Securities Arbitration Lawyers BlogSEC Blocks Agridime, LLC “Cattle Contracts” Ponzi Scheme
The SEC has filed a complaint in US District Court for the Northern District of Texas, Fort Worth Division against Agridime, LLC, and its co-founders Joshua Link and Jed Wood regarding the sale of unregistered securities called “Cattle Contracts.”
In the petition, the SEC alleges that these contracts were simply a Ponzi scheme, and never able to offer the returns claimed. The defendants used $58 million of the $191 million they raised to pay returns to previous investors, the SEC alleges. The SEC requested a temporary restraining order that includes emergency relief such as asset freezes and the appointment of a receiver to stop the Ponzi scheme from continuing.
Silver Law Group is investigating potential claims investors may bring to recover their losses including claims against any third party professionals that may have aided and abetted the scheme.
Agridime, LLC
Based in Fort Worth, Texas, Agridime, LLC also has operations in several states, with storefronts in Fort Worth, Herrington, KS, and Gilbert, AZ. Similar to other online food buying services, consumers and businesses could purchase fresh meat products directly from farmers and shipped to them frozen (or arrange for pickup in one of the three locations.)
The company’s website describes itself as a “meat distribution system” sourced from rural farmers in the US that is USDA inspected and “certified for resale.” The company works directly with these farmers to bring beef, chicken, pork, and other products directly to both commercial and residential customers. It also sells ancillary products such as “heat-and-eat meals,” artisan coffee, tallow-based soap products, pet products and spices on its website AgridimeStore.com.
The company also has active social media accounts on Facebook, Instagram, LinkedIn, and YouTube. While the YouTube videos are at least a year old, its Facebook and Instagram pages have recent ads for Black Friday sales with recent positive comments from customers.
Cattle Contracts
In addition to their farm-to-table meat from rural American farmers, Link and Wood also sold “Cattle Contracts,” unregistered securities, on their AgridimeStore website beginning in 2021. Wood and Link raised at least $191 million from 2,100 investors from at least 2,100 investors in 15 states. The investors were promised returns of anywhere from 15% to 32% through passive cattle ownership.
Additionally, $11 million was paid in sales commissions to Wood, Link, Link’s wife, and others engaged in sales of Agridime cattle contracts.
The contracts allowed investors to benefit from ownership without actually having physical custody of the cattle or any responsibility for feeding and caring for the animals. This passive ownership of cattle would allow investors to reap the rewards “without having to do all the work.” Agridime alleged that the investor funds would be used to “purchase, feed, and process cattle,” then pay returns to the investors. In its marketing materials, the company stated prophetically, “We know it sounds too good to be true.”
The contract offered for sale calves to investors at $2,000 each, and then the company would buy back the same cattle a year later at a higher price. The $2,000 investment was to feed and care for each animal during that period. Unfortunately, most of the investment funds went to pay prior investors, not for animal care.
In August of 2023, Agridime offered an updated variant to the Cattle Contracts, for a bred cow to remain in Agridime’s custody to be fed until the cow gives birth to a calf. Again, investors would not take delivery of the animal, nor any responsibility for care and feeding.
Contracts were offered for as many as 50 cattle, with promised returns of 15% to 20% of yearly guaranteed profits, and as high as 32%, in some cases. These contracts were offered on their website as well as through social media. Investors could purchase these contracts without any verification or income disclosure, and Agridime made no effort to verify any accredited investor status for anyone.
State Cease And Desist Orders
Both Arizona and North Dakota issued cease-and-desist orders to Agridime to stop selling the cattle contracts in their states. Agridime ignored those orders, selling over $1 million of cattle contracts in Arizona and over $9 million in North Dakota since each state’s orders were issued. One sales representative in Arizona admitted under oath in October of 2023 that he was still selling the contracts to new investors.
SEC Complaint
In its petition, the SEC alleges that the defendants (Agridime, Link and Wood) did not purchase enough cattle to fulfill their obligations for these Cattle Contracts. Therefore, they were only able to return investments and use the remaining funds to make Ponzi-style payments to the other investors. This was never disclosed to new investors when soliciting new investors, either.
The SEC’s complaint was filed on December 11, 2023. It accuses the defendants of breaching federal securities laws related to fraud and registration. Alongside the immediate court intervention, the SEC aims to secure both temporary and enduring court orders, disgorgement and repayment of gains, interest before judgment, financial penalties, and the barring of Link and Wood from holding officer or director positions. The court has slated a hearing for Dec. 20, 2023, to address the SEC’s motion for a preliminary injunction.
Did You Invest In Cattle Contracts With Agridime, LLC?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct or third party claims against commercial banks, auditors, law firms and others who may have knowingly assisted the fraud. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.