Latinas target of pyramid scheme | TahoeDailyTribune.com
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Latinas target of pyramid scheme

William Ferchland, Tahoe Daily Tribune

A police investigation has begun of the Women’s Gifting Circle, a pyramid scheme that has reportedly drained thousands of dollars from dozens of poor Latinas in South Lake Tahoe.

The circle promises $40,000 to each new female member if they give $5,000 to join, said Rafael Elias, a reserve officer for the South Lake Tahoe Police Department and community advocate for the South Lake Tahoe Women’s Center.

It has been in existence for about two years and was started by prominent South Shore women. Now the pool of candidates is drying up, authorities said.



Impoverished, minority females — hoping to get a financial grip on life — are being targeted and lured into the circle, causing waves of complications for their families, friends and themselves, Elias said.

“One of the main problems are people who are investing money behind their husband’s back,” Elias said. “Now we’re looking at domestic violence. A lot of people haven’t come forward from this because of families turning against each other. It just triggered a huge chain of events. The ramifications of this are gigantic.”



Victims haven’t been identified because of fear and humiliation, Elias said.

Lois Denowitz, community educator at the South Lake Tahoe Women’s Center, said the women are likely ashamed they lost money under the circle’s guise of helping women reach their goals.

“This isn’t anything new,” Denowitz said. “This is something that’s always been going on but I think a lot of people are embarrassed.

“I think people go in good faith,” she added. “People want to help their families, especially when we’re talking about families from other countries.”

A circle consists of eight to 15 members, all females. They have dinner parties where new members pay a recommended $5,000, but can get away with providing less, said Delicia Spees, director of the Family Resource Center.

The money is scooped from the lower members by the circle leader, who then leaves the scheme with about $40,000, Spees said.

“The first people who started this circle are gone, or most of them are gone,” Spees said.

Elias agreed.

“The person at the top gets all the money off the pyramid, then the next two people move up,” Elias said. “Now that those two people are at the top, the pyramid will split. Then you have to have another 15 slots to get money, which can mean a lot of money.”

Spees said she knows about 10 women who have come forward.

“I had this lady come in with her three little kids,” Spees said. “She can’t be more than 25 years old. She gave them $5,000 because she thought it would be a good way to buy a house. She borrowed the money from her husband’s 401(k) plan.”

Detective Danny Mosqueira is leading the police investigation. He said the scheme originated in Canada about 10 years ago and has spread nationwide.

“We’re in the process of producing a reporting format, researching what criminal statutes may be violated and how we’ll proceed with prosecuting violators,” Mosqueira said. “Despite the fact that these gifting circles are portrayed as being legal, the fact is they are not legal. And if you participate in one of these gifting circles, you’re violating the law.”

El Dorado County District Attorney Gary Lacy said he’s been contacted for information on the circle by authorities in Placer, Sacramento and San Joaquin counties.

People involved in the Women’s Gifting Circle could be charged with a felony or misdemeanor under the “endless chain schemes” statute of California law. Punishment ranges from a maximum one year in jail or three years in state prison.

“I have tried to approach the problem from a reasonable perspective by alerting members of the public to the scam and advising them it is a violation of the law,” Lacy said. The district attorney added no one has been prosecuted thus far.

“When you run out of people to keep it going, the people are going to lose out on the money,” Lacy said. “Somebody will always end up a loser in these gifting circles. It never ever winds up with everybody winning.”

Denowitz, from the South Lake Women’s Center, is afraid there will be more repercussions than loss of money.

“I’m concerned about the violence that may come out of this,” she said. “People have to realize if they were coerced into this for whatever reason, they were a victim. I don’t want people to shy away.”

— Contact William Ferchland at (530) 542-8014 or wferchland@tahoedailytribune.com.


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