"Magic cheese" hoax goes whey overboard

It seems the art of the Ponzi scheme is universal. A French woman has just been busted for bilking thousands of South Americans out of their cash in return for...magic cheese?

From seaweed to caffeine, wheat germ to wine grapes, the list of "secret" ingredients that cosmetic companies use is long, obscure, and bizarre. Consequently, when Gilberte Van Erpe, aka "Madame Gil" began selling cheese-making kits to poor people in Chile, her pitch probably made a great deal of sense.

Posing as a beauty industry supplier, she traveled across the countryside, convincing villagers to make a cheese that could then be sold to cosmetics companies for use as a secret ingredient. It is estimated that, in three years of running con games in South America, she may have scammed as many as 27,000 people out of up to $300 million.The racket was incredibly simple. Basically, Van Erpe charged her Chilean customers €300 ($388) for a cheese-making kit that contained cheese-making equipment, lab tools, and Yo Flex, a commercially-available yogurt culture. Using the kits and locally-harvested milk, the villagers produced cheese, which Van Erpe agreed to collect and resell. For motivated cheese-makers, she promised to double investments in four months.

As with the recent Madoff scandal, Van Erpe initially honored her contract. Buying the cheese for thousands of dollars, she poured money into the villages, inspiring more and more people to get involved. Before long, Van Erpe's marks were selling off cattle and property to raise money to pump into the scheme. To speed things up, she promised hefty bonuses to cheese-makers who enrolled their friends and family. In time, of course, Van Erpe stopped showing up with the big checks and the cheese started piling up. Currently, tons of the stuff are rotting in warehouses in Chile.

Van Erpe ran a similar scam in Peru, but, instead of encouraging investors to make cheese, she convinced them to grow mushrooms. In both cases, however, she sold kits at vastly inflated prices (the cheese kit, for example, is valued at approximately €3). In both cases, she also used a front corporation: in Peru, her company was "Labomax," while her Chilean company was "Fermex."

While Van Erpe managed to extricate herself from her Peruvian scheme with a minimum of fuss, her Chilean fraud was uncovered by "Contacto," an investigative news program. Posing as a customer, a Contacto reporter bought a cheese-making kit and received instruction on how to use it. Despite repeated attempts, however, the reporter was only able to produce mold colonies. Following the story further, the Contacto team tracked Van Erpe to Paris, where she refused to speak to them. Ultimately, they passed all their information on to the Chilean authorities, who contacted Interpol. Van Erpe was subsequently arrested, and the case is currently being investigated by French authorities. There is no word yet on what Chile plans to do with all the cheese.

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. Ever since his junior-year French class, he's been looking for a good excuse to use his favorite French pun. Quelle Fromage!