Affinity fraud is a type of investment fraud that targets an identifiable group of people who share a common bond (a religion, a profession, an ethnic identity, etc.) and in which the fraudster often is, or pretends to be, a member of that group. This is one of the most common and financially devastating forms of investment securities fraud in America today. A single case of affinity fraud can cheat its victims out of hundreds of millions of dollars collectively.

This type of investment fraud occurs most frequently in the stock market. But it can also occur in various other ways, for example when:

  • A man posing as a recent immigrant peddles phony investments to unsuspecting, new immigrants in the community.
  • A pastor convinces his congregation to buy into a Ponzi scheme by assuring them God wants them all to become rich.
  • A retired police officer turned investment advisor uses his credibility and connections in the law enforcement community to convince fellow officers to put money into a fictitious retirement fund and pockets their money instead.

To deceive investors, the fraudster will use new investor money to pay earlier investors, which gives the false illusion that investment is successful. This tricks new investors into the scheme, while making current investors believe their investment is secure. But in reality, the fraudster is using the money for personal use.

It takes courage to come forward as a victim of affinity fraud. By seeking the help of an experienced attorney, victims stand their best chance of recovering their losses and, potentially, additional damages. Standing up to brokers and other perpetrators of affinity fraud also helps the victimized community by preventing anyone else from getting hurt. Contact Price Armstrong today if you suspect that you or someone you know has fallen victim of an affinity fraud scheme.

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Affinity fraud schemes prey on people’s trust. Their victims can’t believe “one of our own” would do them harm. That belief lowers victims’ guards, making it more likely they will hand over money to the fraudster without asking hard questions about the investment they’re peddling.

The groups targeted by affinity fraud are often socially-marginalized, such as:

  • New immigrants
  • Tight-knit religious congregations
  • Elderly people
  • Ethnic communities

Fraudsters try to take advantage of this relative isolation by presenting themselves as people who understand the inner-workings of the community, but who also have special knowledge about money and investments that they learned elsewhere. In this way, the fraudsters try to make themselves the gatekeepers of information their victims “wouldn’t understand.”

Affinity fraud victims tend to be slower than other types of fraud victims to recognize they’ve been cheated. Even when the fraud gets revealed, victims often resist coming forward out of mistrust of the authorities and a fear their community will suffer. Instead, many try to resolve the matter internally, which can lead to additional complications, including victims unwittingly putting themselves at legal risk by helping the fraudster cover up the scheme.

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Make no mistake: affinity fraud is illegal. It’s punishable as a crime under federal and state laws against mail and wire fraud, and under laws governing the registration and sale of investment securities. These laws carry significant penalties, including large fines and long terms of imprisonment for those caught.

State and federal prosecutors and regulators such as the Securities and Exchange Commission (SEC) prosecute criminal charges against affinity fraudsters. But criminal prosecutions and enforcement actions are not the only ways victims of affinity fraud can seek justice. Many of the same laws that allow for criminal prosecution also give victims the right to file a civil lawsuit against fraudsters to seek damages.

Alternatively, victims may have rights to pursue compensation under the rules governing the actions of securities brokers, who perpetrate many affinity fraud schemes. The Financial Industry Regulatory Authority (FINRA) bars the brokers who are its members from, among other things, engaging in “manipulative, deceptive or other fraudulent” conduct, from recommending investments that are not suited to a client’s financial needs, and from misusing client funds or “guaranteeing” a return on an investment in securities. Violating these rules subjects’ brokers to disciplinary action and to binding arbitration actions by their defrauded clients.

Further, a respected law professor has persuasively argued that affinity fraud is also a form of “hate crime” that targets victims because of their race, religion, ethnicity, or other membership in an identifiable, legally-protected group.


