The Commodity Futures Trading Commission (CFTC) sued Agridime LLC for operating a Ponzi scheme.
On May 10, 2024, the regulator filed a complaint against Agridime and co-founders Joshua Link and Jed Wood in the Northern District Court of Texas.
According to the CFTC complaint, from 2021 to 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 the purposes for which Agridime represented those funds would be used, in connection with contracts for the sale of a commodity in interstate commerce (ie, the customer’s purchase of cattle).
During the relevant period, upon information and belief, the defendants received more than $161 million from more than two thousand victims for the purpose of purchasing cattle.
During the relevant period, Agridime operated an online platform that purported to allow customers to buy and sell cattle and offered victims the prospect of a guaranteed annual return of between at least 15% and 20%. As advertised, Agridime’s cattle buying program provided customers with the opportunity to buy and sell cattle without the actual day-to-day care of the cattle, or as Agridime stated in its solicitation materials, livestock buyers would “make money raising cattle without having to they do all the work.”
3In the Agridime cattle program, the customer was supposed to purchase a head of live cattle, usually for $2,000, and Agridime had to take care of the actual feeding and care of the cattle through the farmers Agridime worked with, until the cattle were ready. processed and the beef sold. In exchange for the $2,000 livestock purchase price, clients were guaranteed in solicitations, among other things, a 15%-20% return in one year, although some of the written agreements related to cattle purchases (“livestock contracts”) guaranteed themselves up to 32% in annual profits.
Agridime maintained that customer funds would only be used to purchase, breed and feed the purchased cattle. Instead, among other things, because Agridime did not purchase the number of cattle required to fulfill its obligations under the livestock contracts, Agridime had to use the funds of recent customers to pay the guaranteed profits of previous customer buyers.
Additionally, upon information and belief, customer funds were also used to pay approximately $11 million in undisclosed fees to Agridime personnel, including 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 the capital and refunds of previous customers, in the manner of a Ponzi scheme.
The CFTC charges the Defendants with violations of the anti-fraud provisions of the Commodity Exchange Act (“CEA”), 7 USC § 1-26 and the CFTC Regulations (“Regulations”), 17 CFR Pts. 1-190 (2023), specifically CEA Section 6(c)(1), 7 USC § 9(1), and Regulation 180.1(a)(1)-(3), 17 CFR § 180.1(a) (1)-(3) (2023).
The CFTC brought this action to enjoin the defendants from unlawful acts and practices, to compel their compliance with the CEA and CFTC regulations, and to compel them to engage in any commodity-related activity.
In addition, the CFTC seeks civil monetary penalties for each violation of the CEA and CFTC regulations, as well as remedial ancillary relief, including, but not limited to, trading and registration prohibitions, refunds, discharges, rescissions, prejudgment and postjudgment interest.