Tragic End to Affinity Ponzi Scheme

Posted on January 7, 2015


Affinity frauds are especially devastating because of the inherent bonds of trust that exist within the victimized community.  Fraudsters count on that affinity to promote their scheme. Greed, trust, friendship, lack of due diligence or a sober second thought combine in a disastrous conflagration of financial ruin, friendships destroyed, and as this case demonstrates, suicide. The Washington Examiner ran an article about the recent investigative report released by the US Dept. of Justice regarding the affinity Ponzi scheme which duped over 100 employees of the US Drug Enforcement Administration (DEA).  Over the course of nearly 20 years investors sunk $34 million into a fraudulent investment scheme operated by Kenneth "Wayne" McLeod.  The scheme finally collapsed when a retired DEA employee unsuccessfully tried to withdraw his investment.  An investigation ensued and McLeod killed himself after leaving a confession note.

Like any affinity fraud scheme there were a few red flags that seem obvious now, maybe even then:

  • McLeod had the support of key insiders from within his target group.  In this case he was able to convince key personnel within the DEA to sponsor his investment seminars targeting DEA employees.  He conducted over 130 such seminars for DEA employees and these events were hosted in DEA facilities.
  • Complaints and challenges regarding McLeod's credibility as an investment advisor were dismissed.
  • McLeod made conspicuous contributions to charities that he knew were dear to the target group in an effort to earn their trust.  He donated hundreds of thousands of dollars to the DEA survivor's benefit fund and other charities.
  • McLeod bribed several DEA employees by giving them paid Super Bowl trips in clear violation of the government's ethics policies.
  • One of McLeod's affiliate companies owed $500,000 in back taxes yet McLeod continued to win federal contracts.

If you are worried that you or somebody you know might be the target of an affinity fraud scheme them you should consider getting some outside help. Don't minimize your suspicions, act on them.  Clarium Fraud and Compliance Solutions has the skills and expertise to conduct a detached professional investigation.  Contact Clarium today.

 

 

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