Irvine Man Given Year in Prison as Milk-Culture Fraud Case Nears End

The multimillion-dollar Culture Farms mail fraud and conspiracy case is winding down in a federal court in Kansas City, where nine people, including an Irvine resident, already have been sentenced and three others, including two Orange County men, face sentencing March 12.

The scam involved the sale of homegrown sour milk cultures allegedly to be used in a line of cosmetics, and was an offspring of a similar scheme in South Africa--where investors lost more than $120 million.

In the United States, the government said the 12 defendants set up a sophisticated pyramid scheme in which “investors” purchased raw materials from one company to grow cultures that were to be sold to another firm. The second firm, however, rarely purchased the investors’ cultures. In 1984, the companies--which promised a $900 return for a $35 purchase--netted up to $80 million from 27,000 investors scattered in 20 states.

Prison Terms, Fines

On Monday, U.S. District Judge Earl O’Connor sentenced Irvine resident Willard B. Bass Jr., 44, and two other defendants, William F. Wagner, 34, and Ronald L. Rakow, both of Los Angeles, to one-year prison terms and $10,000 fines. Each had pleaded guilty to one felony count of conspiracy to commit mail fraud.

According to federal prosecutors, Bass, president of a defunct Newport Beach investment company, had used the mail to attempt to raise investment funding in South Africa to support development of the scheme in the United States. Wagner was the president of Custom Products & Development Co. and Rakow was a nutritional products consultant.

O’Connor has granted more time for preparing presentencing reports to defense lawyers for Frans Jacobus Theron, 45, of Palm Springs; his brother, Gert A. Theron, 48, of Mission Viejo; Paul G. Stemm, 53, of Newport Beach, and Larry S. Huff, 44, of Canoga Park. They will be sentenced March 12.

Government attorneys said Frans Theron, a native of South Africa, originally sold the culture kits in his country and brought the scheme to America. Stemm served as his business adviser, prosecutors said.