Forensics Journal - Stevenson University 2015 | Page 33

FORENSICS JOURNAL

As previously indicated, most affinity frauds contain an element
of a pyramid or Ponzi scheme investment. In the case of the Tan
and Bunchan fraud, Bunchan set up two multi-level marketing
companies, World Marketing Direct Selling and Oneuniverseonline,
which supposedly operated in a manner similar to legitimate
companies like Avon or Amway. In these types of organizations,
each new sales person is required to recruit additional product
sellers. However, in a legitimate operation like Avon, product sales,
as opposed to new recruits, drive the profitability of the company.
In a pyramid scheme, commissions earned are based upon how many
persons are brought into the organization. In the Tan and Bunchan
case, they offered victims the opportunity to skip to a “Director
I” level position in the business by paying Tan a lump sum of
$26,347.86. At this level, the victim would get an immediate
bonus and three hundred dollars a month for life. All payouts
were supposedly earned without ever selling a single product.
The scheme operated on several levels but each required a constant
influx of additional personnel to continue payments to the original
investors. Upon the cessation of new recruits, payments stopped,
suspicions arose and investors complained to Tan. At that point,
Tan manufactured excuses as to why the payments were late or nonexistent to include banking issues resulting from Hurricane Katrina.
Illogical excuses are a common element in pyramid and Ponzi
schemes when there is a lack of funds (United States, 2012).

to law enforcement that they trusted the fraudster as if they were
a family member because they believed that they shared the same
value system (Perri & Brody Optics 361).
Regulators and law enforcement must