What’s the Sign For Ponzi?

The Securities and Exchnage Commission (SEC) is going after some really upstanding investment professionals who targetted deaf people in a $4.4 million Ponzi scam.

The SEC has charged Hawaiian Billion Coupons, Inc. (BCI) and its CEO Marvin R. Cooper with misleading 125 investors, including  pocketing over a million of the take to pay for Cooper’s new home and other personal expenses. Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement stated:

“This emergency action shows that the Commission will act quickly and decisively to help victims of affinity fraud.”

So what is affinity fraud? According to the SEC it’s any investment scam that prey upon members of identifiable groups. These might be religious or ethnic communities, the elderly, or professional groups – or as in this case, deaf people. The perpetrators of the schemes may be members of the group themselves, or may pose as such. Often they will enlist the support of respected community leaders. And these influencers may believe the fake investment is a great deal. To make matters worse, the close-knit structure of the group may make it difficult to detect an affinity scam. Victims often won’t inform authorities, choosing instead to work things out among themselves.

The Deaf Ponzi Scheme

According to the SEC’s complaint, filed February 18th in federal court in Honolulu, BCI and Cooper targeted deaf investors and led them to believe their funds would be invested in the foreign exchange (Forex) markets yielding returns of up to 25%, compounded monthly.

They said the investments were safe. *Wink-wink* Wonder of wonders – they failed to generate sufficient funds from their Forex trading to pay the promised returns, and instead operated as a Ponzi scheme by paying returns to existing investors from funds contributed by new investors.

Nice.

Want to learn more about affinity fraud? I know I do. Stay tuned for more on this next week.

PS – Thank you, SEC!

Image Credit: T altered art, Flickr