Police Arrest 17, Seize $2,000 in ‘Pyramid’ Profit Scheme

Vice detectives infiltrated a meeting in Canoga Park and arrested 17 people suspected of operating an illegal “pyramid” scam, Los Angeles police said Thursday.

According to detectives, participants put in $500 and got back as much as $16,000 after drawing in acquaintances to contribute.

The operation, called an “endless chain,” depends entirely on a continuous cycle of new investors to be successful. When the flow of investors finally dries up, those who joined the pyramid most recently lose out, said Sgt. Mark Williams.

The officers began investigating the operation three weeks ago. They attended two prior meetings at different locations in the west San Fernando Valley before making the arrests at the Canoga Park Woman’s Club in the 7400 block of Jordan Avenue about 7:30 p.m. Wednesday, Williams said.

The club had been rented for the meeting and its officials were unaware of the purpose, he said.

Williams said 115 people were in the hall when undercover officers stopped the meeting. Investigators interviewed the participants and arrested the alleged leaders of the operation on suspicion of promoting an “endless chain,” a misdemeanor. They were all arrested and released, he said.

According to reports, police stopped the meeting and made the arrests shortly after one of the operation’s leaders announced, “This is not a Tupperware party and we are not trading baseball cards. We are here to make money. Lots of money.”

Detectives were still reviewing evidence seized during the arrests, including six pyramid charts, and could not estimate how many people took part. Investigators believe the operation worked solely through word of mouth.

Police seized $2,000 during the arrests.

Williams said those arrested were all from the Valley and few had prior criminal records.

“They were just everyday folks,” he said. “They come from all walks of life. They were trying to make a buck.”

But police said it was clear that all of those involved knew the pyramid operation was illegal. Williams said the group’s leaders rented different locations for meetings, using names like Century Properties, and started each meeting by asking that any law enforcement officers identify themselves.

“Everyone knew it was illegal,” Williams said. “When someone would knock on the door during the meeting they would take the pyramid cards and place them face down until they saw who it was. Everyone there knew what was going on.”