Hello readers of TIP, my name is Cesar Zambrano and I’m happy to have been given the chance to share an article I’ve written with you all.
I have been interested in the stock market, investments, and spreading the word about fraudulent activities for quite a few years,
but have most recently fulfilled this passion by working for ForexFraud.com.
Ponzi schemes are proliferating in our society to such an extent these days that individual names have been assigned to each category of fraud based on the nature of each type of swindle. One of the more shockingly evil types has been tabbed “Affinity”. Affinity fraud entails an investment scam that preys upon members of a specific group. Examples of these groups may be religious congregations, ethnic communities, the elderly, or even professional societies. The swindlers frequently pretend to be a member of the group and persuade a group leader to endorse their pitches and spread the word to his faithful constituents.
When the scam unravels, law enforcement may be the last ones to be alerted since members and leaders of the group are too embarrassed to admit being duped to authorities. Crooks know full well the human psychology traits of group thinking and how tight-knit relationships in these structures tend to be. Since the probability of prosecution is low, the criminal element is quickly drawn to such circumstances. However, when the word gets out, arrests can follow, as happened in these three instances.
In Miami, Luis Felipe Perez actually turned himself in to face charges for his affinity Ponzi scheme. His investment fraud hoodwinked his fellow Hispanic community out of over $40 million. His investors invested millions, ostensibly to be invested in his lucrative jewelry and pawn shop businesses. In this case, the swindler used fake diamonds to allure his potential clients. Their money was to be as safe as the jewels that were collateral behind their low-risk loans. Mr. Perez also promised outrageous returns of as much as 10% per month, typically a tip-off of a scam, but ignored by trusting Hispanics. According to court documents, at least $6 million went to supporting Mr. Perez’s lavish lifestyle, including a $3.2 million home, $1 million in jewelry, and exotic vacations.
Back in New York, another Affinity Ponzi scheme did its damage. In this case, the targeted investors lived in the Caribbean and the African-American communities of Brooklyn. Gedrey Thompson and his firm, GTF Enterprises Inc., are accused by the SEC of having raised more than $800,000 from 20 customers. A portion of the invested funds lost money, and the balance went primarily for Mr. Thompson’s personal use. Although the level of loss is not in the millions, the “affinity” caption is just the same. David Rosenfeld, Associate Director of the SEC’s New York Regional Office, stated, “Thompson and his cohorts exploited members of their own community by using phony trading credentials and bogus account statements to legitimize their fraud.”
However, the “award” for the highest Affinity Ponzi scheme prosecution for the year goes to Minneapolis. Trevor Cook recently pleaded guilty to a U.S. District Judge that he had defrauded investors out of $190 million from an elaborate Ponzi scheme involving forex trading and the use of sponsorships from a Christian broadcasting radio host named Pat Kiley. Mr. Kiley’s radio program, “Follow the Money,” was carried on more than 200 radio stations. Cook promised “risk-less” forex accounts as the avenue to riches and claimed to have over $4 billion under management. A tearful Cook received a plea bargained sentence of 25 years in jail, but must assist the court in recovering whatever remaining assets can be found. A court-appointed receiver has already begun collecting assets and implementing an approved “clawback” process to reclaim any gains that other investors may have received. Cook’s wife is the first target.
The FBI estimates that annual losses from investment fraud are $400 billion. Ponzi schemes continue to account for a considerable portion of these frauds, in spite of frequent news articles covering these deceits. All investments involve risk, especially forex trading. Fraud prevention starts with skeptical investors. However, as long as greed trumps caution in our society, it appears that Ponzi schemes will persist.
ALL RIGHTS RESERVED: Cesar Zambrano