An audit by a forensic accounting firm revealed the extent to which the co-founders of Agridime operated the company as a Ponzi scheme.
Agridime, a Texas LLC, was co-founded by Joshua Link and Jed Wood in 2017 and headquartered in Fort Worth, TX. Link and Wood jointly controlled Agridime as its top officers and managing members, each holding a 45.5% ownership stake. The company operated in several states, including Texas, Arizona, Kansas and North Dakota, and claimed to be a meat distribution company with a “proprietary beef supply chain.”
In May, the Commodity Futures Trading Commission filed a civil enforcement action in the U.S. District Court for the Northern District of Texas against the company, alleging a Ponzi scheme.
Audit findings
July court documents show Madhu Ahuja, president of Ahuja & Consultants Inc. (A&C), investigated Agridime’s accounting records from October 2021 to December 2023 for the courts to determine whether “indicia of Ponzi scheme were present.”
A&C identified the first signs of Ponzi investment activity in October 2021, linked to investor payments made despite Agridime’s net operating losses. Upon reviewing Agridime’s accounting records, A&C found that the entries did not accurately reflect the transactions.
For example, Agridime recorded funds received from cattle financing with Cattle Empire LLC as core operation revenue instead of liabilities, artificially inflating its revenue. A&C concluded that Agridime’s financial statements do not comply with generally accepted accounting principles, leading to a distorted financial picture.
As a result, A&C relied more on bank records to uncover Agridime’s finances. Ahuja’s analysis found that during the two-year time period, there were over 40,000 transactions from three bank accounts, with total disbursements amounting to $446,999,957 and total deposits amounting to $446,081,279.
A&C also reviewed contract samples, which revealed that Agridime’s cattle contracts labeled principal as “purchase price” and interest as “guaranteed profit,” with returns guaranteed to investors ranging from 15-33%. These guaranteed returns were used to attract new investments, which were then used to pay off older investors due to the company’s ongoing net operating losses.
A&C identified approximately 1,940 investors from whom Agridime received $244,137,718 in cattle contract sales, and outflows amounted to $141,200,814. A&C concluded that since net cash outflows from core operations were −$103,648,146, most of the monies repaid to investors likely came from new investor deposits rather than core business operations.
The court records show the audit revealed Agridime’s operational cash flows were insufficient to cover the outstanding payment obligations to cattle contract investors, as disbursements frequently prevented the accumulation of positive net cash. Even during months with marginally positive cash flow from meat and cattle sales, the amount was substantially less than what was paid to investors.
The audit also showed a significant discrepancy with the cattle contracts marketed with the proceeds to acquire, feed and raise cattle on Agridime’s network of ranches. The audit determined that only 86%, 40% and 31% of the total funds used to purchase cattle in 2021, 2022 and 2023 were spent on cattle from the proceeds of investor funds. A&C said the declining trend indicates that investor funds were not used as promised to purchase the underlying asset of the investment.
Ahuja said that based on her experience and expertise, Agridime business practices “demonstrate all the indicia of a Ponzi investment scheme.”
Steve Fahey, the court-appointed receiver, filed the motion for Ponzi determination on July 26 for the court’s determinations. According to an update on the Agridime website, if the “Ponzi presumption” is applied to this case, Fahey would gain “additional power to claw back” profits or sales commissions from individuals who benefited by exiting the scheme with gains from cattle contracts sold.
According to the North Dakota Monitor, Wylie Bice of Killdeer, ND, has offered to purchase American Grazed Beef, the company formed from Agridime’s meat sales division. Bice indicated that the final agreement would likely involve allocating a percentage of the company’s profits to repay investors over several years. — Charles Wallace, WLJ contributing editor
