LOCAL : 17 Arrested in Canoga Park in ‘Pyramid’ Scheme Operation

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

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

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, Sgt. Mark Williams said.

The officers, who began investigating the operation three weeks ago, attended two previous meetings at different locations in the West San Fernando Valley before making the arrests at the Canoga Park Women’s Club about 7:30 p.m. Wednesday, Williams said.

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

Williams said 115 people were in the meeting hall when undercover officers who were also in attendance 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 booked and released, he said.