Empowering Tribal Citizens to Make Informed Financial Decisions

The Securities Division of the Office of the Secretary of State aims to ensure the integrity of the securities marketplace through investigative actions as well as the registration and oversight of securities, securities brokers and dealers, investment advisors and their representatives. The Division further aims to enhance legitimate capital formation and to minimize the burden and expense of regulatory compliance by legitimate businesses. Visit the Securities Investor Protection page for more information.

The following information was developed with resources from the North American Securities Administrators Association (NASAA).

What are Assets?

Tangible assets include:

• Family and Friends
• Community and the Surroundings (water, land, historical sites, etc.)
• Housing, Jewelry, Heirlooms, etc.
• Money and Investments (retirement)

Intangible assets include:

• Ethic Culture and Traditions
• Spiritual Rituals
• Health and Happiness (Joy and Peace)
• Education and Knowledge

What is Affinity Fraud?

Affinity fraud refers to a scam that preys upon members of identifiable groups, such as religious, native or ethnic communities, the elderly, or professional groups.

These scams rely on the trust and friendship in groups of people who have something in common.

The Approach:

• Con artists target affinity groups to gain trust and then steal their savings.
• Con artists use their relationships to get “family and/or friends” to buy fake investments.

Name Dropping:

• Sometimes, the con artist is not a member of the group, but they pull off the fraud by selling first to a few prominent group members or leaders.
• The con artist then reels in the rest of the victims with a name-dropping pitch:
  •  “Your group leaders have already invested with me and are making lots of money!”
• Group leaders may do the work for the con artist, unknowingly reeling in new investors by taking up the investment.

Targets (Many are common in Native communities):

• Native or Ethnic Groups
• Senior Groups
• Religious Organizations
• Union Members
• Military
• Professional Organizations
• Athletic Groups

The Results:

• In many cases, the recruiting member or even the leader of the group becomes a victim of what turns out to be fraud.
• Victims may lose their entire life savings, as funds are often depleted before the scam is discovered.

Affinity Fraud Prevention

1. Check before you invest – no matter who is selling the product.
2. Beware of investment opportunities that sound too good to be true.

Prevention:

• Never make an investment solely based on the reputation or “relationship/friendship” of a member of a group to which you belong.
• Don’t let a “relationship” or “friendship” stop you from getting the offer in writing and asking hard questions.
  • Ask for written information detailing the investment risks, such as a prospectus.
  • Ask about the procedures for accessing your money.
• Be suspicious if told NOT to share details of the investment with people outside of the group or to keep the investment opportunity confidential.
• No guarantees – just because someone you know made money or claims to have made money doesn’t mean you will make money too.
• Before you invest call your securities regulator to check out the investment offer and the promoter for proper registration.

Types of Scams

Investment Fraud

• A con artist promises to pay you a high interest rate on the money you lend to them.
• A promise that you will make more money every time you recruit someone to buy into the business.
• A scammer uses high-pressure tactics to try to convince you to invest.
• The seller or product may be unregistered.

Imposter

• Unsolicited calls, texts, emails or letters that claim to be government agencies, lottery officials, family members, nonprofits, etc.
• Convince you they are legitimate and that you owe money.
• Asks for your bank account information or a credit card. May tell you to wire the money, send cash or gift card, or even pay by cryptocurrency.

Identity Theft

• When someone steals your identity by using your personal information – your name, Social Security #, credit card #, or other identifying information – without your knowledge or permission to commit fraud or other crimes.
• Their goal is to purchase assets for themselves, or to steal the assets you already own.
• They may create phony documents or accounts with your personal information and use this to go on a spending spree in your name.

Phishing

• E-mail or text appears to be from a legitimate source, and encourages you click on a link.
• That link will take you to FAKE websites and entice you to provide your personal, financial or password information.
• Once you have entered the site, any personal information you enter goes to the bad guys.
• They will use your personal information and identity to steal money and assets from you.

Con Artist Tricks

• Convince victims to believe that they need to invest NOW, before the great deal is over. “Time is running out!”
• Create trusting relationships by claiming the same common interests and values.
• Claim, “Everyone you know and respect has already invested in this.”
• Are very charismatic and will do favors for you and gain your trust.  Ex: Buy you lunch.

• Keep an eye out for these red flags

  • “Inside information” known only to a select few.
  • “Secret methods” or “Breakthrough technology.”
  • “Act now!” Limited-time offer!
  • “Risk free” once-in-a-lifetime opportunity!
  • “Guaranteed” returns!
  • Newest idea or products to “make you a millionaire!”

Preventative Questions to Ask

1. What risks are involved?
2. Can you provide a detailed explanation of the investment in writing?
3. Are you a registered financial professional?
4. Is this investment registered or exempt?

Control Your Assets

1. Monitor your finances and check your statements regularly
2. Ask questions
3. Always get details in writing
4. Never invest in something you don’t understand
5. Don’t be rushed into making a decision 

Report Fraud

• Report suspected fraud even if the scam artist is your “relative” or “friend.” It could help save you, your family, and your community money and heartache.
• Gather as much information as you can, including:
  • Promoter’s name and address
  • Investment documents, including promotional material
• Protect others. Don’t let embarrassment keep you from reporting.