The Root Vegetable That Fueled a $25 Million Ponzi Scheme

Rich in carbohydrates and easy to cultivate, these little rhizomes once promised to solve all of our energy problems.
Sunchokes being cut and sliced on a blue cutting board.
Photo by Joseph De Leo, Food Styling by Micah Marie Morton

If carrots and potatoes are the year-round A-listers of the root vegetable pantheon, sunchokes are something of a part-time supporting actor. They appear at farmers markets or a tucked-away corner of the produce section sometime in the fall, then quietly vanish from shelves once fresher, greener things are ready to replace them in spring. If you don’t see them at your local store, you might have better luck by going outside and looking around. In much of North America, sunchokes grow wild and with abandon, sending up eight-foot-tall shoots of bright yellow flowers every summer and spreading eagerly through prairie, pasture, and roadside. 

A relative of the sunflower native to North and Central America, sunchokes are unfussy about soil or location. Each year, they produce a huge number of thin-skinned, nutty-flavored tubers long relied on by indigenous peoples as an abundant source of carbohydrates. Also called Jerusalem artichokes, they have no relation to either the Mediterranean artichoke or the city of Jerusalem, only a vaguely artichoke-like flavor and an Italian name, girasole, that sounds loosely like “Jerusalem” to English speakers. 

Despite their occasional appearance on restaurant menus, sunchokes remain firmly on the “obscure” end of the American vegetable spectrum. The USDA doesn’t track the US production of sunchokes, suggesting they’re even less economically important to farmers than mint, taro, or escarole and endive. But in the 1980s in the upper Midwest, a combination of forces—the farm crisis, evangelical Christianity, the brilliant-on-paper promises of multilevel marketing schemes, and the free-floating, potent desire to make a buck ASAP—conspired to take the sunchoke on a brief, strange voyage into the beating heart of American capitalism. 

“Get big or get out”

The early 1970s were boom years for American farmers. Immense global demand for American grain, including via a brand-new trade deal with the Soviet Union, led to sky-high prices. In 1971, for example, farmers could sell a bushel of corn for an average of $1.08. By 1974 they were getting $3.02 per bushel—almost triple the price. 

With revenues up, federal policies pushed farmers to increase production at the expense of stability. “Plant fencerow to fencerow” and “get big or get out,” exhorted Earl Butz, President Nixon’s Secretary of Agriculture. Tax credits, advantageous depreciation schemes, and reductions in capital gains taxes enticed farmers to take on huge amounts of debt to buy more land, equipment, and seed.

But the good times didn’t last. In early 1980, the Carter administration embargoed grain exports to the USSR after the Soviets invaded Afghanistan. Prices for American farmers began to drop almost immediately. Federal interest rates also reached a historic high—at one point edging above 19 percent—as the Federal Reserve Bank, led by Paul Volker, attempted to fight inflation. Fuel costs skyrocketed while agricultural land values in the Midwest tanked, leaving farmers with less equity to borrow against. All of a sudden, farmers found themselves holding several hot potatoes: plummeting income, higher day-to-day operating expenses, and crushing levels of high-interest debt that put their properties under water. The result, according to the USDA, was “the most severe financial stress for the US farm sector since the Great Depression of the 1930s.”   

New ideas

Mainstream American agriculture was clearly not working. As a result, new ideas—good, bad, and totally weird—were everywhere. Some advocated a return to the diversified small-scale farming practiced by their grandparents. Others proposed techniques like perennial polycultures, no-till farming, and organic farming. “Energy farmers” tapped into this subjunctive mood by envisioning a future America powered not by petroleum but by fuel made on the farm—ethanol or methane—from resources including manure, cattails, wood, corn, and even photosynthesis itself. This prospect of energy independence was particularly enticing for farmers. High oil prices had made it more expensive to fill up the tractor and apply petroleum-based fertilizers. Plus, as experienced participants in the commodity economy, they knew very well that high prices weren’t a problem at all when you were on the receiving end. 

