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Affinity/Ponzi Fraud


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AFFINITY/PONZI FRAUD

Affinity fraud is the practice of using shared membership of a religious, ethnic, career, community or other, established group to entice fellow members to invest money in seemingly legitimate schemes. The angle pursued by these fraudsters is to claim that their shared membership in the particular group speaks to their credibility and makes them more responsible and therefore worthy of trust. Those who ’talk the lingo’, as it has been described, are immediately greeted with a certain familiarity and people frequently drop their guard. This in turn makes the process of ’selling’ the scheme significantly easier. [We have a more detailed paper titled ’Affinity Fraud’, for which you may like to send.]

Normally, in what is termed a Ponzi scheme, payments to existing investors are funded almost completely by money received from new investors to the scheme. Once the flow of new investors stops the house of cards collapses and investors are left empty handed. Often the initial funds have been used for the personal gain of those running the scam.

In recent times various churches, and church members, have been taken advantage of and lost considerable funds. For example one that has reached the attention of the law and media is International Product & Investment Corporation (IPIC) run by Gregory Setser. This company encouraged church groups, and everyday church goers alike, to invest in its plans and used religion as part of the sales pitch. Some investors acknowledged the reason they took the risk to invest was the group’s Christian affiliation. Unfortunately for the investors, most of the money invested was used to buy worthless business ventures and to furnish Gregory Setser, and his family, with a very lavish lifestyle.

Those in churches are not the only ones to be deceived. Recently news of these schemes in the wider community has been reported. Turning Enterprises International Ltd, whose managing director, Derek Turner, misled, among others, Australian TV doctor, Dr James Wright, (real name, Dr John Knight). Apparently Turner, a one time neighbour of Dr Wright, offered to invest money for Dr Wright and his charity, which operates to help the aged, and instead swindled him out of more than $50 million. Turner is appealing a 20 year jail sentence in the US.

Cult groups and members have also been taken advantage of recently. In California a group called Renaissance Asset Fund and its principals, Ronald Nadel and Joseph Malone, have had charges laid against them. Nadel and Malone are said to have sought aged investors, mainly through Jehovah’s Witness congregations.

Even members of the Christian Science Church have been targeted. In Boston, USA, in 2003, two companies and four men had civil fraud charges bought against them for raising $22 million in a scam aimed at members of the Christian Science Church.

Beware of ANYONE with quick, high profit schemes - especially people who use their religious group membership to encourage fellow members to contribute or invest. AND remember to old cliche - if it sounds too good to be true, it probably IS too good to be true!