Worming For Dollars
Can I Make Money Raising Worms?


By Kate Silver • Las Vegas Weekly

There’s gold in them thar worms. Or is it just a scheme?
Welcome to the wacky world of worm farming.

If worms were a form of currency, Clyde would be rolling in it. Let’s say that his Mississippi worm farm, now an impressive 3,000 pounds of nurtured red wigglers—about 300,00 of them—actually earned him the $9.25 a pound that a Henderson-based company called Combined Resource Systems promised him. He’d be looking at $27,750. Wait 60 days or so, and that number could more than double as the worms continue eating his trash, pooping fertilizer and reproducing, which was his plan when he sunk almost $60,000 into the project—$30,000 for the worms and another $30,000 to build them a happy home. It seemed a nice investment and a good change from carpentry work. He’s one of about 500 worm breeders who have signed a contract with CRS, starting these days at $10,000.

But now, when he thinks about the worms out there wriggling in the shed costing him $125 a day to care for, when he considers the four hours of work they require every day and the $25,000 that he still owes the bank, he gets queasy. That was a lot of money to sink into some soil squigglers.

If you’re able to get past the slime, the wriggling and the oddity of worm-farm investments, a lot of folks will tell you there’s money to be made. Just look at the website for CRS, a company with its corporate office on Green Valley Parkway, and read about how the company has financed more than $12.5 million in the last year. “Over 360,000 pounds of worms already paid for.

Translation: ‘Confidence in your future.’” It outlines the success stories: David White of Conway, Arkansas, invested $5,000 and has seen a return on that investment of $87,569! Doug and Holly Stark of Peculiar, Missouri, invested $5,000 for a return of $82,610! Robert J. Prather of Salvisa, Kentucky, invested $10,000 for a return of $13,122—in less than a year! Selling worms!

Sold? Ready to become a worm farmer and turn your trash into cash? Clyde’s got 300,000 red wigglers he’d be happy to sell you. Because it’s not the wormvana that this small-town farmer had hoped for. He’s gotten checks from CRS adding up to $10,674, and at first the money came quickly. But now Clyde’s nervous.

A little over two months ago, a truck picked up 1,300 pounds of his worms and transported them up to a Washington farm owned by CRS. Something went terribly, terribly wrong, resulting in mass vermicide. Only 546 pounds of Clyde’s worms were still squiggling when the truck got to the farm, and CRS told him they wouldn’t pay for the dead ones. He pressed them, saying that once the worms were out of his hands, he was longer responsible for their vitality. The company seemed to relent, and told him they’d cut his check Friday. That was more than 60 days ago. “All I’m doing, Miss Kate, is gettin’ the runaround,” Clyde says, sadly. “Ma’am, I really don’t know [what I’m going to do], I been so nervous and upset for the last two weeks, it’s about got me to where I don’t know what I want to do. The aggravation is—if they pay you and do what they say, it’d be fine, but I’m not used to people lying to me. I don’t work ’at way.”

Clyde’s not alone in his quandary. The question of what to do with thousands and thousands of worms when a buy-back plan goes awry has been burrowing across the country for months. Vermiculture companies have created billions of pounds of worms, but there are only so many farms, bait shops and composters looking for worm wares.

Worm excreta might be called “black gold” by those in the business, but the poop of Eisenia fetida has yet to catch the eye of the United States Treasury.

Squiggle

Worm buy-back programs have been around off and on since the 1970s. When a Wall Street Journal exposé detailed the sliminess of certain worm salesmen in 1978, many of the companies shut down. But it seems they’re back, digging in with a vengeance, with at least four of them having incorporated in—you guessed it—Nevada.

The concept is simple: Investors are not just getting worms for their money, but a buy-back guarantee on their worms. The farmer raises them, the company markets them and buys them and their babies back at a price established in the worm farmer’s contract, and everyone’s happy, right?

“Oh, that is really stomach-turning,” says Angela O’Callaghan, a Las Vegas area extensions specialist in social horticulture and an independent worm farmer. “Certainly there’s no need for anything like that.

That’s an awful of worms. I don’t know what kind of facility they’re going to be growing them in. You know, worms are not that picky.”

Apparently, neither are worm farm salesmen. To find customers, they place ads in various newspapers, ranging from The Nifty Nickel to USA Today. Johnny McMahon, a former CRS broker, says the money was great—he made 15 percent of every contract he sold, netting about $39,000 in three months. But when it comes to the actual worm farmers, he can’t think of more than a couple who have done as well as the company promises.

