Couple Accused of Defrauding Thousands

An Arleta couple was 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 Thursday.

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

Police called Luz de Oro 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, and one man said he lost $30,000, said Det. Gene Arreola of the LAPD’s Financial Crimes Division.

Most of the victims are believed to be in Los Angeles County, but police feared that the alleged scheme was on the verge of becoming nationwide, he said.

Arreola said the club is pitched with a strong helping of religious sentiment at Spanish-language seminars that have drawn as many as 1,000 people. Participants pay $75 to join the club and are coaxed into buying overpriced telecommunications services, he said.

After investing about $3,800 and signing up at least seven new members, participants become eligible for the “automobile program,” Arreola said.

Police said they believe that since last June, about 100 members have driven out of 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 the cars were usually bought under deferred payment plans, and no payments were made.

Twenty of the vehicles 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 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 said there is no evidence that any car sales people broke the law.

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

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