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SPEAKER: Now, here is a worm that's approximately three months old, [? tootin' ?] about two months old.

DALE CONNELLY: You can just tell that by the size?

SPEAKER: Yeah. There's one about two months old. Now, those were little piddly things when--

DALE CONNELLY: The man you're listening to is a worm grower. He agreed to be interviewed only if we agreed not to mention his name because he's not sure the city he lives in would take kindly to his raising worms in the basement of his home. He says he also doesn't want to get involved with the State's lawsuit against Worm World. That's the company he bought his original worm stock from.

This man paid more than $800 for 60,000 worms about a year ago. He feeds his stock every day and believes he will eventually make a profit in worm growing. And this man says he wasn't cheated by Worm World.

[? LUKE ANDRICH: ?] Then the guy there on the ranch, he was doing some talking about the things. But I was new in this area. But it sounded like a real good deal.

DALE CONNELLY: This man has a different point of view. He's Luke [? Andrich ?] of Brooklyn Center, and he feels very definitely that Worm World cheated him. [? Andrich ?] said worm growing took too much of his time more than Worm World had said it would take and that the worms didn't reproduce nearly as often as he had been told they would. But [? Andrich ?] said he should have been more suspicious. And he recounts one of his early experiences with Worm World.

[? LUKE ANDRICH: ?] And they told me that I had to get a check down there by-- let's see-- I think, Thursday, yeah, because the board met on a Thursday morning, and they had to decide who they're going to sell these worms to because they just couldn't have anybody growing these worms.

You just couldn't send a regular check, either. They had to be a money order or a bank draft or whatever. Right, so it was just cash when he got it. And that thing was cashed on a Wednesday before the board meeting was ever met. See?

DALE CONNELLY: So he didn't really--

[? LUKE ANDRICH: ?] That right away was phony.

DALE CONNELLY: The board didn't really have to meet at all?

[? LUKE ANDRICH: ?] No. No, that was just a bunch of crap.

DALE CONNELLY: The State's charges of fraud against Worm World relate to a number of claims the company makes about worm growing. One series of claims concerns the markets available to worm growers once they have enough stock to sell. Our attempts to contact Donald Lewis, one of the chief officers of Worm World, were unsuccessful. But in August of 1977, Lewis, who is a defendant in the State's lawsuit, directed a worm-growing seminar in Worthington. There, he told NPR's John [? Murrell ?] about the possibilities for a worm grower.

DONALD LEWIS: The worm-growing business is "over a billion dollar a year" industry. And it's growing all the time because the worms are being used more and more in agriculture and other areas where, at one time, it was considered only a bait product.

[? JOHN MURRELL: ?] Well, how many markets are there for the worms?

DONALD LEWIS: Well, we see them as there being five major markets, bait being obviously still the largest single market and organic farming, organic gardening, land reclamation, medical research, things of that nature.

DALE CONNELLY: The State of Minnesota says the claims you just heard Donald Lewis make are misleading and constitute fraud. That charge is based in part on the findings of Dave Noetzel, an extension entomologist at the University of Minnesota. Noetzel is familiar with Worm World's operation and with the type of worm they sell, which is called a manure worm.

DAVE NOETZEL: Virtually, the only practical use of this thing is for fishing. The use in agriculture-- the worm doesn't live out here in our agricultural soils. It's not found anywhere but in a manure pile, so it's worthless for that use. There are no cases of where it's been successfully used commercially, say, in converting organic matter. There are no places, no examples of it being used in scientific research other than to study the life history of the worm itself. So you're left only with possibly the bait market being an available outlet for those worms that you raise.

DALE CONNELLY: Another claim Worm World makes has to do with the reproductive rate of the worms. At a worm-growing seminar in Bloomington last April, a transcript of the proceedings made from a tape recording by the Minnesota Securities Department shows Donald Lewis saying that the worm the company sells, quote, "is able to reproduce its numbers every 60 days. If I start off with 15,000 worms today and growing them in our environments, at our systems, in 60 days, you will have 30,000 earthworms." Extension entomologist Dave Noetzel.

DAVE NOETZEL: Most earthworms take more than a year to reach sexual maturity. It happens that Eisenia, the manure worm, is slightly shorter than some of the others. And the other unique thing about that that's different than the species that are native here, there are about two eggs that survive per egg packet in Eisenia, whereas in all of the other species, a single one survives.

However, since the maturity in that one also takes a year, sexual maturity, you're only going to get that replacement, population replacement, annually, once each year. And I think some of the claims that we can double populations in 60 days or whatever, it's neither biologically nor mathematically possible to do that.

SPEAKER: I think that they were hoping with proper--

DALE CONNELLY: Once again, our anonymous worm farmer, who has his own ideas about the worms' reproductive rate.

SPEAKER: Every two months. But I would say every three months is a better guess.

DALE CONNELLY: Well, now, I talked to an entomologist over at the University who told me that this kind of worms will take a year to mature.

SPEAKER: Yes, they will.

DALE CONNELLY: So that they can't double their population every two months or every three months.

SPEAKER: Well, I would disagree with him. But for some reason or other, I've got an awful lot of worms here. And-- [LAUGHS]

DAVE NOETZEL: It's, of course, not possible. It's not biologically possible, and since it's not biologically possible, you can't do that doubling figure from the mathematical standpoint. Let's say that we had a thousand worms. They're hermaphroditic, so the thousand would be both male and female. And let's say that we mated those and had a normal reproductive capacity in 90 days, based on this two-for-one for a year, which we never realized incidentally in nature. But let's say that it reached its maximum. You would have 500 in 90 days. The thousand plus 500 in the 90 days, that's the most you could possibly have on paper.