That could take some time, since the company seems to worm under the radar well. The buy-back programs get attention from time to time, like last month, when the state of Mississippi filed cease-and-desist orders against CRS and another Nevada company, Organic Systems and Waste Solutions Inc., for selling at least $50,000 worth of contracts and not registering with the state. This week, Kentucky’s attorney general announced a lawsuit and temporary restraining order have been filed against CRS and three of its corporate officers for violations of the Kentucky Consumer Protection Act and Business Opportunity Act, and there have also been cease-and-desist orders filed against the company by the states of Washington, Kentucky and Pennsylvania. The Nevada attorney general’s office wouldn’t say whether it is looking into CRS.

But the story that’s really set worm farmers and the media to wriggling is the fall of B&B Worm Farms, which was based in Oklahoma but incorporated in Nevada in 2000, and was run by a man named Greg Bradley. B&B representatives would host seminars in small towns, touting the wonders of worm farming saying that Red wigglers can be placed in landfills to break down garbage, they turn cow manure into horticultural gold and could all but save the planet—all a worm farmer has to do is feed them trash. Bradley claimed that B & B had a contract to ship worms to Sierra Leone and a contract with a large chicken farm in Ohio. But Kelly Slocum, a respected expert in the worm-farming community, who sat on the board of directors for B&B and used to give seminars for CRS, says she never saw any evidence of an end-buyer for the worms. She describes B&B’s business practices in typical Ponzi, or pyramid scheme fashion: One farmer signed a contract and bought thousands of pounds of worms, which he would tend to and sell to the next guy who came along and signed a contract, and so one down the line, Slocum explained in a telephone interview with Las Vegas Weekly.

In the three years B&B was in business, it wrangled up 2,900 clients. Most of whom were left high and dry when Bradley died last January, and the company declared bankruptcy. But it’s juicier than that. There’s speculation in the worm-farming community that Bradley staged his own death, squirming out of all of the contracts and living on an island somewhere with whatever was left of the $29 million the company had made.

“There’s just a lot of people that you cannot convince them that this guy really died,” says Dan Clark, supervisory investigator in the enforcement division for the Oklahoma department of securities. “Because they knew him, they talked to him, he bragged about how he could disappear any time he wanted to. He told that to many people that I’ve spoken with. He was a glib salesman. All I can say is, I went out to the health department, got a certified copy of his death certificate and it appears to be in order. He died in well-respected hospital here. The death certificate’s signed by a medical examiner, and there’s a funeral director’s signature on there and the body was cremated.”

CRS investors became worried when they learned of the demise of B&B. Not only because of the worms that were flooding the marketplace, but because the two companies have stronger ties than a love for red wigglers. The men who run—or ran—the companies both started at the same place: a company called VermiTrade, which was incorporated in Nevada in 1999. Greg Bradley was a VermiTrade grower, but quickly split off with one of VermiTrade’s owners to form B&B. Around that time, another VermiTrade owner joined up with a man named Barry Wise, and they formed CRS. Slocum says all three companies have used the exact same business model. And that could spell disaster.
“I have taken phone calls from 50-year-old Southern men who wept on the phone,” says Slocum, referring to B&B investors. “They had lost their farms they used as collateral. They used their 401ks, people who used their retirements to do this who now will never be able to retire, the stories have been heart-wrenching—far and away the hardest thing to deal with.”

And then there are the billions upon billions of worms created in the process. What about them? Stephanie Boyles was shocked—shocked—to hear of the horrors visited by humans on worms. The wildlife biologist for People for the Ethical Treatment of Animal’s initial comments went something like this: “Whoa. Oh, my God. Good grief. Whoa.”
Once she got her bearings, Boyles was ready to share PETA’s worm-farm stance.

“In speaking on behalf of the organization, we just hate it when people use animals as a means to an end and this is a perfect example of that. …We see people that maintain circuses and zoos and rodeos do the exact same thing with animals, so it doesn’t surprise us when people decide to do this with worms, and not four-legged creatures.”
Vermicide Hotline. How May I Dissect Your Call?
The following is an excerpt from a real live conversation with a real live vermiculture representative. After expressing suspicion about how their business works, citing a recent article about worm farms in the New Yorker, I was put on hold (and treated to the music to “Somewhere Out There,” from An American Tale. Seemed appropriate) while the rep sought reinforcement from his boss.