By their nature, affinity fraud schemes happen in a wide variety of settings and circumstances. Here are some examples to give you a sense of where they have appeared in the past:

  • In the mid-2000s, a Cambodian woman and her Canadian-Cambodian husband bilked members of the Boston-area Cambodian immigrant community out of $30 million. They gained the community’s trust by speaking the community’s language, attending the community’s church, recruiting the community’s leaders to legitimize their phony investments.
  • A charismatic pastor preaching a “prosperity gospel” convinced Christian church congregations across America to participate in a Ponzi scheme, defrauding them of $16 million.
  • A fraudster posing as a hedge fund targeted the Los Angeles Persian-Jewish community, collecting $7.5 million from victims while promising them outsized returns from an “investment” that was, in fact, a pyramid scheme.
  • A phony entrepreneur claiming to be starting a cloud computing venture collected more than $65 million from Los Angeles Asian and Latino communities by awarding them “points” that were supposedly “convertible” into equity securities and promising a 100% investment return in 100 days.
  • Fraudsters targeted members of the Church of Jesus Christ of Latter-day Saints in Utah, using longstanding family connections and smooth-talking sales pitches to steal millions, especially from vulnerable, elderly community members.


As we described above, affinity fraud victims tend to be taken-in by a trusted member of their community. In effect, the trust members of the community place in one another becomes weaponized against them. This makes affinity fraud difficult to detect and to separate from the types of mutual support common in a strong immigrant, religious, or professional community. But, it’s not impossible to spot a scheme in progress.

Here are some signs to watch out for, and steps to take, to reduce your risk of falling victim to an affinity fraud:

  • Beware of investments promising “too good to be true” returns, “guaranteeing” your investment, offering “no risk,” or marketing an investment “exclusively” to members of your community.
  • Make sure you understand an investment before committing your money to it. A legitimate investment broker can provide you with a prospectus or other written explanation of the investment and should also take the time to explain why he recommends it.
  • No honest broker will use pressure, intimidation, or the fact that “everybody else is doing it” to convince you to put your money into an investment.
  • Treat it as a warning sign if the person promoting an investment tries to use his or her authority as a community leader to get you to invest.
  • Use online resources, such as these tools on the FINRA web site, to evaluate an investment and/or a broker.


Admitting you’ve fallen victim to an affinity fraud isn’t easy. You struggle to fathom the breach of trust that has occurred. It may feel wrong to take action against someone within your community, and you may even face resistance from friends and family members who don’t want you to “mess things up.”

At Price Armstrong, we understand the difficulty of coming forward to expose an affinity fraud, and we want to help. When victims of affinity fraud are ready to step forward, we can assist them in with evaluating the nature and scope of the fraud. Price Armstrong can help you:

  • plan for and navigate the fallout within a community after exposing the fraud
  • bring the fraud to the attention of the appropriate regulators or prosecutors in a way that protects the victims’ and victimized community’s rights
  • counsel the victims about how to avoid missteps that could jeopardize their chances of recovering their losses
  • pursue the necessary legal action in court or arbitration proceedings to hold the fraudster accountable and, hopefully, get the victims’ money back

Victims of affinity fraud rarely have the know-how or resources to take the steps above on their own. Trying to resolve matters directly with a fraudster can put fraud victims at serious legal risk of implicating themselves in the scheme. Simply put, the sooner victims have an experienced affinity fraud lawyer on their side, the better their chances of staying out of harm’s way and recovering their losses.

At Price Armstrong, we have represented victims of affinity fraud and other types of securities fraud in court and arbitration proceedings throughout the nation. Our team has a deep understanding of how to spot and unravel affinity fraud, as well as of the steps to take once a fraud has been revealed that will give our clients the best possible chance of getting their money back. If you believe an affinity fraud scheme has harmed you, a family member, or a friend, contact the experienced affinity fraud attorneys at Price Armstrong today to schedule a free consultation.

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If you have suffered financially because of affinity fraud, contact the attorneys at Price Armstrong. We can help you seek justice and protect your rights throughout the process. We represent clients nationwide with offices in Birmingham, AL, Tallahassee, FL and Albany, GA. Call us today at (205) 208-9588 for a free initial consultation and review of your case. Let us fight for you – call now!