This investment was all bull.
A pair of western ranchers have been accused of running a $191 million Ponzi scheme by offering big returns for purchasing cattle but never buying enough to make legitimate payouts, federal regulators said.
The Securities and Exchange Commission says Josh Link, 30, of Gilbert, Arizona, and Jed Wood, 62, of Fort Worth, Texas, set up Agridime LLC in 2017 as a vehicle for cattle investments, claiming to offer returns as high as 32%.
The deal was simple: For $2,000, investors purchased the rights to a head of cattle, which Agridime would raise and feed. The investor would collect their profits when the animal was slaughtered and sold for meat, according to an SEC lawsuit filed in federal court in Texas.
“We know it sounds too good to be true,” the suit quoted Agridime as stating in its investment pitches, which it offered via its website and on Facebook.
“Unfortunately for investors, the investment offering was too good to be true,” regulators said in the SEC suit.
A message left with an attorney for the men wasn’t immediately returned.
Investigators say that Link and Wood never actually purchased enough cattle to sustain the scheme, and instead used money from new investors to pay off older ones, in a classic method of a Ponzi scheme. The SEC says some $58 million of investor money was used this way.
The SEC said the pair and other salespeople working for Agridime also collected 10% sales commissions for every dollar they brought in, although this was never disclosed to investors. That amounted to $11 million paid to Link, his wife, Wood and others, the SEC said.
In all, the pair are accused of duping 2,100 investors in 15 states out of $191 million, the SEC said.
In seeking a restraining order and freeze of Agridime’s assets — which has been granted by a judge — the SEC said the company owed $147 million in principal and interest payments as of September, yet only had $1.5 million in the bank, suggesting the scheme would “soon implode.”
The SEC suit said that Agridime had been hit earlier this year with cease and desist orders by officials in both Arizona and North Dakota, demanding that it stop soliciting investors in those states, but that Link and Wood continued to offer the cattle contracts there.
