Universal Herbs Cattle and Marijuana Ponzi Scheme: Three Pitches for Money That Paid Earlier Investors

Universal Herbs, a Colorado marijuana business, figured in a cattle and marijuana Ponzi scheme that raised more than $650 million from investors across the country, according to the Justice Department’s charging announcement. The indictment alleged promises of approximately 10% to 20% returns over periods as short as several weeks, while incoming investor money primarily repaid other investors or enriched the operators. If you handled the solicitations, business accounts or investor payments, you may recognize the gap between the activity that supposedly earned a return and the money that actually funded it.

This page follows the operation’s promises, payment source and criminal findings. Our broader account of agriculture and commodity investment schemes compares the business records behind other asset-based pitches.

What Did the Universal Herbs Operation Promise Investors?

The Universal Herbs operation offered investors short-term cattle investments, a marijuana business or broader business funding, according to the Justice Department’s account of the indictment. Most often, the operators represented that investors’ money was backed by short-term investments in cattle. If you kept the cattle books, the promised investment may be something you can connect to the purchases and sales you recorded.

The indictment also alleged that the operators solicited money for Universal Herbs LLC, their Colorado-based marijuana business, through false pretenses. Other investors received a broader promise that their money would support legitimate cattle or marijuana activity without being tied to a specific investment opportunity.

The indictment alleged that investors in all three variations were never told how their money was primarily being used. We see cattle and marijuana getting the credit. The next investor supplied the money.

New Investor Money Paid Earlier Investors

The Justice Department’s February 17, 2023 account of the criminal case states that investors handed over money for legitimate activities related to the cattle and marijuana businesses, but the funds went to earlier investors. That is the transaction someone processing deposits or outgoing payments may be able to explain.

A Ponzi payment can look like business earnings from the receiving end. The person who sees the incoming deposit and the outgoing transfer has another view: whether the payment came from business receipts or new investment money.

The charging announcement also alleged that the two operators received millions of dollars from the scheme despite putting little to none of their own money into it. That allegation gives someone handling payments another part of the story to explain: money going to the people running the operation, alongside payments going to earlier investors. The investment pitch described a use for the customer’s money. The people collecting it had their own use for it.

What Did the Universal Herbs Criminal Case Establish?

A federal jury convicted two operators of wire fraud and conspiracy to commit money laundering, the Justice Department reported in its trial announcement. Its account of court documents and trial evidence described the scheme running from late 2017 until early 2019. The Federal Deposit Insurance Corporation Office of Inspector General and the FBI investigated, and the Justice Department’s Fraud Section prosecuted the case.

Which Records Connect the Universal Herbs Pitch to the Payment?

The securities fraud evidence in a case like this can sit in different hands. We work with the person who knows the pitch, the person who kept the books or the person who handled payments:

• The solicitation and the deposit. Investment terms and communications can show whether the promised activity concerned cattle, Universal Herbs or general business funding. Subscription records and bank destinations let us compare that promise with where the money arrived.
• The business activity. Operating books and cash receipts let us compare the promised source of earnings with what the business recorded. The question is which activity generated the money available for investor payments.
• The payment and its explanation. Investor statements, payment records and the underlying account let us compare what the investor was told with the actual source of the cash.

Your work may connect only part of that sequence. Someone familiar with the solicitation may know which use of funds was promised. Someone handling the accounts may know how a deposit or payment was recorded. We work through those connections with you rather than expect one employee to have seen the whole operation.

Agridime’s Cattle Business Raised the Same Payment Question

In a separate case, the Securities and Exchange Commission’s December 14, 2023 Agridime announcement described a Fort Worth company that claimed to specialize in meat sales, distribution and animal supply chain management. The SEC alleged that investors were told their money would acquire, feed and raise cattle. Instead of buying enough cattle or generating sufficient operating revenue to deliver the promised returns, the SEC alleged, the defendants used at least $58 million in new investor funds to pay prior investors.

For someone who handles cattle purchases, operating receipts or investor payments, the business activity and the source of the return belong in the same comparison. Universal Herbs presented several business stories. Agridime’s separate SEC case shows why the money supporting the payment remains a question even when the pitch describes a whole cattle business.

Investor Payments and the Whistleblower Opportunity

The SEC whistleblower program can pay eligible whistleblowers 10% to 30% of money collected when monetary sanctions exceed $1 million. Where fraud involves government money, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with you to identify the whistleblower opportunity in the solicitations, accounts or investor payments you know and build the case around what you can explain from inside the business.

You Know What the Payment Represented

If the cattle or marijuana story you helped administer does not match the money you saw move, speak to one of our Whistleblower Experts about where the investor money really went. We work with you to build your strongest securities fraud whistleblower case around your knowledge of the business and bring in securities fraud whistleblower lawyers who understand investment schemes. We stay beside you as your inside view becomes a case.