Affinity Fraud

Targeting a particular group to defraud is known as affinity fraud.

Affinity fraud is an investment scam that targets members of an identifiable racial, ethnic, professional, or religious group. Often, the defendant is (or pretends to be) a member of the group. For general information on fraud, see  Securities Fraud: Sentencing and Penalties  and  Laws on Fraud.

People who commit affinity fraud use different bogus investment schemes to steal money from their victims, whom they often recruit through churches and other religious and charitable organizations. Defendants often use Ponzi or pyramid schemes, where initial investors are paid “returns” out of money collected from later investors so that, at least early on, it appears that the investment is sound and the defendant is able to escape detection.

Like all financial fraud, affinity fraud is prohibited under state and federal law. The  Securities and Exchange Commission  has prosecuted a number of affinity fraud schemes. For example, in 2012, a  Florida man  was sentenced to five years in federal prison for mail and wire fraud in connection with a Ponzi scheme targeting Cuban-Americans. Affinity fraud can be challenging to prosecute, becauseit often occurs within insular communities that may be inclined to try and handle the problem themselves.

Should Affinity Fraud be Prosecuted as a Hate Crime?

Some scholars have argued that affinity fraud should be prosecuted as a hate crime when victims are targeted due to their religion, race, or ethnicity. For more information on hate crimes, see  Hate Crimes: Laws and Penalties. However, many state laws against hate crimes are limited to crimes of violence, so financial crimes, such as fraud, cannot be prosecuted as hate crimes. While the type of crime may be a barrier to a hate crime prosecution, the fact that the defendant may be of the same religion, race, or ethnicity is not. Hate crime laws prohibit bias-motivated crimes against everyone and it does not matter whether the defendant is a member of the same group or not. For more information, see  Is Everyone Protected by Hate Crimes Legislation?

However, in some states, people who target fraud victims due to their age have been prosecuted for hate crimes. For example, New York’s hate crime law increases the penalty for a number of violent and non-violent crimes whenever the defendant chooses the victim based on the victim’s “race, color, national origin, ancestry, gender, religion, religious practice, age, disability or sexual orientation.” Prosecutors in New York have used the state’s hate crime law against  people who have swindled the elderly.

Obtaining Legal Assistance

If you are charged with affinity fraud or any other crime, you should talk to a local criminal defense attorney. An attorney can explain the law in your state and help you prepare the strongest possible defense.

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