“And what questions did you have?” the CRS boss asked.
“I’m actually just curious about starting a worm farm,” I said.
“OK. In Henderson?”
“Yeah.”
“OK, what type of space do you have there?”
“Well, I’m in an apartment but I know people who have some land.”
“They have land, do they have buildings?”
“Um, they have a house.”
“Yeah, I mean, you know you can’t do it outside in Vegas.”
“OK.”
“The worms will die, it’s too hot.”
“What about in an air-conditioned building?”
“Air-conditioned building will work.”
“OK. So. Just tell me about how you invest.”
“OK, what I’m gonna do, is are you single or married?”
“I’m single.”
“OK, what do you do for a living?”
“I’m a writer.”
“OK, for who?”
“The Las Vegas Weekly.”
“Oh, really? OK. Can you hold one second? I’m gonna grab this other line.”
(Mischievous-sounding music is on now. No more Fievel.)
“OK, I’m sorry. Now what was your name?”
“Kate.”
“Kate. Now, my business broker, now you’re interested in breeding worms, or you’re interested in a story about the company?”
“A little bit of both. Basically, I want to hear what you tell people when they call.”
“OK, because basically my broker mentioned you said we’re a scam.”
“That’s what it sounded like in the New Yorker, yeah.”
“OK, have you visited our website.”
“I have.”
“What’s your number, Kate?”
“990-2565.”
“OK, what I’ll do is I’ll probably just have the president or CEO call you directly and they can—”
“Well, I have a call into the lawyer, I’m waiting to hear from that end. But I really just want to hear a sales pitch.”
“A call into who? Our lawyer? So you just want to hear how our business works?”
“Basically, yeah. Let’s say I’m calling you and I have $5,000, $10,000 that I want to invest, I have the land, what do you tell me?”
“OK, well, I wouldn’t tell you anything, and the reason you’re talking to me is because my broker mentioned that you said it was a scam, and he thought that I could probably talk to you a little more and tell you about the business. But, um, right now I’m having a business meeting and I would have to call you back. So give me, if not this evening, I can call you back tomorrow.”
“Yeah, I’m not going to be around much later this evening.”
“So, I’ll call you back tomorrow, we can go over some things and see what you think.”
He never called back.

Squirmy

After attending a CRS seminar in Lawrence, Mississippi, back in March, James Shaw Jr. invested $10,000 with CRS, with the understanding that $10,000 more would be paid in worms, as he bred them and shipped them out. Thomas Graves invested $5,000, with the understanding that $5,000 more would take the form of worm currency. Rick Daughtry wired the company $10,000. Daughtry, along with other investors, made the rounds and visited nearby worm farms before sinking any money into vermiculture. He saw checks written for thousands of dollars and fertile worms, everywhere.

“Well, you know their schematics looked good and, you know, thing is, I knew the worms could be raised, I’d seen it,” says Daughtry during a phone call from Mathiston, Mississippi. “I mean, these things, it ain’t no rocket science, believe me. You can raise worms so you’ll have worms climbing the walls. You just don’t understand—they populate ridiculously.”

But if they populate so ridiculously on their own, why invest $10,000? Patricia Jarman-Manning, commissioner for the Nevada Consumer Affairs Division, wonders the same thing. Her division has received nine complaints about CRS.

“It’s always caveat emptor, let the buyer beware. And, once again, if it sounds too good to be true, it probably is. Some of it almost goes back to the consumer. If, you know, I don’t know how much worms cost, I don’t quite frankly care, not my favorite little creature, but you know, you have to look at it. To me, $10,000 for some worms sounds like a lot of worms, I mean a lot of money for some worms. So that would have been the first red flag for me. I don’t understand.”

She’s not alone.

Soon after they handed over their checks, Daughtry, Graves and Shaw became nervous. They requested their money back, but instead of getting their thousands of dollars, or even thousands of worms, they all received letters warning them that they were being sued for “anticipatory breech of contract.” Their contracts say that they must diligently pursue worm farming for six months before they can qualify for a refund. But it’s pretty difficult to pursue worm farming without any worms, and these Mississippi farmers are squirming mad.

Shaw recalls one phone call conversation with a CRS representative.

“I said, ‘Well, you can mark this down in your little black book, hoss.’ I said, ‘We are going to have a serious problem. Now, all I want is my 10 grand back and you can go about your merry way, and you’ll never hear nothing outta me.’ And he said, ‘Are you threatening me?’ He said ‘I’ll call the law, I’ll have papers made out on you, and I’ll have you arrested.’ I said, ‘If you feel froggy, you jump.’” No jumping ensued. But neither did an exchange of money or worms.

Paul Wommer, corporate counsel for CRS—and whom Mississippi farmers snickeringly call Paul “Wormer”— explains the business structure very simply. CRS places vermiculture business opportunity advertisements in newspapers across the country, the calls roll in and the contracts are signed.

“A couple of people didn’t get the worms for whatever reason. But the ones that did get their worms and requested a refund before the end of the six-month period and didn’t diligently pursue, don’t meet the terms and conditions of the money-back offer,” Wommer explains.
When asked about allegations of CRS running some kind of scheme, he’s quick with an answer.

“Well, it’s not a Ponzi scheme. Because what we’re buying back is not essentially the worms, we’re buying back the byproducts of the worms. These worms can be used for many different uses including composting, the elimination of waste, they could be used for a various number of reasons, and a Ponzi scheme is equivalent to what Social Security is, with the newer purchasers buying out the older people. We’re not like that at all.”

