Even when the investment is legitimate, the risks are substantial.
Just as some fraudsters focus on convincing unsuspecting investors into purchasing property that is either overvalued or even bogus, others specialize in crop and agribusiness scams.
The operators of these schemes 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. These responsibilities are handled either by the operators or by the farmers who grow crops on the land. In the meanwhile, the investors stay put and wait for the land to appreciate in value. At which point it will be sold and they will divide the profit between themselves.
Now for the Bad News. You Can Be Scammed Outright.
Even when the investment is legitimate and not a scam, the risks are substantial. Crops can fail, grazing animals can drop in value, the land can easily be mismanaged, and the entire scheme can go bust, especially when that responsibility is entrusted to a financial adviser overseas who may have no direct experience in agribusiness.
Moreover, market prices inevitably fluctuate over time, and that can slow or even diminish the investment 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.
Crop scams are but one type of agribusiness fraud. There are many others. 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. That byproduct is widely used as a high-quality soil additive in the production of compost. Beginning in 1998, a fraudster named Greg Bradley embarked on a worm scam. It would 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, a toll-free customer assistance number, and a one-year money-back guarantee. B&B also committed itself to purchasing all the worms each grower would breed. The price they promised to pay was between $7 and $10 per pound. But the worms B&B bought back from the growers were not sold to vermiculture compost producers. There are actually very few of them. Instead, they were shipped to new growers for breeding. In other words, it was a 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 came to an end 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 scam, contact the fund recovery experts at MyChargeBack.