 denominations in the region.

Minority groups also are very susceptible to affinity fraud.

Members of long-established minority groups in Canada may have accumulated savings and achieved success and want to give back to their community to help others like themselves. This generosity can make them easy prey for fraudsters.

One of the biggest affinity cases in Canada involved the closely knit Ismaili community, many of whom were induced by one of their own people to invest $75 million in a scheme involving a product to whiten teeth.

New immigrants are another susceptible group.

Often they are isolated from the larger community and are unfamiliar with Canadian laws and customs regarding investments. As well, they may not be able to get information and advice about proposed investments because of language and cultural barriers, making it very difficult for them to distinguish between legitimate and fraudulent offers.

Security regulators advise people to watch out for investments or advisers who exploit a religious connection or seem to be closely tied to a particular religious belief. Religious financial planners should hold the same standards as other financial planners, and an investment opportunity that is only available to members of a specific church or faith does not make sense.

Don’t trust any claim that religion-based investments are not regulated. Most investments are regulated by securities laws and must be registered for sale.

If in doubt, ask for a prospectus or other written information. Scam artists don’t like paper trails. A legitimate sales person must provide detailed written materials outlining the nature of the investment, the risks involved, financial statements and any restrictions on getting your money out.

And always remember the golden rule: if it sounds too good to be true, it probably is.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. He can be reached at boggsyourmoney@rogers.com.

Just Posted

Parenting: Every woman will have a different pregnancy experience

Wife whose hormones are unbalanced can be unpleasant experience

Men posing as repo men attempt to steal vehicle in Red Deer County

Two men attempted to steal a utility vehicle from a Red Deer… Continue reading

Red Deerian spreads kindness with one card at a time

One Red Deerian wants to combat bullying by spreading kindness in the… Continue reading

Bowden baby in need of surgery

“Help for Alexis” Go Fund Me account

PHOTO: First Rider bus safety in Red Deer

Central Alberta students learned bus safety in the Notre Dame High School… Continue reading

WATCH: Annual Family Picnic at Central Spray and Play

Blue Grass Sod Farms Ltd. held the Annual Family Picnic at the… Continue reading

Turning on Trump doesn’t buy credibility for black Americans

WASHINGTON — For years, Omarosa Manigault Newman stood at Donald Trump’s side,… Continue reading

Senior Chinese monk accused of sexual misconduct quits post

BEIJING — One of China’s most high-profile Buddhist monks has resigned from… Continue reading

Priests molested 1,000 children in Pennsylvania, report says

HARRISBURG, Pa. — A priest raped a 7-year-old girl while he was… Continue reading

Death toll hits 39 in Italy bridge collapse; blame begins

GENOA, Italy — Italian emergency workers pulled two more bodies out of… Continue reading

Constellation Brands spending $5 billion to increase stake in Canopy Growth

SMITH FALLS, Ont. — Constellation Brands has signed a deal to invest… Continue reading

Women-owned businesses generate $68,000 less revenue than men’s: survey

TORONTO — When Dionne Laslo-Baker sought a bank loan to expand her… Continue reading

Hedley frontman Jacob Hoggard’s alleged sex offences case returns to court

TORONTO — The case of Hedley frontman Jacob Hoggard, who faces three… Continue reading

Fredericton woman recounts terrifying moments after gunshots rang out

FREDERICTON — She awoke to the crack of gunfire, the shots fired… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month