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Sunday morning swindles

Half of all Ponzi schemes are affinity based

Feb 17, 2012

by Geoffrey Morgan

Don’t let someone pull at your heartstrings while they’re also pulling at your purse strings. It’s a lesson learned too late for many fraud victims.

A study by Marquet International, an American consultancy, said that half of the largest Ponzi schemes of the last 10 years were affinity based. Affinity-based frauds are perpetrated by more than just friends and family. As this Economist article points out, these swindles occur most often in larger social circles, like churches, professional clubs and organizations, and among tight-knit ethnic communities.

This happens in Alberta. In June 2011, police charged John Lipinski, a Ukranian Orthodox clergyman from Bonnyville, in a scam which brought Polish and Ukranian students seeking English-as-a-second-language education to northern Alberta. Police allege the potential ESL students were put to work, rather than allowed to study. The scheme was reportedly worth a cool $1 million. The Alberta Securities Commission has warned against affinity-based frauds as well.

Affinity-based frauds extend well beyond Ponzi schemes, as the Bonnyville church case shows. In its report on embezzlement, Marquet International said religious groups and non-profits are the most victimized organizations behind governments and financial institutions. Christopher Marquet said “this phenomenon is the result of the trust factor within a given church community or religious order.”

As the examples from both Bonnyville and the Economist article illustrate, don’t let your guard down – especially on Sunday morning.

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