Category Archives: Seniors

Fleecing the Flock: The Big Business of Swindling People Who Trust You

Posted on by Mark Pugsley

This a repost of a great article on affinity fraud that appeared in this week’s Economist Magazine.

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Fleecing the flock

The big business of swindling people who trust you

Jan 28th 2012 | SALT LAKE CITY | from the print edition

WITH a nudge from their pastor, the 25,000 members of the New Birth Missionary Baptist Church near Atlanta opened their hearts, and their wallets, to Ephren Taylor. And why not, given his glittering credentials? Mr Taylor billed himself as the youngest black chief executive of a publicly traded company in American history. He had appeared on NPR and CNN. He had given a talk on socially conscious investing at the Democratic National Convention. Snoop Dogg, a rapper, had tapped him to manage a charitable endowment.

So when Mr Taylor’s “Wealth Tour Live” seminars came to town, faithful ears opened wide. Eddie Long, the mega-church’s leader, introduced Mr Taylor at one event with the words: “[God] wants you to be a mover and shaker…to finance you well to do His will.” Mr Taylor offered “low-risk investment with high performances”, chosen with guidance from God. Continue reading →

The SEC is Targeting Affinity Fraud

Posted on by Mark Pugsley

This is a re-post of an article in Financial Advisor Magazine on how the SEC is increasingly looking into affinity fraud issues:

SEC TARGETING AFFINITY AND MICROCAP FRAUD

Social media and the Internet are making it easier for people to commit affinity fraud — when a person uses a common bond he has with others to cheat them out of their money, says SEC Chairwoman Mary L. Schapiro.

U.S. Attorneys in several states have made arrests recently in cases in which a Jewish person misused trust from a close-knit Jewish community or someone infiltrated an elderly community to build enough trust to sell fraudulent investments.

“Religious groups or ethnic groups can be a hot bed for these types of fraud,” says Owen Donley, chief counsel of investor education and advocacy. “We put out publications and use social media to fight this. I would hope this type of fraud is not something an advisor would fall for, but it is something advisors can help their clients watch out for. Continue reading →

Great Advice for Seniors on How to Avoid Affinity Fraud

Posted on by Mark Pugsley
This is a repost of a terrific article that appeared in Morningstar this week:
Seniors: Beware of Affinity Fraud By Christine Benz 
In hindsight, a scam like the one Bernie Madoff perpetrated on his victims looks like it should’ve been a cinch to detect. Madoff’s clients were promised steady returns of 10%-12% per year; that should’ve looked impossible even to novice investors, particularly given the extreme market volatility that marked the first decade of the 21st century. Financial analyst and Madoff whistle-blower Harry Markopolos said he knew that Madoff had faked his clients’ returns within five minutes of seeing them. Continue reading →