Chile 'magic cheese scam' woman goes on trial in France

A woman has gone on trial in France for allegedly operating a scam in which thousands of Chileans paid millions of euros to produce a supposedly "magic cheese" for the cosmetics industry.

Gilberte van Erpe, 74, is accused of selling a near-worthless powder as a costly domestic cheese-making kit.

Buyers were lured with the promise of huge returns when their "cheese" was sold on for use in beauty products.

The €14.5m (£10.6m; $16.14m) scam is one of the largest in Chilean history.

Ms van Erpe, nicknamed Madame Gil by the French press, was arrested in 2008. She is being tried at a court in Paris, as she could not be extradited to Chile. Three of her alleged accomplices are also on trial.

According to French media reports, the scam attracted some 5,500 people in Chile, each investing amounts between €400 and €168,000.

They were charged more than €350 for kits that would help produce the "cheese" if added to milk.

The buyers were told that the fermented product they made in their homes could be sold to the French cosmetics industry at a much higher price.

The victims were initially paid the dividends they had been promised, and the early success prompted them to invest larger amounts.

Many encouraged their friends and family to sign up, cashed in their savings, sold homes and property, or gave up jobs to concentrate on "cheese-making" full-time.

However, the dividend payments soon stopped. The initial returns are alleged to have been funded by new members joining up - a type of pyramid scheme.

The scam's victims are alleged to have included many villagers who had attended Ms van Erpe's public lectures.