Over 20 years ago Adriaan Alettus Niewoudt rose to prominence when he convinced thousands of wide-eyed South Africans to buy into the kubus scheme, which was based on a milk culture his grandmother used as a skin product.
In January 1984, Nieuwoudt placed a newspaper advertisement inviting members of the public to earn more than their present salary by “cultivating vitamin plants in a glass.” In order to participate in the scheme, customers would have to send R500 ($74.39) to Kubus Kwekery for an “activator” ― a substance that would enable them to cultivate 10 jars of the kubus culture a week.
The first crop of kubus, it was advertised, could be harvested after seven days, and after that on a weekly basis. Commencing two months after the purchase of the activator, Kubus Kwekery would buy back from the customer a “dried product” derived from the kubus crop at a rate of R100 ($14.88) per week for producers who sent him a teaspoon of the culture, making for the break-even mark within five weeks. Customers could not deliver more than one unit per week to Kubus Kwekery for each activator acquired by them, although they could buy as many activators as they wished.
The company put large quantities of the dried product returned by growers (together with the envelopes into which it had been packed) through a mill and ground it into a powder, which was then resold as new “activators.”
Unfortunately the plan went sour when the Cape Supreme Court held that the kubus scheme was an illegal lottery. What was probably South Africa’s best known pyramid scheme collapsed leaving mainly small investors twisting in the wind. Thousands of people had invested a reported R140 million ($20.8 million) in the scheme.
Kubus in the USA
According to subsequent evidence presented at trial, the Kubus business was exported to the United States in 1984. By late 1984 several corporations had been established around the product, including Activator Supply Company, Inc., which sold “activator kits” that allowed the making of the milk culture for $350 per a minimum of ten kits; Culture Farms, Inc. which produced, bought and sold culture; and Cleopatra’s Secret, Inc., (also known as House of Cleopatra) which was to utilize the culture in manufacturing cosmetics.
On June 10, 1985, a permanent cease and desist order was issued by the Kansas securities commissioner to Activator Supply Company, Inc. and Culture Farms, Inc.
Phil Robertson, Editor
