Arleta Pair Charged in Pyramid Scheme

An Arleta couple were arrested Wednesday on suspicion of running a pyramid scheme that allegedly bilked thousands of mostly working-class Latinos of at least $2,000 each, Los Angeles Police Department officials said Thursday.

Mercedes Navarrete, 53, and Felix Maganna Navarrete, 69, who run the Panorama City-based company La Luz de Oro, were charged with grand theft by false pretense Wednesday. Each was freed on $50,000 bail in Van Nuys.

Mercedes Navarrete denied the allegations when reached at home Thursday.

“We do have our side and that will come out,” she said. “There’s not going to be a problem.”

Police described Luz de Oro as a “complex endless chain scheme” that holds out the promise of new cars and homes to members, but rarely makes good on those promises. Of the club’s 25,000 members, thousands invested at least $2,000. One man reported he had lost $30,000, Det. Gene Arreola of the LAPD Financial Crimes Division said.

“This was an extremely sophisticated operation,” Arreola said. “The sad thing about it is that it took advantage of so many disadvantaged members of the Hispanic community.”

Though most of the victims are believed to be in Los Angeles County, Arreola said chapters of the club are active in California cities outside the county as well as in Las Vegas, Tijuana and Ensenada, Mexico. Police feared the group was on the cusp of breaking nationwide, he said.

The multilevel scheme is pitched with a strong helping of religious sentiment at Spanish-language seminars that have drawn as many as 1,000 people, Arreola said. Participants pay $75 to join the club, and are coaxed into buying overpriced telecommunications services, he said. A member who has invested about $3,800 and signed up at least seven new members becomes eligible for the “automobile program,” Arreola said.

Police said they think that since last June, about 100 members have driven off San Fernando Valley auto lots with high-end sport-utility vehicles after being given the impression that Luz de Oro would make payments. But Arreola said that the cars were usually bought under deferred payment plans and that no payments were made.

Twenty of the SUVs have been repossessed, he said. Because members often used relatives and friends to co-sign for the cars, people who were not Luz de Oro members have also had their credit ruined, he said.

“Some of these car salesmen were saying, ‘Don’t worry about it, Luz de Oro’s going to take care of it,’ knowing . . . the co-signers are going to get nailed,” Arreola said. He added that there’s no evidence that any car salesman broke the law.

Luz de Oro also ran a “home program.” The few members who reached this level discovered that Luz de Oro was named on the grant deed of the homes they thought they had purchased.

The company would “only give enough back [to members] to showboat people on stage” at the meetings--”people who would get up there and say, ‘I started with nothing, now look what I got,” Arreola said.

Arreola said the Navarretes’ office on Chase Street has a chapel inside it.

“Everything they present is about God,” he said. “They say, ‘If you do everything the right way and follow our rules and regulations, this is how God rewards us--we only mean to bring good to one another.”

Los Angeles police say Mercedes Navarrete served 145 days in prison after being found guilty of similar crimes in Michigan in 1999.