Two articles in BusinessWeek Online discuss the rising popularity of “affinity fraud,” being ripped of by someone you know and trust.
One article describes a Cambodian woman who 
convinced fellow Cambodians to invest with her, and the other describes a similar scheme among Masonic brothers, in which millions of dollars were lost.
“Affinity scams typically take the form of Ponzi schemes,” according to the articles, “in which money from new investors is channeled to existing investors. Fraudsters create the illusion that they're distributing profits from a business or securities portfolio, but they use the money they collect to pay earlier victims and keep the rest.
“Affinity swindlers play on their victims' sense that they are shut out of mainstream society. ‘The pitch is: 'The haves [know] a secret they're just not telling you. But we know it and we can get it for you,’’ says SEC Enforcement Director Linda Chatman Thomsen.”
Securities regulators have stepped up investor education outreach to vulnerable groups.
