The Kubus scheme was a scheme that originated in
South Africa
South Africa, officially the Republic of South Africa (RSA), is the southernmost country in Africa. It is bounded to the south by of coastline that stretch along the South Atlantic and Indian Oceans; to the north by the neighbouring countri ...
in the 1980s and was subsequently exported to the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
. It involved the cultivation of milk yeast cultures, which was sold to the originator, and the recultivating of the next batch. The producers had to canvass new members to the organisation to ensure sustainability. The whole scheme crashed when the government decided to implement a law in retrospect, thereby declaring the scheme illegal. The originator had to pay back all the money to claimants, likewise all who benefited had to return their earnings.
Origins
The scheme was initiated by
Adriaan Nieuwoudt after his grandmother showed him a milk culture she used as a skin product. He turned the culture into a
remote work
Remote work, also called work from home (WFH), work from anywhere, telework, remote job, mobile work, and distance work is an employment arrangement in which employees do not commute to a central place of work, such as an office building, ware ...
business by selling dried plants that would produce thick milk for R500, which would produce 10 jars of culture a week. In return he paid R10 per envelope or R100 per week for producers who sent him a teaspoon of the culture, making for break-even within five weeks.
The dried product sent back by activation kit buyers were ground up, without first being removed from the envelopes in which it was shipped – and resold as new activators.
Thousands of people invested a reported R140-million in the scheme before it was declared an illegal lottery. In the end, after it was declared illegal through retrospective legislation, Mr. Nieuwoudt said that he could have repaid every cent to the participants but does not confirm that he actually did. However many people still claim that they have lost considerable amounts of money, some as much as their life savings and others their pension and claim to have never received any payback. Other copy-cat schemes who followed the same basic recipe, were in no way associated with Kubus.
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In the United States
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, among them: Activator Supply Company, Inc. sold "activator kits" that allowed the making of the milk culture for $350 per a minimum of ten kits; Culture Farms, Inc. produced, bought and sold culture; and Cleopatra's Secret, Inc., (also known as House of Cleopatra) was to utilise the culture in manufacturing cosmetics.
References
Pyramid and Ponzi schemes
History of South Africa
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