SPEAKER: He's not wrong. I wouldn't ever tell anybody that they're wrong. But I have-- I started out with 60,000 worms last September, and I've got 500,000 right now.

DALE CONNELLY: How can you be sure that you've got 500,000?

SPEAKER: I weigh them. And every 15 pounds, I figure I have 15,000 worms.

DALE CONNELLY: That last statement points out one of the problems in making a judgment about worm farming. Determining numbers is an inexact science at best because no one can go through the stock and count each worm. A more technical charge against Worm World is that it was selling unregistered securities in Minnesota. That charge has to do with a guarantee that Worm World issues-- promising to buy back worms that its growers raise if they can't find a market for the worms themselves.

The State's Securities Department hasn't been able to find anyone who's taken advantage of that offer. But Securities Commissioner John Larson says the buyback is a promised return on an investment, which constitutes a security under state law. Securities must be registered, and Worm World is not. Donald Lewis told Laura Forman of Iowa Public Radio in a recent interview that he does not agree with the State's interpretation of the law.

DONALD LEWIS: And even if, in fact, by law, it was interpreted to be, then it would be a complete change in the whole agricultural industry because also cattle farmers and anyone who's dealing with chickens or hogs or any other livestock would also--

LAURA FORMAN: Any of the commodities?

DONALD LEWIS: Would fall under that same category if that'd be the case.

LAURA FORMAN: Mm-hmm.

DONALD LEWIS: So we're not so concerned about whether or not we are selling security. But the difficulty is that if a worm is classed security, then everyone who's down the marketing line who's dealing with the worm has to also then be registered in dealing with that security, which complicates--

LAURA FORMAN: It does.

DONALD LEWIS: --the whole marketing structure.

LAURA FORMAN: It does.

DONALD LEWIS: So we're not defying the law, but we're trying to get a clearer interpretation of that law. And the only way that can be done is to take it into a civil court and get what we consider an impartial hearing to invalidate the law. Or if, in fact, we do fall under that category, then we would have to be listed as a security, and we would have to register our product as such.

DALE CONNELLY: Donald Lewis of Worm World. Securities Commissioner Larson has heard Lewis's contention that the worm agreement is no different from other livestock buyback agreements. But Larson says the real question is whether the seller, Worm World, is providing expertise management for the worm grower, directing that person in the handling of their investment. Worm World promises to provide training, technology, and local dealer help for a person.

JOHN LARSON: The Securities and Exchange Commission not too long ago came out with an opinion that basically concluded that sale-leaseback arrangements that are all part of one transaction, where you're relying on somebody else to basically you're going to buy that particular animal or a piece of equipment, whatever, but somebody else is going to use it, somebody else is going to take care of it, somebody else is going to make sure that it's used properly, et cetera, or they raise the animal, whatever, that that arrangement is an investment contract.

DALE CONNELLY: Securities Commissioner John Larson. Putting the question of whether or not the worms are a security aside for a moment, there's another question to be answered as to how far the State should go in trying to protect its citizens from making potentially poor investments. Worm World's buyback provision, though it might constitute a security, doesn't really offer enough money to make selling back to the company worth the trouble, some growers say. And if the worms die or fail to reproduce, as they did with Luke [? Andrich, ?] there's some question as to where the fault really lies. I asked John Larson if there's a place in today's marketplace for taking a risk on something which may or may not work out.

JOHN LARSON: The philosophical approach that the State of Minnesota has taken is that if people are going to lose their money in a securities transaction, they should at least lose it fairly. Spelled out in the law, spelled out in a basic premise that people should know accurately what they're getting into, and there should be a reasonable opportunity for return.

SPEAKER: In my estimation, I don't think I was cheated. I knew exactly what I was getting into, and I studied it a year before that.

DALE CONNELLY: Once again, our anonymous worm farmer.

SPEAKER: I have been in this a year, in September, and I have not made any money off of it. But I've got an awful lot of worms, an awful lot of stock that I could maybe sell. I estimate they're worth $5,000 right now.

DALE CONNELLY: Do you think that you will be able to sell them?

SPEAKER: I have little or no doubt in my mind that I will be selling worms by next March.

DALE CONNELLY: What about the people who believe they've been cheated in a deal like this? Have they been cheated, or have they just not had the dedication?

SPEAKER: I think they expected too much. I did not expect for one year to make any money off of them. And I don't think I'll be too far from wrong, but a lot of people expected to start making money off of them within three or four months, you see.

[? LUKE ANDRICH: ?] And most people are a bit afraid to admit that they were suckered, see, cheated, but I'm not.

DALE CONNELLY: Former worm grower Luke [? Andrich. ?]

[? LUKE ANDRICH: ?] I should have known better. I mean, because knowing about worms in the first place, I should have known better. But I'm just like anybody, like these other people, too. They still got the feeling that the thing might go. It's something about it. [LAUGHS]

DALE CONNELLY: Some people still feel that way, I think.

[? LUKE ANDRICH: ?] I know it. I know. I can even-- I know it's over there. And there's a feel-- I don't know what it is. It's a feeling that that thing just couldn't go, and that's what they were going on. It's just a sucker play. And it really isn't worth a damn.

DALE CONNELLY: The court proceedings in regard to Worm World are just beginning, with a decision expected within the next few months as to whether or not Donald Lewis will be extradited to stand trial in Minnesota. I'm Dale Connelly.

Get the line on them, they all sort of scurry for cover, don't they?

SPEAKER: Yeah. Now, see this is a heavy one. See that?

DALE CONNELLY: Oh, yeah.

SPEAKER: See, this is a heavy one, and this is one of the ones that I will have to put first. I'll have to put this one first.