Former poultry growers sue Cooks Venture execs for operating ‘defacto ponzi scheme’

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Dive Brief:

• Thirteen former poultry growers are suing the leadership of Cooks Venture for allegedly engaging in deceptive and unlawful conduct, saying they lost hundreds of thousands of dollars to the now-shuttered, “next generation” chicken company that claimed to support sustainability and farmer welfare.

• The complaint, filed last week in Arkansas Western District Court, alleges that former Cooks executives Matthew Wadiak, John Niemann, Blake Evans and Tim Singleton repeatedly misled their contract chicken growers, turning the company into a “defacto ponzi scheme.”

• Cooks allegedly convinced dozens of Ozark chicken growers to mortgage farms and homes, acquire and prepare large broiler houses and standby — until the company shuttered abruptly in late 2023. The growers are seeking restitution and compensation for unpaid services.

Dive Insight:

The lawsuit is one of the first to challenge a company’s practices under recent updates to the Packers and Stockyards Act in May that included protections against false or misleading statements or omissions of information in contract formation, performance, and termination.

“Holding the people behind Cooks Venture accountable in court is important, and so is reining in larger agribusiness firms that exploit poultry contract growers as a standard business practice,” David Muraskin, litigation director at FarmSTAND and counsel for the plaintiffs, said in a statement.

According to court documents, executives allegedly burned through capital at a breakneck pace to grow the startup into a leader in the heirloom, pasture-raised chicken category. The lawsuit alleges that the company carried out an aggressive recruitment campaign that convinced growers into sinking up to hundreds of thousands of dollars into farm assets and signing three-year contracts that could not be fulfilled.

Despite internal financial issues, plaintiffs say Cooks continued to recruit and grow its farmer network in the months leading up to its abrupt shut down in November 2023. Contract poultry growers were in the middle of raising over 1 million birds for Cooks when production ended.

Instead of finding another buyer for the remaining flocks, the Arkansas Livestock and Poultry Commission agreed to euthanize the birds, citing animal welfare and avian influenza concerns, with Cooks responsible for cleaning up the mess. However, in many cases, the farmers were left to dispose of the dead birds themselves in the weeks after losing their contracts.

In April, Cooks filed for Chapter 7 bankruptcy. Bel’s Poultry, which is owned by California-based Pitman Farms, acquired its production assets the following month.

The contract poultry growers are represented by Antimonopoly Counsel, FarmSTAND, the Brad Hendricks Law Firm and TFPC.

“In order to bring about a food system that’s better for farmers, animals, and consumers, we need to make an example of all companies that falsely claim to be doing things the right way,” Muraskin said.

Neither Pitman Farms nor Cooks’ former CEO immediately responded to Agriculture Dive’s requests for comment.