Agridime diverted tens of millions of dollars in investor funds to make Ponzi payments to prior investors.
MARY STEURER - North Dakota Monitor
The North Dakota Securities Department claims a Killdeer rancher made more than $6 million selling under-the-table investment contracts for Agridime, a national cattle company accused by federal regulators of orchestrating a Ponzi scheme.
A cease-and-desist order filed Dec. 15 states Taylor Bang sold unregistered cattle contracts for the company from the beginning of 2021 to Oct. 30, 2023. It also claims Bang was not registered as an agent with the North Dakota Securities Department.
Bang said in an interview with the North Dakota Monitor that he did, in fact, sell cattle contracts for the company, but he is not sure what it means for those contracts to be “unregistered.” He also says he didn’t make $6 million.
People who sell investment contracts are generally required by law to register as agents with the state and federal government, North Dakota Securities Commissioner Karen Tyler said. The contracts themselves are also usually subject to registration requirements, depending on the type of agreement offered.
The filing demands that Bang stop selling contracts until he registers as an agent and the securities he offers are properly filed with the Securities Department.
This isn’t the first time the state has tried to crack down on Agridime. The agency in May issued a similar order against the company and one of its owners, Josh Link.
The company was supposed to stop selling unregistered investment contracts in North Dakota roughly seven months ago, according to that order.
But the Securities Department says Bang continued offering them on Agridime’s behalf.
Just days before the agency filed the cease-and-desist order against Bang, Agridime was accused by the federal Securities and Exchange Commission of using the cattle contracts to run a Ponzi scheme that defrauded investors of millions.
The SEC on Dec. 11 filed a complaint against the Fort Worth-based business, Link and another owner, Jed Wood, in the U.S. District Court for the Northern District of Texas claiming the company raised more than $190 million from the alleged scheme.
How did it work? Agridime would sell investors cattle contracts for $2,000 per calf. The company would then promise to buy the cattle back a year later at return rates of 15% to 32%, the complaint says.
“Agridime told their investors that it would use their funds to purchase, feed, finish, process, and sell specific cattle,” the federal agency wrote in the filing. “Instead of using investor funds to do these things, Agridime instead diverted tens of millions of dollars in investor funds to make Ponzi payments to prior investors.”
The SEC was granted a “temporary restraining order, asset freeze, the appointment of a receiver, and other emergency relief” against Agridime, according to an announcement from the agency.
At least $9 million in contracts have been sold to North Dakota investors since late May, when state regulators had already ordered the company to stop, court documents indicate.
North Dakota’s cease-and-desist order against Bang asks the rancher and Agridime to pay that sum, plus interest, back to investors.
The filing also requests that Bang hand over any commission money he was paid by Agridime to the North Dakota Investor Restitution Fund.
The North Dakota securities commissioner can fine people up to $10,000 each time they’re found in violation of state securities law, according to the order.
The North Dakota order does not say Bang knew the contracts he was selling were unregistered, nor whether he knew of the alleged Ponzi scheme.
Bang said he’s always approached his business honestly and was simply taking direction from Agridime.
“I don’t know if there’s underlying circumstances that I don’t know that I’m not being told,” Bang said. “I was just doing a job.”
Bang disputes the claim that he made more than $6 million in commissions from Agridime. He said that figure is “way high” and that he wasn’t sure how the Securities Department arrived at that number. The Securities Department says it calculated the figure from subpoenaed financial records.
Bang said he was aware of the May cease-and-desist order the North Dakota Securities Department filed against Agridime and Link, but that as far as he could tell, the company took the legal demands outlined in the orders seriously and was working to address them.
The rancher said he’s worked with Agridime for roughly seven or eight years. He first learned of the company when representatives visited his hometown.
“They were talking to some of my customers about purchasing their calves and their beef,” Bang said. “I said, ‘Hey, let’s try to work together instead of against each other and make it better for everybody.’”
He said he still thinks very highly of the company and is proud to support the American livestock industry.
“To date, I have not had one person that has done this, as far as the cattle-purchasing contracts, not get paid on time,” Bang said.
A voicemail left with Agridime was not returned.
The order states the North Dakota Securities Department is still actively investigating Bang.
Bang may request a hearing before the North Dakota securities commissioner challenging the alleged violations outlined in the cease-and-desist.
In wake of the SEC's complaint against Agridime, the North Dakota Department of Agriculture denied renewal of a license for Agridime to deal livestock in North Dakota, and said it would issue an order preventing the company from purchasing any more livestock in the state.