Affinity fraudsters fleecing millions from groups

Commission chairman Jane Diplock said affinity fraud was a problem in New Zealand with five serious cases occurring over the past five years.

"In each case millions of dollars have been stolen from people who belong to church or cultural groups," Diplock said in a statement.

"Affinity fraudsters exploit our tendency to trust people who belong to the same group as we do."

The scam worked by convincing members of close knit groups to put money into an investment scheme. Often the crooks will say some profits will go to a charity or other worthy cause. In some cases the victims are paid "interest" from money obtained from new investors giving the illusion that the investment is successful.

"Eventually, people discover that most - if not all - their money is gone."

Diplock said it was impossible to tell how much money was stolen from New Zealanders through affinity fraud each year.

"These scams are hard for authorities to detect. Victims are often shocked and embarrassed by what's happened, so they keep quiet instead of going to the police. The fraudster is then free to move on to another group of people."

Diplock said affinity fraud, like most investment scams, could be avoided by using common sense and asking a few questions.

"In particular, people should always ask for an investment statement for any investment they are offered, and they should seek independent advice before investing."

According to the commission, just over $60 million has been reaped by affinity fraudsters in five major cases in since 1999.

Many of these targeted Bay of Plenty church groups including the largest, a scheme run by Donald Moris Rea which collected $30 million during 2001 to 2003. Quite a lot of money remains unaccounted for, possibly sent to overseas bank accounts for the personal benefit of Rea and his associates.

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