Everyone Is Doing It, But You Don't Have To
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Social Consensus/Phantom Riches
The people you surround yourself with—whether family or social organizations—are often the greatest influencers in your life. Whether it's your friends from church, classmates or fellow military service members, the affinity you have with those people creates a strong bond. Unfortunately, it's those bonds that some fraudsters exploit to get you to invest in a scam. This tactic is called "affinity fraud"—the thought that if everyone is doing it, it must be okay.
One shocking example was that of "The Three Hebrew Boys," a trio of scammers who targeted church groups and military service members, using an angle of faith to get people to invest.
"Because of the bond with other military personnel," said Joyce Adams, a victim of scam, "it gave me a sense of trust to invest with the Three Hebrew Boys."
The Three Hebrew Boys, who promised 200 percent returns on the investments, recruited high-ranking military officials as sales people to sign on their subordinates, betting on the faith and trust between military service members. Assuming the high-ranking officials had already done their due diligence, the subordinates blindly invested their money.
Ron Grosse, the FBI agent who cracked the Hebrew Boys fraud case, said many of the victims of the Ponzi scheme he interviewed during this investigation were highly educated—some with multiple degrees—but their faith and trust got the best of them.
"Because of their faith, because of their affinity with these folks, they cannot believe, they will not believe…that this is a fraud," said Grosse.
The Three Hebrew Boys were not registered to sell investments. When it was all said and done, they had stolen more than $80 million dollars from church groups and military service members. In 2010, they were convicted and sent to prison. Joyce Adams lost $37,000, but that doesn't have to happen to you.