Try telling that to the worm farmers. Clyde says CRS has never attempted to buy worm castings off of him. They just buy worms, and except for the time that his wares died on the way to a Washington farm, his worms have always been sold to other CRS contract holders.

Wormy

Let’s say that worm farming really is the business of the future, and these companies have seen the light. Because there’s no doubt that worms are good for the earth and plants and catching fish. But at what cost? If not $10,000, then maybe $5,000? $1,000?

Try $40, says Slocum, who’s a vermiculture specialist in Washington. That’ll cover a pound of worms bought off the Internet (at $15 a pound), another $15 for the book Worms Eat My Garbage by Mary Appelhof, and about $10 for a plastic storage tote. Then you pile on coffee grounds, newspaper, table scraps and any nonhuman, nonpet manure you might find, and you’re in business.

Or learn a lesson from a Pahrump worm farmer who decided to go it alone. Doug’s $80 vermiculture investment turned him into a worm farmer overnight, netting 1,000 red wigglers and a used worm bin—called Can of Worms—in which he would nurture them, lovingly stacking newspaper, coffee grounds and vegetables on top of their home so they had full bellies and all of the nutrients they needed to give him oodles and oodles of squirmy little baby worms.

There was no mood music needed, no fertility encouragement required, since worms are self-fertilizing hermaphrodites that lay a capsule about once a week, which contains up to 20 potential worms. They also eat his trash and poop it into “black gold.” Now, a year later and 89,000 worms richer, his hobby has proved successful. On the outskirts of Pahrump, his worms eat, drink, lay capsules and excrete black gold inside of an eight-foot-by-12-foot shed that might just wriggle if you stare at it long enough. It’s an air-conditioned wooden structure in the back of a house, and there used to be a happy little worm above the door, but Doug, the owner, explains with disappointment that the worm fell off. There’s an old card table inside this shed that’s covered with books like As the Worm Turns, Darwin on Earthworms, and Raising the African Night Crawler: Or, Tropical Giant Worm, next to a box of disposable gloves, a large bag of Purina grains and a scattering of four large, plastic storage bins and garbage cans that hold those 90,000 red wigglers.

Doug’s happy to be an independent worm farmer. He went to a vermiculture convention in Oregon last October looking to soak up some worm-farming knowledge, and remembers a strange encounter with a fellow worm farmer—this one not so independent. The farmer wanted to know which buy-back program Doug had selected.

“I said I didn’t go with any of them; I’m doing it on my own. And he said, ‘Do you think you can do it on your own?’ I said, ‘Yeah.’ I said, ‘What’s the difference? I’ll just sell them myself.’ And he never talked to me again. He really started to get mad or something.”
Sound fishy? OK, wormy?

Doug’s a small time worm farmer, who shares the fruits of his labor with friends and family, and says he’s made a net profit of about $100. The money’s nothing compared to the thrill he gets from watching his babies turn trash into fertilizer and spreading the black gold among friends and family.

“This was all newspaper at one time,” he says, gently pressing his hand into the dark, soil-looking substance—worm shit—the critters are buried in, searching for a specimen to show off. “This all came out of 1,000 worms. See the little—those are babies. They just came out.” A red wiggler wriggles in the poop, but only for a few seconds before it disappears back into the mound. “Oop, there he goes again. He’s kinda camera shy. Everything’s got worms in it, I just gotta dig down and get ’em.”
Sounds strangely like my phone conversation with the worm salesman. Only I didn’t feel like getting my hands dirty.

Slime

So what does someone do with 300,000 worms? Don’t ask Clyde. Right now, he’s selling them as fish bait for $1 a cup. The rest he just keeps feeding and watering, tenderly stirring up the dirt they live in so it doesn’t harden. If he doesn’t care for them properly, they’ll die, or worse—they’re make a run for it.

“Yes ma’am, they in bins, you’ve got to feed them every morning and every evening. If you don’t they’ll leave,” he explains.

“They’ll leave? Or they’ll die?” I ask, thinking “leave” might be a euphemism for a worm farmer who can’t accept the journey of his worms to the great compost bin in the sky.

“No ma’am, they’ll just crawl out the bins and take off.”
“How will they get out of the bins?” I ask, with a hint disgusted amusement.
“They just crawl.”
“Don’t you have lids on them?”
“No you don’t got lids on them,” he says, clearly annoyed at my ignorance. “If the feed and everything stays right they’ll stay in the beds, but if they get too many worms in the beds, those big ones, when them little ones starts hatching, you either got to take the big ones out or they’ll come out theirself. I went down there last Monday, Tuesday morning there was about 500 pounds on the floor.”
“Did you pick them up and put them back in?”
“Yeah we picked ‘em up and put ‘em in something else. I mean people laugh about it, but there’s a lot of work to this.”  

 

© 2008 Happy D Ranch

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