ST. GEORGE — The problem of affinity fraud – financial crimes based on bonds of trust – is so serious in Utah that in 2015 the state Legislature passed a law establishing an online white-collar crime registry similar to sex-offender registries.
The white-collar crime registry publishes the names, photographs and criminal details of individuals convicted of financial fraud crimes in the state going back a decade. Currently, there are 231 individuals listed on the registry.
Affinity fraud occurs throughout the United States but is especially prevalent in Utah, where members of The Church of Jesus Christ of Latter-day Saints too often are victimized by savvy fraudsters who claim to be just like them, according to a statement issued by the FBI Monday.
“These are greedy individuals who will stop at nothing,” John Huber, the U.S. Attorney for the District of Utah, said in the statement. “What’s so disconcerting is that these criminals approach us at church or through associations at our work or referrals from friends. They are silver-tongued devils – wolves in sheep’s clothing who will take our money and we’ll never see it again.”
Affinity fraudsters are expert manipulators and great salesmen, Michael Pickett, FBI special agent Salt Lake City Division, said in the statement. They will approach members of their social or religious circle with a promising investment opportunity – one that pays a high rate of return – and then use a variety of high-pressure tactics to get their victims’ money.
“Within the Mormon population, there is a well-known sense of trust,” Pickett said. “Unfortunately, that trust can sometimes take the place of due diligence, and that’s when individuals are more susceptible to being victimized.”
Established earlier this year, the “Stop Fraud Utah” campaign aims to educate the public about affinity fraud – what people can do to avoid it and how best to report it if they have been victimized.
“Within the Utah area, we are investigating more than $2 billion worth of fraud. In the last four months, we’ve opened 10 new cases,” Pickett said, adding that Utah consistently ranks among the top five states for the FBI’s most significant white-collar crime cases.
Unlike a drug addict who might rob a bank out of desperation, financial fraudsters’ crimes are ruthlessly premeditated, Huber said, noting:
These perpetrators, with a smile on their face and a twinkle in their eye, approach with a handshake and a hug, with intent and with persistence, to violate the trust of their victims and to take their life’s earnings.
Avoid becoming a victim of affinity fraud
Before investing money, the FBI offers the following important points to keep in mind:
- Do your homework. Understand the investment and do research about the person you are investing with, even if you have an existing relationship with that individual. “Trust is fine,” Pickett said, “but it does not replace due diligence.”
- Don’t make investments behind closed doors. Talk to friends, family members or financial professionals about the possible investment, and be wary if an individual tells you not to mention the investment opportunity to others.
- If an investment sounds too good to be true – with returns that greatly outweigh the risk – be suspicious. Also beware of high-pressure tactics that pressure you to act quickly.
- Be an informed consumer. Financial fraudsters are savvy salesmen and expert manipulators. They have an answer for everything. Verify their pronouncements through independent sources.
- If any red flags are raised about a potential investment or investment advisor, call your local regulatory agency and speak to someone. If you live in or near Utah, you can also consult the White-Collar Crime Offender Registry online.
- If someone tries to use their affiliation with a church or social organization to entice you to make an investment, you have every right to be suspicious, no matter what your relationship is with that person.
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