KILLDEER — Tom Murphy said the money he expects to lose on his investment in the AgriDime livestock company is significant, but “it doesn't break my heart.”
Still, he funneled money into what federal investigators have now dubbed a Ponzi scheme, extorting money from his neighbors, especially young ranchers, until the scheme collapsed in order to repay previous investors. I'm worried about them.
“It's the young players who are going to suffer,” he said.
Murphy said he knows people in Dunn County, North Dakota, who literally gambled their farms by renting property to invest in agridimes.
Most, but not all, are ranchers like Murphy, who runs about 250 head of cattle north of Killdeer.
Texas-based AgriDime owes North Dakota investors about $40 million, according to one state official. Killdeer-based sales representative Taylor Bang is accused by the North Dakota Department of Securities of obtaining $6 million in commissions from illegal contracts.
Federal investigators shut down Agridime in December and are attempting to take control of the company's assets, including about 8,000 head of cattle and processed meat in 18 states, according to updates posted on Agridime.com. Securities and Exchange Commission.
“With respect to cattle and meat, AgriDime's records were found to be at least outdated and inaccurate,” the update said.
North Dakota Agriculture Commissioner Doug Gehring said 149 investors have been identified in North Dakota. North Dakota Securities Commissioner Carl Karpinski said the company has about $40 million in debt, more than any other state in which AgriDime operated before federal authorities took over.
North Dakota is “kind of the epicenter,” Karpinski said.
The full impact of North Dakota's loss is unclear. In addition to the $40 million from people who invested in cattle on paper with the promise of large profits, there are also ranchers who have sold their cattle to Agridime but have yet to receive compensation.
In December, the Securities and Exchange Commission announced that 2,100 investors in 15 states owed $191 million.
North Dakota authorities are still working with the Securities and Exchange Commission on an investigation that also involves the FBI.
One Agridime ad promised a 15% to 20% return on investment and said, “Have you ever wanted to make money raising cows without doing all the work?”
AgriDime sometimes promised returns on investments as high as 32%, according to a complaint from the Securities and Exchange Commission.
Agridime's video explains how the $2,000 per beef calf is used to pay for feed and expenses until processing. Ultimately, AgriDime will sell the beef.
But the Securities and Exchange Commission's complaint against the company alleges that AgriDime diverted at least $58 million of its investors' funds to make Ponzi payments to previous investors.
Agridime was incorporated in 2017. His website for Agridime lists Josh Link, Tia Link, and Jed Wood as owners. Bang then joined as a distributor, which led to Murphy's involvement. Bunn is not named in the SEC's complaint.
Jeff Beach / North Dakota Monitor
Mr Murphy said his first investment in Agridime went well and the money was deposited into his bank account on the promised date and time. AgriDime's success has attracted other investors.
His next investment wasn't scheduled to pay a return until May, but he doesn't think that will happen.
In December, the North Dakota Department of Securities issued a cease-and-desist order against AgriDime and the salesperson's van.
The order against Mr. Bang accuses him of making $6 million in illegal sales commissions and selling unregistered securities without a license.
That number is “very high,” Bunn told the North Dakota Monitor in December.
He said he became involved with AgriDime when an AgriDime representative was in his sales territory at the time. “I said, 'Hey, let's work together instead of against each other and make it better for everyone.'
Murphy and other ranchers worked with Bang as cattle brokers for years before Bang's involvement with AgriDime.
Murphy said Bang, who grew up in Killdeer, “had a great reputation.” Murphy said Bang honored those contracts even in years when cattle prices were low and he could have lost money.
He said he didn't think Bunn intended to deceive anyone, but that in the end, AgriDime failed to deliver on its promise.
Pan did not return messages left on his cell phone on January 31st.
Gehring said the information that led to the investigation came from a North Dakota banker who was doing business with a client who had invested in AgriDime. Bankers had doubts about whether Agridime was legal.
Because AgriDime was selling its stake in its cattle investments, Gehring said that was a Department of Securities issue, not a Department of Agriculture issue.
Karpinski said North Dakota is the second state to issue a cease-and-desist order against Agridime, after Arizona, where co-owner Josh Link lives. He said those state orders helped launch the federal investigation.
Karpinski said that after such an order is issued, the party targeted by the order can request a hearing and argue to continue operating in the state. AgriDime requested a public hearing and continued to receive another $9 million in investments before federal authorities shut it down.
But North Dakota investors, including Mr. Murphy, still placed orders with Agridime.
“That's how stupid I was,” Murphy said.
Jeff Beach / North Dakota Monitor
Murphy said he questioned Bang about the May cease-and-desist order. He said Bang told AgriDime to “carry on as usual.”
He said the contract he signed was very simple. It was too simple, with no information on where the calves were fed, where they were processed, or branding or ear tags to identify specific animals. He said it was Josh Link, not Bang, who signed the contract.
“If you talk to a lawyer, you'll be laughed out of the office,” he says.
Mr. Bang and his attorney, Brent Edison of the Fogel Law Firm in Fargo, requested a hearing on the cease and desist order.
Mr. Edison said one of the purposes of the hearing was to determine whether the cattle investment agreement met the definition of a security.
When asked if Bang also owed money from AgriDime, Edison told the North Dakota Monitor that Bang was “in a similar position” as other AgriDime investors.
“It's certainly possible that he was at least partially the victim,” Karpinski said, but noted that Bunn did receive millions of dollars in fees.
The cease-and-desist order required Mr. Bang to provide the state with funds from these fees to establish a fund to repay some of the money owed to investors.
Karpinski said that hasn't happened yet.
He said federal officials may need money for their own fund.
“A double recovery will not be possible,” he said.
Karpinski added that the repayment amount could be subject to negotiation, but “at some point you're going to have to pay that money back.”
Karpinski said the hearing is on hold while the federal investigation continues.
Regarding the investigation, Edison said, “I will cooperate as much as I can.''
I sold the cow, but I didn't get paid.
Larry Sorenson of Watford said he was unaware of the cease-and-desist order against Agri-Dime until he agreed to sell the cattle to Agri-Dime.
He said Agridime still owes money for cattle processed last year.
He said he had sold cattle to Agridim for the previous two years and received his salary on time.
“I felt reassured that it was a reputable company,” he says.
He entered into a price agreement with Agridime. The cows were sent to a feedlot in Kansas. Mr. Sorenson retained ownership of the cow and Agridime received the feed payment. He said the cows should grow to market weight by September or October and would be paid in November.
As far as he knows, the last cow was slaughtered on Nov. 26, but he hasn't been paid and doesn't know if he will ever be paid.
“If we see anything, we won't see anything until the end of the year,” Sorenson said.
Without that income, they may have to take out an operating loan next year.
Mr. Sorenson is filing a claim under the Packers and Stockyards Act, which requires Agridime to establish a bond fund that it can tap to cover unpaid beef producer claims.
North Dakota also has a bond fund, but it's only $140,000, Gehring said. He said he worked with AgriDime last spring to increase the bond, but the company did not respond. The North Dakota Department of Agriculture did not renew AgriDime's license when it expires in June.
Gehring said the lesson for producers is to “understand who you're dealing with.”
This article was originally published on NorthDakotaMonitor.com
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