RIP-OFF ALERT: Of all the types of fraud, affinity fraud is one that's particularly effective because it hinges on dealing with people who are "like you" -- hence the name. Human nature dictates that we let our guard down when we're approached by someone of the same religion, race, profession, etc.

Consider this example: The Wall Street Journal reports that the son of a rabbi stole $100 million from fellow members of the Jewish community after promising to invest it (with huge returns) in "private placements."

Private placements are an exotic sort of investment where you discover under-the-radar businesses that are poised to boom and then invest in them.

But the rabbi's son was operating a classic Ponzi scheme. He used the money taken from later investors to pay earlier ones, and he pitched people in synagogues throughout Virginia, Illinois, New York, Israel and South Africa.

The Los Angeles Times reports a similar Ponzi scheme saw one criminal steal $22 million from people using the private placements shtick. Returns of 40% were promised. The culprit used the money to fund his lifestyle with his wife and his mistress. In fact, the man gave twice as much money to the mistress as he did to the wife!

This latter example is not strictly a case of affinity fraud like the first one. However, Clark has some advice for you if you're ever confronted with either situation:

• If you don't understand what they're pitching, don't do it.
• Just because someone is your pal at the golf course or a house of worship, it does not mean they're automatically more trustworthy than a stranger on the street.

Have you seen all the TV ads, trying to get you to trade currency? If you read financial publications, you probably see ads there too. Trading currency is a tough thing to do for professionals. They can lose a ton of money every time they trade. But there is a higher risk for amateurs because of all the criminal outfits out there. These rogue traders offer to trade your money for you using their “proprietary method.” But what they really do is take your money and spend it. It’s a classic “ponzi scheme.” One man ripped people off for $30 million. With it, he bought an island, a yacht and land in California. Don’t give these people anymore money. If you get a phone call about currency trading, hang up. Even if it’s legitimate, you’re likely to lose money.

Have you heard of affinity fraud? It’s the type of con where a scam artist will convince affluent people to invest in a certain fund or company. The con artists gain the trust of preachers, doctors, and other “leaders” and then get them to invest. Those people get huge returns on their money right away, so the other people around them start investing. The lead investors are usually not involved in the scam, but they spread the word because they are excited. The problem is that there is no real money, and often the scam artist is fronting the scam with his own money. Affinity fraud has been around since the 80s but it’s back “in” hot and heavy right now because people are concerned about investing in stocks. One “social club” lost $27 million in a recent scam. So remember to be cautious when someone in a group around you starts talking up these investments. People let their guards down when someone they know recommends something. But you need to independently verify the true story. Phenomenal returns on investments don’t exist.

Have you heard of the NFIC – the National Fraud Information Center? It’s become a great source for information about the latest scams around the world. Repeatedly, someone drafting your checking account has become one of the favorites for thieves. Sweepstakes are another top complaint. The average loss in a fraudulent lottery is $5,000, which is huge. The No. 2 scam is phony scholarship help. The third most popular scam is magazine sales and callers who are “renewing” subscriptions. No. 4 is credit card offers and No. 5 is fake check scams with the average loss being about $4,000. Advance fee loan scams are also huge, as are work-at-home schemes and lottery pools. We’ve all experienced some type of phishing scam, and finally are the phony vacation offers. Clark has talked about each of these at some point in the show, but you still need to be on the lookout.

There is a trend in direct marketing right now to send very misleading, yet convincing mailings that could wipe out your wallet. The main target is senior citizens and they are old fashioned ways of taking advantage of you. They mailings look like they’re coming from an official government organization or department. A popular one today uses a logo that looks like the one from the Department of Housing and Urban Development. Really it’s just a pitch from a mortgage company to try and get you to refinance. Another one featured in the Washington Post looks exactly like an envelope from the U.S. Treasury, but it too is a refinance pitch. Many also look like correspondence from your bank or from some kind of “sweepstakes commission” or bureau that doesn’t exist. The Federal Trade Commission is very concerned about these scams, so warn your parents. These are all scams demanding payments, so be very careful.

Every week, it seems Clark shares a story about the latest Ponzi scheme. The most popular kinds are Ponzi schemes and affinity scams. Churches and doctors are often targets of these schemes. And the latest newsworthy scam is unbelievable. One man conned $253 million out of about 7,000 people by getting them to believe a lie. Larry Osaki somehow convinced people that they would get 20 percent returns on the money they gave him every 90 days. So, what would they make money on? Latex gloves. It’s not a joke. People thought the next big break was in latex gloves. If your stocks are doing great, you’re going to earn 7 to 10 percent on your money each year at the most. That’s over the course of a year. One consolation is that Osaki is headed to prison, according to the Orlando Sentinel. Whenever someone promises you more than the normal return on your money, run the other way.

The SEC just shut down a group that stole millions from churchgoers who believed they were being “divinely guided.” The people believed they would make twice as much money in sixty days if they invested in these gold transactions. They were told their money would help an Arabian Prince move his gold from Israel to the United Arab Emirates, which of course was not true. There is no legitimate chance that you can double your money within sixty days. You are doing well if your money earns 4 to 5% a year. Clark wants people to make intelligent decisions with there money.

Every week, it seems Clark shares a story about the latest Ponzi scheme. The most popular kinds are Ponzi schemes and affinity scams. Churches and doctors are often targets of these schemes. And the latest newsworthy scam is unbelievable. One man conned $253 million out of about 7,000 people by getting them to believe a lie. Larry Osaki somehow convinced people that they would get 20 percent returns on the money they gave him every 90 days. So, what would they make money on? Latex gloves. It’s not a joke. People thought the next big break was in latex gloves. If your stocks are doing great, you’re going to earn 7 to 10 percent on your money each year at the most. That’s over the course of a year. One consolation is that Osaki is headed to prison, according to the Orlando Sentinel. Whenever someone promises you more than the normal return on your money, run the other way.

Clark often reports on ripoffs going on in the consumer world. Today, he has a Top 10 list of scams, schemes and scandals, provided by the state regulators who watch over financial analysts and brokers. Drum roll please…. The No. 10 scam is variable annuities. If you don’t know what these are and you don’t have any, good. If you do, you don’t want to put any more money into these plans. They have massive commissions and are absolutely horrible for your wallet. No. 9 are scandalous mutual fund companies. No. 8 is Internet fraud. No. 7 are “high yield investment” scams. Some that Clark has received calls on involve exotic overseas investments that are a complete scam. Insurance agents who sell people bogus investments come in at No. 6. Most insurance agents are honest, but a number of them have been involved in very scandalous affairs. No. 5 are church ripoffs. Just because someone seems religious does not mean that person is on the up and up. At No. 4, phony brokers. Just because someone says something is going to be a great investment doesn’t mean it will. Promissory notes – or fake CDs – are No. 3. These are promises that someone will pay you later if you give them money. But there is no guarantee, and it’s not safe. No. 2 is any kind of scam against seniors. If you’re not involved in your parents’ finances, be nosy! And, the No. 1 scam in the U.S. involving your wallet are Ponzi schemes. These are schemes where criminals recruit people to pay back other people who have invested, and then you have to recruit someone once you’re in. Eventually, these collapse because there are no more people willing to “invest.” There a lots of people who will sell you sizzle, but that’s all it is.