South Florida Arbitration & Litigation Lawyer BlogSouth Florida Broker/Dealer Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
June, 2012:
SEC Charges Florida Broker in Astrology-Based Ponzi Scheme
Articles Posted in Affinity Fraud
Terry E. Wiese, Scott A. Wiese and Internet Protocol
Investment Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
May, 2012:
Securities and Exchange Commission v. Usee, Inc., et al, Case No. 3:12-cv-01325-M (N.D.Tex.) (filed April 30, 2012)
Shervin Neman and Neman Financial, L.P.
City Capital Corporation and Ephren W. Taylor
Affinity Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
April, 2012:
SEC Charges Ponzi Schemer Targeting Church Congregations
Gaston E. Cantens and Tereita Cantens
Affinity Securities Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.
April, 2012:
Royal West Properties, Inc. Founding Principal Sentenced In $135 Million Investor Fraud
AFFINITY FRAUD – HOW TO STOP IT!
AFFINITY FRAUD – The Friendly Killer!
Affinity fraud refers to investment scams that prey upon members of identifiable groups, often religious or ethnic communities. The fraudsters who promote affinity scams frequently are – or pretend to be – members of the group. They often enlist respected leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster’s ruse.
These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies, and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.
Affinity Fraud – Church of Jesus Christ of Latter Day Saints
January, 2012:
Affinity Fraud has a devastating effect not only on the individuals that are defrauded but also affects the core beliefs of the individuals that makeup the targeted group, in this case members of the Church of Jesus Christ of Latter Day Saints.
Securities and Exchange Commission v. Kevin J. Wilcox, Jennifer E. Thoennes, and Eric R. Nelson, Civil Action No. 2:11-cv-01219-DN (D. Utah, December 29, 2011).
Jody Dunn – Charged by SEC with Investment Scheme Targeting Deaf Community
September, 2011:
Securities and Exchange Commission v. Jody Dunn, Case No. 4:11-CV-00577 (USDC E.D. Tex.).
Affinity fraud is alive and well in today’s investment world. While most investors realize this, it is likewise inconceivable, to people, that it will happen to them. Unfortunately, anyone can be taken advantage by fraudsters. One such example is described below.
Imperia Invest IBC – Affinity Fraud (Deaf Investors)
Securities and Exchange Commission v. Imperia Invest IBC, Civil Action No. 2:10-cv-00986-B (D. Utah)
On October 6, 2010, the Securities and Exchange Commission obtained a temporary restraining order and emergency asset freeze against Imperia Invest IBC (“Imperia”) for defrauding more than 14,000 investors worldwide. The Commission’s complaint alleges Imperia raised in excess of $7 million, $4 million of which was collected primarily from deaf investors in the United States. In addition to the asset freeze, the court has granted the Commission’s motion for expedited discovery and prohibiting the destruction of documents.
According to the Commission’s complaint filed in the U.S. District Court for Utah, Imperia defrauded investors by soliciting funds via the internet to purchase Traded Endowment Policies (“TEP”), the British term for viatical settlements, claiming to pay investors a guaranteed return of 1.2% per day. The Commission alleges that Imperia promised unrealistic returns to investors. The Imperia website allegedly stated that an initial $50 investment would allow the investor to obtain an $80,000 loan from an unnamed foreign bank which would be used by Imperia to purchase a TEP; Imperia would then trade the TEPs and pay the investor the guaranteed return. The Commission’s complaint alleges that Imperia claimed to be licensed and located in both the Bahamas and Vanuatu when, in fact, it is not licensed to do business or located in either of those countries. It is also alleged that Imperia’s website stated investors could only access their profits by purchasing a Visa debit card from Imperia, but that Imperia has no relationship with Visa and was using the Visa name without authorization. Additionally, the complaint contends that Imperia took proactive steps to conceal the identity of its control persons by using an anonymous browser to host its website, by communicating with all investors via email without disclosing the identity of any control persons and by establishing off-shore Paypal style bank accounts to conceal the recipient of the investment proceeds.
Amish – Affinity Fraud
The Securities and Exchange Commission recently published Litigation Release No. 21856 on February 15, 2011 in which the SEC charged Monroe L. Beachy in $33 million offering fraud that targeted the Amish.
The cased is styled Securities and Exchange Commission v. Monroe L. Beachy, Civil Action No. 11-cv-320-SL in the United States District Court for the Northern District of Ohio.
The Securities and Exchange Commission announced that on February 15, 2011, it filed a civil injunction action in the United States District Court for the Northern District of Ohio charging Monroe L. Beachy with conducting an unregistered and fraudulent offering of securities that raised more than $33 million. The SEC alleges that Beachy, a 77-year-old Amish man from Sugarcreek, Ohio, targeted his fellow Amish as investors in his fraudulent offering.