Desperate Housewives Popped in PTA Ponzi

by Paul Springer

Expect to see a mini-series version on television in a matter of weeks: Three PTA mothers in Southern California stand accused of raking in $14 million through an alleged Ponzi scheme.

The three Armstrong Elementary School mothers purportedly dissipated $4 million before the scheme was uncovered and the rest of the money was returned to investors, The Associated Press said.

The school is located in San Bernardino County’s Diamond Bar, and the local Patch.com website provides an up-close and personal view of the situation.

For one thing, the Pomona Unified School District took issue with some of the claims according to Patch.com, which reported that the district says one of the women was not in the PTA. The district also said that PTA funds were not involved in the alleged scam.

In any case, Diamond Bar’s Downey Patriot said two of the women have been arrested, while the third is already behind bars on separate fraud charges. The Patriot said about $1.5 million is demonstrably gone, while another $2.5 million is unaccounted for:

Detectives speculate the women used the money for lavish vacations, expensive hotels, new cars and at casinos in California and Nevada.

Promises of easy money and high returns led investors to buy into the theory that the women were involved in a lucrative deal to sell Alta Dena dairy products through Disney concessions. Those who took the bait allegedly paid a high price, according to the Patriot:

In order to get money, many of the victims took out second mortgages on their homes, maxed out their credit cards and “invested” their life savings. All transactions were done in cash and the victims losses ranged from $5,000 to as much as $208,000. Victims were given serialized receipts like those commonly available in office supply stores.

A disgruntled investor filed a lawsuit last year that ultimately lead to this week’s arrests.

In addition to those who lost money, the PTA itself is also a victim in some sense. While the PTA and school officials were not involved, the women allegedly preyed on the association to create a version of the so-called affinity scam, where unscrupulous individuals exploit connections in a social group.

One commenter on the local Patch.com site blasted the media for sullying the PTA:

To associate these convicted criminals with the PTA in the title sure does tell us that Yellow Journalism is alive and well…

Another commenter contested this view, leading to a lively dialog on how accurately the media are treating the PTA in this particular situation. At one point a reporter jumps in and asks if commenters had personal experience in the debacle.

Parental involvement in schools has never been a simple matter. And from the looks of things in Diamond Bar, it might actually be getting a lot more complicated.

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