Culture-Growing Investors Seeking to Gain Control of Companies

Investors in a controversial soured-milk culture-growing operation are seeking to take control of companies that they contend owe them millions of dollars.

About 3,000 angry investors met recently in Long Beach and Oakland and were asked to contribute $85 each to an Anaheim-based “Grower Recovery Fund.”

“More and more of the growers are convinced this (culture-growing investment) is a scam,” Jerry Smilowitz, a deputy state attorney general, said in Los Angeles. Smilowitz said in an interview that about 1,500 growers attended each of the meetings.

Already a separate “Grower’s Defense Fund” has been set up to try by way of a class-action lawsuit to recover the hundreds of thousands of dollars lost by investors in the culture-growing operation.

Since last December, an estimated 20,000 people across the country have invested about $60 million in kits designed to grow cultures for a line of women’s cosmetics. Sales of the cosmetic line have been delayed in the wake of a crackdown by securities officials in various states who allege that the culture-growing business is a pyramid sales scheme.

The companies involved are Activator Supply Co. of Pahrump, Nev.; Culture Farms Inc. of Lawrence, Kan., and House of Cleopatra’s Secret Inc., which recently moved from Irvine to Chicago.

California, Oregon, Florida and Kansas have all taken legal action to halt the investment program on the grounds that it involves the sale of unregistered securities. State officials also contend that money collected from new investors is used to repay old investors.

A few weeks ago, the California attorney general’s office obtained a court order freezing Activator Supply funds held in California banks. Activator sells the kits to growers.

Before the recent crackdown, growers sold their completed cultures at a profit to Culture Farms. However, earlier this month, Kansas securities authorities shut down Culture Farms.