Affinity frauds target members of identifiable groups, such as the elderly, or religious or ethnic communities. The fraudsters involved in affinity scams often are—or pretend to be—members of the group.
Fraudsters may enlist respected leaders from the group to spread the word about the scheme, convincing them it is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraud they helped to promote.
These scams exploit the trust and friendship that exists in groups of people. Because of the tight-knit structure of many groups, outsiders may not know about the affinity scam. Victims may try to work things out within the group rather than notify authorities or pursue legal remedies.
Affinity scams often involve Ponzi or pyramid schemes where new investor money is used to pay earlier investors, making it appear as if the investment is successful and legitimate.
In Texas, affinity fraud is considered a serious criminal offense. It is a type of investment fraud that targets specific groups, often exploiting the trust and relationships within those communities. Texas securities laws, enforced by the Texas State Securities Board, prohibit fraudulent investment activities, including Ponzi and pyramid schemes, which are common in affinity frauds. Violations of these laws can lead to both civil and criminal penalties, including fines, restitution, and imprisonment. Additionally, under federal law, the Securities and Exchange Commission (SEC) also prosecutes affinity frauds that involve securities. Victims of affinity fraud in Texas are encouraged to report the fraud to the Texas State Securities Board or the SEC. They may also seek civil remedies, which could include suing the fraudster for damages. It's important for individuals to conduct due diligence on investment opportunities and be wary of schemes that promise high returns with little or no risk, especially those promoted within trusted groups.
