Affinity fraud, experts say, has been around as long as any other scam. Cass said Charles Ponzi himself -- the man for whom Ponzi schemes are named -- was likely guilty of affinity fraud.
Beginning in 1919, Ponzi, an Italian immigrant, targeted other Italian immigrants, convincing them to give him millions for what he billed as investments in postage with 40 percent returns. In reality, Ponzi was using money contributed by new investors to provide returns for old investors. The scheme collapsed when Ponzi ran out of funds. (He was convicted of mail fraud in 1920 and eventually deported to Italy.)
"If you're an Italian-American, why would you target other Italian-Americans?" Cass asked. "Not because you don't like them, but because those are the people who are going to be most trusting of you."
Together, the Madoff and Theodule schemes -- which came to light within weeks of one another -- illustrate the wide spectrum of people who can fall prey to affinity fraud.
Much of Theodule's alleged scheme was focused on southern Florida's largely insulated Haitian-American community, where community members turn to Creole-language radio for their primary news and where investing money in anything other than a savings account just isn't common, said Teresa J. Verges, an assistant regional director for the Securities and Exchange Commission.
Theodule attracted investors in part by assuring them that their money would help the development of Haitian-run businesses.
"Investors believed they were not only doing something good for themselves but something good for the community," Verges said.
Not everyone who invested with Theodule actually had the money to spare.
"People borrowed against equity in their homes, borrowed money needed for Christmas presents, money they needed to live on," said David A. Rothstein, a lawyer who represents dozens of Theodule investors.
Among his clients, the average person invested between $10,000 and $40,000 with Theodule.
By contrast, many Madoff investors lost hundreds of thousands or millions.
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