Organizers called their group "Women of Empowerment," holding lavish dinners at homes and restaurants along the South County coast. But Sheriff's Department investigators said the social club was actually an upscale pyramid scheme that allegedly bilked at least 30 women out of more than $100,000.
The alleged scam lured new participants with the enticement of $40,000 gifts at restaurant bashes masquerading as "birthday parties," according to sheriff's officials. To join, each new victim paid $5,000--a sum that shocked even seasoned detectives.
"Maybe it's a reflection of the affluent times we live in," said Sheriff's Investigator Chris Rhodes, who has worked vice cases for 14 years. "I've never seen one where the [entry fee] was so high."
Deputies managed to infiltrate the group about a week ago and interrupted one such "birthday party" on Tuesday at the Crab Cooker restaurant in Newport Beach. Deputies arrested the accused organizer, Corinne Joy Alavekios.
Alavekios, in an interview, denied she organized a pyramid scheme. Thousands of women, she said, are involved in "Women of Empowerment" throughout California, Washington and Oregon.
"It's women helping women," she said. "There's a lot of charity benefiting from this, whether it be personal or helping other causes."
But sheriff's detectives allege that the Laguna Niguel resident ran a sophisticated organization that projected an image of high-class respectability.
Recruits, whose entry fees funded the alleged pyramid, were dubbed "appetizers," Rhodes said. With each new recruit they attracted, members moved up through the dining hierarchy, he said, to become "soup or salads," then "entrees," until they finally reached the apex of the pyramid and were known as "desserts."
"I guess this was part of the fun," Rhodes said. "Who wants to go through life being an appetizer when you could be a dessert?"
It was the desserts who collected the final jackpot, he said. The alleged pyramid would then split into two, and the scheme would begin again.
Organizers generally targeted women who could afford to shell out $5,000. But participants ran the gamut of social classes, from bankers to Realtors to retirees, officials said. And just in case would-be members were strapped for cash, they were told to relax, investigators alleged.
Recruiters told women that some members took out loans, cashed in retirement plans or ran up credit car debts to pay their entry fees, investigators said. But the women were allegedly reassured they would be able to repay debts out of their final windfall.
Investigators allege that Alavekios told women that the setup was entirely legal. She allegedly emphasized how past participants used their payouts to benefit charities, pay off bills or surprise husbands with romantic retreats. But investigators allege that the sell always came down to helping women secure a measure of financial independence.
"As one of the women at these presentations said, 'One of the best things about this is that we don't have to tell our husbands,' " Rhodes said.
Alavekios told detectives she ran the organization but did not believe it was illegal, Rhodes said.
Detectives suspect it is a spin-off from a Seattle, Wash., pyramid scheme. Officials said they know of at least five pyramids in Orange County related to the "Women of Empowerment" that paid out since November.