The Commodity Futures Trading Commission (CFTC) has taken Agridime LLC to Court for operating a Ponzi scheme.
On May 10, 2024, the regulator filed a complaint against Agridime and co-founders Joshua Link and Jed Wood, at the Texas Northern District Court.
According to the CFTC Complaint, from 2021 through approximately December 11, 2023 (the “Relevant Period”), Agridime and its co-founders engaged in a scheme to defraud thousands of customers in at least fourteen states throughout the United States by soliciting, accepting and using customer funds to pay other customers in the nature of a Ponzi scheme, rather than for the purposes Agridime represented those funds would be used, in connection with contracts of sale of a commodity in interstate commerce (i.e., the customer’s purchase of cattle).
During the Relevant Period, upon information and belief, Defendants received more than $161 million from over two thousand victims for the purpose of purchasing cattle.
During the Relevant Period, Agridime operated an online platform that purportedly allowed customers to buy and sell cattle, and pitched victims with the prospect of guaranteed annual rates of return between at least 15% and 20%. As advertised, Agridime’s cattle purchase program afforded customers the opportunity to buy and sell cattle without the actual day-to-day care of the cattle, or as Agridime stated in solicitation materials, purchasers of livestock would “make money raising cattle without having to do all the work.”
3In the Agridime cattle program, the customer supposedly bought a head of live cattle, typically for $2,000, and Agridime was supposed to take care of the actual feeding and caring for the cattle via farmers with whom Agridime partnered, until the cattle was ready to be processed and the beef sold. In exchange for their $2,000 livestock purchase price, customers were guaranteed in solicitations, among other things, a return of 15%-20% in a year, although some of the written agreements relating to the cattle purchases (“livestock contracts”) themselves guaranteed up to 32% in annual profits.
Agridime represented that the customers’ funds would be used only for the purchase, raising and feeding of the purchased cattle. Instead, among other things, because Agridime did not buy the number of cattle required to fulfill its obligations under the livestock contracts, Agridime had to use recent customers’ funds to pay the guaranteed profits of earlier purchasing customers.
In addition, upon information and belief, customers’ funds were also used to pay approximately $11 million in undisclosed commissions to Agridime personnel, including to Defendant Link, his wife, and Defendant Wood.
During the period from December 1, 2022 to September 30, 2023, Agridime used customer funds from the sale of new cattle to pay previous customers’ principal and returns, in the manner of a Ponzi scheme.
The CFTC accuses the defendants of violations of anti-fraud provisions of the Commodity Exchange Act (“CEA”), 7 U.S.C. § 1-26, and CFTC Regulations (“Regulations”), 17 C.F.R. Pts. 1-190 (2023), and specifically Section 6(c)(1) of the CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(1)-(3), 17 C.F.R. § 180.1(a)(1)-(3) (2023).
The CFTC has brought this action to enjoin Defendants’ unlawful acts and practices, to compel their compliance with the CEA and CFTC Regulations, and to enjoin them from engaging in any commodity-related activity.
In addition, the CFTC seeks civil monetary penalties for each violation of the CEA and CFTC Regulations, and remedial ancillary relief, including, but not limited to, trading and registration bans, restitution, disgorgement, rescission, pre- and post- judgment interest.
