By: Evor VattuonecloseAuthor: Evor Vattuone Name: Evor Vattuone
Member: Member Paladin
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Email: evor@aspire.biz
Site: http://paladinregistry.com/external/beaninformedinvestor/advisor_profile.php?advisor_id=2758
About: See Authors Posts (3) | July 29, 2009 | Illegal Schemes & Scams, Ponzi Schemes, Who Can I Trust?

The Affinity Group

Alarming numbers of new scams are being originated from what are called “affinity groups”.  These are groups of people with similar values, lifestyles and/or ethnic identities, such as churches and women’s or senior groups. Predators use the most respected members of affinity groups to gain access to their constituents – and their built-in level of trust.  For example, endorsements coming from a pastor of a church can carry significant sway and new clients will therefore often skip the due-diligence portion of their research into new investments.   

A major case that started in 2004, involved an innocuously named group – “Women Helping Women” aka “Women Empowering Women”. This group pitched unbelievable returns on their investments.  For a small sum of $5,000 paid to WHW, they would invest it for you, all in the safety of dealing with other “trusted” women…how empowering.  They pitched 300% to 400% returns with little risk of loss. It was uncovered by a CA Dept. of Corporations agent and District Attorney in Sacramento to be a Ponzi scheme and many members lost much more than $5,000.  In addition, many members faced criminal charges who had no idea they were even perpetrating a crime!  There is another group with the same name currently, but they’re not a scam from what I can see.  However, this same scam is being reborn all over the country using different names.

You absolutely MUST do your homework, regardless of the name or affinity to which an organization ties into.  Just remember to ASK QUESTIONS.  Questioning a person or business you are thinking of engaging with usually uncovers many bad intentions.  If you don’t get a straight answer or are confused, keep asking or get a second opinion. Trustworthy advisors, agents and others will spend as much time as needed to help you understand whatever it is you’re considering.  Most importantly, investors should know exactly how to get out of an investment and how much it will cost.  Getting in is the easy part.  Scams usually leave you confused…so trust your instincts and get a good second opinion from a disinterested, independent, and qualified third party if you’re unsure.  If it even hints at being too good to be true, just say “no”.