A Wolf in Sheep’s Clothing: Enacting Statutes Enhancing Criminal Penalties for Affinity Fraud

Karina Sargsian

affiliation not provided to SSRN

February 16, 2012

The following essay reviews a new form of sentencing enhancement under the security fraud statutes of two states. The sentencing enhancement is imposed on individuals who are found guilty of affinity fraud.

Affinity fraud is any type of fraud in which the perpetrator tailors the fraud to target members of a particular group united by common traits or interests that produce inherent trust. The fraudsters who promote affinity scams frequently are — or pretend to be — members of the group.

Other states are likely to enact similar affinity fraud penalty enhancement statutes aimed at deterring and punishing culprits. This essay compares and contrasts the current enacted affinity fraud statutes. The essay also discusses some of the issues that courts might encounter when dealing with their analysis of whether or not a particular fraudulent scheme encompassed an affinity relationship so as to render it eligible for the sentencing enhancement.

This essay is of particular guidance to legislators in other states considering proposing a similar bill, to legal practitioners in need of a basic background on the intricacies of affinity fraud, and to legal scholars in their respective publications regarding securities fraud, Ponzi schemes or affinity fraud.

Number of Pages in PDF File: 33

Keywords: Affinity Fraud, Ponzi Schemes, Criminal Enhancement Statute, Securities Fraud

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Date posted: February 20, 2012 ; Last revised: July 9, 2016

Suggested Citation

Sargsian, Karina, A Wolf in Sheep’s Clothing: Enacting Statutes Enhancing Criminal Penalties for Affinity Fraud (February 16, 2012). Available at SSRN: https://ssrn.com/abstract=2006716 or http://dx.doi.org/10.2139/ssrn.2006716

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Karina Sargsian (Contact Author)
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