Arizona Elder Fraud Prevention Team

Investment Fraud

AFFINITY FRAUD

Current fraudulent schemes include: Promissory note fraud; Prime bank instrument fraud; and, Affinity fraud.
Each of these investments are touted as safe and offering higher returns than more traditional investments.

Affinity fraud involves the gaining the confidence of investors by stressing the con artist ethnic, religious, or professional solidarity with the would-be victim.

Once the connection to the group is made, the natural skepticism of the individual member is overcome.
Even when they realize they've been scammed, victims won't notify the authorities but will instead try to resolve the problem themselves.
This allows the swindler to play on loyalties within the group and continue operating.

How can your constituents avoid affinity group fraud?
Advise them to beware of the use of names or testimonials from other group members.
Have them obtain written information that details the risks in the investment.
Encourage them to ask for professional advice from a neutral outside expert.
Advise that they call the Securities Division to see if the investment or the salespersons are registered.

PROMISSORY NOTE FRAUD

Promissory notes are similar to loans or IOUs.
They may be issued by individuals or companies to raise money and are touted to be a safe way to invest short-term.
A promissory note is a form of debt that a company may use to raise capital for its operations.
Insurance agents have actively promoted the sale of promissory notes.
Sellers often fail to inform investors that promissory notes are highly risky and often fraudulent.

The insurance agents often encourage the investor to cash in a life insurance or an annuity policy and roll the proceeds into the promissory notes.
Unfortunately, the promissory notes and the company behind them are often fraudulent, or
Promoters use the investors’ money to line their own pockets.

Investors can protect themselves and their money by:
Checking with the Securities Division before investing
Staying away from investments that that are touted as offering guaranteed above-market returns.

PRIME BANK INSTRUMENTS

Prime bank schemes go by many names:
Bank-secured trading programs, high-yield investment programs, standby letters of credit, prime bank notes.
The common denominator is that all are supposedly debt obligations guaranteed by the world’s top 100 banks, or "prime banks.”

These schemes are based on the lie that incredible returns can be earned without risk of loss.
Prime bank schemes are pitched as secret trading programs that the Rothschilds and Rockefellers established, which are only offered to the elite.

Prime bank fraud often involves
Money laundering and Ponzi schemes.
Most investor money disappears offshore through wire transfers making difficult to recover the investors’ funds
How can investors protect themselves from PBI fraudsters?

Avoid such investments at all costs
Prime bank instruments do not exist in the real world of finance.
Encourage your constituents to notify the securities division – we investigate and prosecute PBI schemes.

Email us
accsec@ccsd.cc.state.az.us

Secuities Issues Hotlinks

Securities Division--Arizona Corporation Commission