Culture-Growing Fad Being Probed; Man Arrested in Anaheim

Anaheim police on Monday arrested a Rosemead man on 13 misdemeanor counts in connection with what police described as "an endless-chain scheme" to sell investors kits to grow soured milk cultures for use in cosmetics. It was the first arrest in this country related to an investment fad that swept South Africa last year and recently has been gaining momentum in the United States.

Zelbert Wallace Ritchie, 57, was arrested on a variety of fraud charges filed by the Anaheim city attorney's office, including making misleading statements about the culture investment, failing to register a list of his company's principals with the secretary of state and misrepresenting the investment as secured, according to Sgt. Jerry Stec.

Ritchie posted bail and was released late Monday. He could not be reached for comment.

Meanwhile, prompted by what state investigators described as a "flood of consumer inquiries," offices of attorneys general offices in Kansas, Oregon and Nevada are investigating companies involved in the operation.

850 Paid Fees Last week, Las Vegas city officials ordered one of the companies, Activator Supply Co., to stop doing business because it did not have a valid business license. Activator Supply's sole owner and president, Roland Nocera, pleaded guilty in 1977 to one count of securities fraud in connection with the multimillion-dollar nationwide marketing of a line of cosmetics.

According to promoters, about 850 people in 18 states, including California and Oregon, have paid at least $350 each to participate in the culture-growing investment.

"It's all over Orange County, as far as we can tell," said Stec, a fraud investigator with the Anaheim Police Department. "The method of sales is very much like a pyramid," said Stec, adding that he has been told there are at least 50 local growers. Stec said Ritchie was giving several sales seminars a day in Anaheim for a company called Premiere Concepts.

Most states, including California, have laws prohibiting some kinds of pyramid operations, in which investors pay promoters to join the operation and the funds are used to pay back earlier investors. Basically, the laws prohibit certain types of investments where investors are totally dependent on promoters to earn a profit.

The culture operation involves buying "activator" packets, which contain a yellow, powdery substance that growers add to a glass of milk and grated cheese. The mixture is left to ferment for seven days. Then, part of the top layer is skimmed off for sale back to the promoters.