CNBC Associate Producer
Shawn Merriman was head of an investment firm and lay bishop in the Mormon church who persuaded friends, family, and church members to invest with him. It turned out to be a big scam, taking in more than $21 million. Among victims: his own mother.
The Ponzi scheme, which continued for 15 years, landed Merriman behind bars, and his investors out of money.
What Merriman did is considered affinity fraud — where a perpetrator tries to swindle a specific group out of money. While Merriman was already a long-standing member of the Church of Latter-day Saints, other fraudsters have been known to specifically infiltrate a group with the sole mission of perpetrating a scam. The method of operations is simple. The person is introduced to the group, joins the group, and establishes a relationship of trust. Once trust is established, the scam has the potential to spread like wildfire — especially at a time when nearly 1 in 4 financial fraud schemes in America are actually cases of affinity fraud, according to a recent report by Marquet International, a professional consultancy.
Characteristics of Affinity Fraud
“Ponzi schemes are almost always marketed as something exclusive or selective,” said Tracy Coenen, a forensic accountant and fraud investigator. “Ponzi schemes play on our human nature, including our trust and our desire to be part of something special.”
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