What are agribusiness and crop scams?
Agribusiness and crop scams is a subset of real estate scams. In this case, they try to convince unsuspecting investors to purchase agricultural or crop land that is overvalued to begin with, or will be when push comes to shove.
The operators of agribusiness and crop scams pool funds from several separate investors in order to purchase agricultural land. The investors themselves will not manage the property or exercise any and day-to-day control over it. After all, that requires a physical presence and constant supervision. A pool of investors, many of whom might even reside outside the country, would not be able to do that. So that responsibility falls on the handlers. Or the handlers assign the responsibility to the farmers who already grow crops on the land. In the meanwhile, the investors stay put and wait for the land to appreciate in value. At that time the pool members will sell it and divide the profit between themselves. Or at least that’s what they think.
Legitimate Investments Can Become Agribusiness and Crop Scams
No investment is without its risks. But the risks involved in agriculture-related investments are substantial. Crops can fail, the price for grazing animals can drop, the land can suffer from mismanagement, and the entire scheme can go bust. Especially when a financial adviser who resides overseas makes all the decisions even though he or she has no direct experience in agribusiness.
Moreover, market prices inevitably fluctuate over time. The going rate can even diminish over the long-term. In addition, it is virtually impossible to sell off a partnership in such a collective investment before the property is finally sold.
So even when such investments themselves are legitimate, buyers can still become victims of agribusiness and crop scams. In the event you are the victim of a scam, you are generally entitled to receive a refund or, in certain circumstances, apply for a chargeback.
The Worm Scam
Believe it or not, vermiculture is the breeding of worms for their waste material. Manufacturers of compost use that organic byproduct as a high-quality soil additive. Beginning in 1998, a fraudster by the name of Greg Bradley embarked on a worm scam. It eventually cost approximately 2,400 growers of worms in 40 U.S. states a total of $25 million.
Bradley began by opening a front in rural Oklahoma that he called B&B Worm Farm. He then proceeded to offer contracts to worm growers. The contracts specified that B&B would supply the grower breeding worms upon payment of $15,000 for 100,000 of the little critters or $60,000 for 1.5 million of them. In addition, B&B would provide them with a manual, worm harvesting equipment and a toll-free customer assistance number. And a one-year money-back guarantee on top of that. B&B also committed itself to purchase all the worms each grower would breed. The price they promised to pay was between $7 and $10 per pound. But Bradley did not sell the worms those growers bought back to them to vermiculture compost producers. There are actually very few of them around. Instead, B&B shipped them to new growers for breeding. In other words, it was an agribusiness Ponzi scheme.
As long as the amount of money that flowed in with new contracts was greater than the money Bradley had to pay out to buy worms from his growers, the scam succeeded. Indeed, within three years, the scam was so successful that it outgrew his Oklahoma facility. Bradley expanded operations by opening new distribution centers in 12 more states.
Ultimately, law enforcement authorities grew suspicious of B&B’s rapid expansion. What caught their attention was the seemingly high demand for a product aimed at an exceptionally small market.
On August 13, 2002, after discovering that B&B was $23 million in debt, the Oklahoma Department of Securities prohibited the company from signing any new contracts. B&B quickly declared bankruptcy as a result. The saga finally ended when Bradley died unexpectedly on January 26, 2003 at the age of 40. His victims were left holding their bags full of worms, literally.
If you think you’ve been the victim of an agribusiness or crop scam, contact the fund recovery experts at MyChargeBack.