Investors in New York and throughout the world are often targets of people with ill intent. Brokers, investment advisers and other supposed financial professionals will talk a good game, use various tactics to convince a would-be investor that they are trustworthy, and then take their money for illegal purposes. This is becoming increasingly common with the number of people who are portraying themselves as big winners in the investment world with Bitcoin and GameStop. Rest assured, another “opportunity” is right around the corner. A method unscrupulous brokers might use to accrue investors is affinity fraud. While this might not be as well-known as other scams, it can cause severe financial damage and is illegal. Those who suspect they have been harmed should be aware of their options.
Understanding affinity fraud
People might tend to trust those with similar backgrounds or who they know in some way. That could be as a “friend of a friend,” a local person who lives and works in their neighborhood, a relative, or someone with a shared background or religion. Using these commonalities as an “in” is a strategy to gain trust and access. Simply getting a reference or a recommendation does not automatically mean that the person is trustworthy, but that is a mistake people might make as they try to get involved in the stock market or other investment opportunities. These individuals might name drop by saying they are involved with a famous or wealthy person who is immediately recognizable. That too can lure new investors into the scheme.
A challenge with these cases is that the so-called affinity might prevent a victim from reporting what happened to the proper authorities because they do not want to get a person they know in trouble. Fear and reluctance are counted on by those committing fraud as they my get some time to secure new investors into their scheme, pay back old ones and move forward. Often, this leads to a Ponzi scheme that has been referenced as increasingly dangerous in the high-stakes and increasingly popular world of online investing.
Even people who might have initially accrued a windfall from trusting people they know could find themselves with massive losses. This is not even limited to those who are unfamiliar with investing or should not be making large financial commitments and risking their future. Investors who are well-informed are being caught up in these illegal activities. The genesis of Ponzi schemes is frequently affinity fraud as it starts in a certain circle of people who know each other and slowly expands exponentially as their individual contacts, friends and acquaintances become ensnared.
Having legal representation can try to recover lost investments
Those who are running or benefiting from affinity fraud count on familiarity. This is a method to continue with impunity. It is imperative to think about personal interests instead of maintaining a relationship that was based on illegality, exploitation and abuse. There are viable strategies to recover investments that have been lost in an affinity fraud and other scams. Before investing, it may be wise to consult with a legal firm that understands these tactics and knows the signs. After a person has been victimized, it is even more crucial to have legal assistance to get the money back and hold the perpetrator accountable.