Holly Wilson, a psychiatric nurse, never thought she'd have $300,000 to lose. But in 1980 she wrote a textbook about nursing to help instruct her students at the University of California. And it was a hit.
She started investing book royalties with a San Francisco-based adviser, who seemed to have impressive credentials and a loyal following of customers from the medical community. The investments he recommended also appealed to Wilson's sensitivities _ they were partnerships designed to finance housing for old people who would otherwise be forced into nursing homes.
But two years ago the investment partnerships started to unravel. Now attorneys maintain that Wilson is among a rapidly growing number of Americans to be hit by so-called "affinity fraud."
Affinity frauds come in all shapes and sizes _ ranging from real estate and trust deed scams to precious metals cons. But what all affinity frauds have in common is that they target a specific group where all the members have common goals and fears.
No one has statistics on how much affinity fraud has spread in the past few years, but experts note it started to crop up in significant numbers about five years ago. Now it is so pervasive that many law enforcement authorities are beginning to study it as a separate and distinct type of financial scam.
Since affinity fraud was first "diagnosed" in 1988, officials say they've uncovered scams that target many types of professionals, including doctors, lawyers and teachers, as well as virtually every ethnic and religious group. There have been scams that concentrated on Hispanics, African Americans, Chinese, Taiwanese, Koreans, Haitians and French. There have been con artists who took members of particular church congregations and others who targeted broader religious sects, from fundamentalist Christians to Mormons, Baptists, Catholics and Jews. Some have even targeted graduates of particular colleges and universities.
While every state has been hit by some affinity scam, these frauds seem to be most pervasive in California. And that's an ominous sign for the rest of the country.
"California is a bellwether state for investment fraud," said Scott Stapf, a spokesman for the North American Securities Administrators Association. "The fact that this problem has grown to enormous proportions in California means that it's just a matter of time before it's a much bigger problem in other states."
The California Department of Corporations has never tried to quantify how many affinity frauds it has discovered or prosecuted, said Bill McDonald, chief of enforcement. …