I read with interest this FBI Most Wanted notice concerning a certain Joshua Link, who is accused of, well:

Joshua Robert Link is wanted for his alleged involvement in a fraud scheme between January of 2021 and December of 2023. Through his company, Agridime LLC, Link and his co-conspirators solicited cattle contracts from buyers throughout the United States. They told prospective buyers that Agridime would purchase cattle, care for and feed the cattle, have it processed, and sell the meat through Agridime’s distribution channels. Agridime offered investment returns from 15% to 32% to prospective cattle contract buyers. In reality, Agridime purchased only a fraction of the cattle. The scheme resulted in an approximate loss of $115 million to over 2,000 cattle contract buyers nationwide. On January 29, 2026, a federal arrest warrant was issued for Link in the United States District Court, Northern District of Texas, Fort Worth Division, after he was charged with Conspiracy to Commit Wire Fraud.

Upon further research, I discovered that the SEC had previously brought a civil action against him and his co-conspirators. As I understand the scheme, the fraudsters sold specific cattle to individual investors, promised to hold on to the cattle, raise, feed, slaughter, and process them, and then buy the cattle back at a guaranteed higher price.  Of course, none of that actually happened – they just took the money.

The SEC’s complaint makes clear that these cattle contracts were sold to investors on the promise of profit, and that the investors themselves were entirely passive which satisfies the first three elements of the Howey test for a security (investment of money, for profit, derived from the efforts of others).

But what about the common enterprise prong, if each investor thinks they’re buying individual cattle?

Certainly, broad vertical commonality is present here – in the sense that investors know the promoter will profit if they do – and that was enough for the Eleventh Circuit to find commonality met in the conceptually-similar case of Securities and Exchange Commission v. ETS Payphones, 408 F.3d 727 (11th Cir. 2005), where you bought a plot of land and telephone equipment that someone else would lease from you to run a payphone business and then buy back from you at the end of the contract.  But broad vertical commonality is fragile as a legal concept because there’s so much overlap with the “efforts of others” Howey prong.

So the SEC says something else.  According to the SEC’s complaint:

Agridime has not purchased enough cattle to fulfill its Cattle Contracts.  Agridime’s investors, therefore, do not actually invest in specific, identifiable animals. Instead, the success of the investments depends on the success of Agridime’s purported cattle operation, including its ability to attract new investors.

Get it? The investors think they’re investing in identifiable animals, but that didn’t actually happen, so any returns investors receive actually come from the (Ponzi scheme) enterprise, which is common across multiple investors.

Which sounds like an odd elision from investors’ subjective understanding to the reality of how any profits were made – but in the payphones case, and in other similar kinds of cases (like Miller v. Cent. Chinchilla Grp., Inc., 494 F.2d 414 (8th Cir. 1974), the infamous chinchilla-raising scheme, everyone loves the chinchilla-raising scheme), courts make a similar sort of move. They note that investors may be buying identifiable plots of land or chinchillas or cattle, but they can only make money when the promoter finds new investors.  ETS Payphones, 408 F.3d at 732 (“Investors were dependent upon Edwards’s ability to attract new business to realize profits.”); Central Chinchilla, 494 F.2d at 417 (“The record shows that the plaintiffs invested money in a common enterprise with the expectation that they would profit if the defendants secured additional investors.”).  And in a beaver-raising case, the Tenth Circuit found commonality in the fact that no one expected to profit from the beaver sales unless they understood the defendants to be taking part in a larger beaver industry, which was also sufficient for commonality, Continental Mktg. Corp. v. SEC, 387 F.2d 466 (10th Cir. 1967), and perhaps not unlike investors’ faith in “Agridime’s purported cattle operation.”

Anyway, leaving aside the grimness of the “raise-an-adorable-animal-for-slaughter” aspects of these schemes (“The owner may care for his own animals with each pair of beaver requiring a private swimming pool, patio, den and nesting box together with the services of a veterinarian…”) maybe the ultimate lesson here is really, courts aren’t interesting in getting into the weeds of where you find commonality when it walks like an investment scheme and talks like an investment scheme.

And another thing.  The Shareholder Primacy podcast is back! This week, Mike Levin and I talk about the securities fraud case against Elon Musk that appears to be heading for trial in March, and the latest (as of Sunday afternoon) developments in Warner/Paramount/Netflix.  Here at Apple; here at Spotify; here at Youtube.