So, when Fred Hendrickson and James Dwire founded a company called American Energy Farming Systems (AEFS) in October of 1981 to promote sunchokes as the answer to agriculture’s many problems, farmers were ready to hear them out. Never mind that neither had any real experience with agriculture. Hendrickson was an attorney, real estate developer, and dreamer who became deeply enamored with the idea of agricultural alcohol fuels in the late 1970s. He met contractor James Dwire when Dwire offered to help build Hendrickson’s vision of a utopian agricultural cooperative on a former US Army ammunition dump in South Dakota. When that fell through, Hendrickson shifted his attention to Jerusalem artichokes, which he had observed thriving, untended, in the alley behind his house. Before long, he had come to believe that the sunchoke was “energy farming’s answer to OPEC.” 

Dwire was among Hendrickson’s first converts. His contracting business, too, had been squeezed by inflation and high gas prices. Plus, the idea appealed to his prepper streak. Shaken by the financial turmoil and convinced that a future of chronic scarcity was imminent, he’d built himself a country home that included windmills, solar energy, a survival bunker stocked with food and ammunition, and 32,000 gallons of fuel tanks buried throughout the yard. When he met Hendrickson, he was so taken by his vision of energy independence via sunchokes that he ordered $20,000 worth of seed, enough to plant at least 20 acres. Together, Hendrickson and Dwire shared a robust evangelical Christian faith, a strong entrepreneurial urge, and a belief that “the big powers of oil and government controlled the nation and were destroying the social and moral fabric of the nation and rural America,” wrote Joseph A. Amato in his 1993 book The Great Jerusalem Artichoke Circus: The Buying and Selling of the Rural American Dream. 

Sunchokes will save us 

AEFS positioned the sunchoke as the perfect solution to farmers’ many problems. It was easy to cultivate and hugely productive, even without expensive fertilizer. Its carbohydrate-rich tubers (it’s technically a rhizome like ginger) were an ideal source of fuel ethanol (as long as ethanol producers could figure out how to process them and American consumers began to demand fuel ethanol—advances, they assured growers, that were just around the corner). As a result of its many incredible attributes, there was sure to be an enormous demand for sunchoke seed tubers. By getting in early and growing seed tubers that other growers would almost certainly want, farmers could help achieve the holy grail of American energy independence while simultaneously getting very rich. 

Volume XXX, Plate 108 by the School of Giovanni Antonio Bottione: Asteraceae or Compositae, Jerusalem artichoke (Helianthus tuberosus). Watercolor, 1770-1802. (Photo By DEA / G. CIGOLINI/De Agostini via Getty Images)DEA / G. CIGOLINI/Getty Images

“AEFS is not just interested in marketing Jerusalem artichokes to farmers for the sake of ‘making money,’” Hendrickson wrote in the margin of an article about Amway, another direct selling company that was an inspiration to AEFS. “But its founders, James Dwire and Fred Hendrickson, are the first ones to admit that those farmers who initially participate in the Jerusalem Artichoke Growing Program will make a lot of money.”

Like any good scam, it contained a kernel of truth. Sunchokes really are productive and easy to cultivate—so easy, in fact, that many gardeners consider them borderline invasive. And they really do contain plenty of carbohydrates that could, in theory, be transformed into ethanol. The trouble is they’re a particular kind of carbohydrate called inulin called that standard yeast can’t ferment on its own. Instead, it has to be treated with acid and heat before Saccharomyces cerevisiae can do its work transforming carbs into alcohol. It’s not an insurmountable hurdle—several European distilleries and a handful of US producers make sunchoke-based spirits—but no fuel ethanol facilities existed in the 1980s to actually process all of these sunchokes AEFS commissioned farmers to grow, nor was there major consumer demand for fuel ethanol.

Faith and profit

Without clear demand, AEFS poured all its attention into marketing. Pitches steeped in the language of evangelical Christianity were designed to spread the prosperity gospel of the Jerusalem artichoke across the land. One of the company’s primary consultants, Reverend Lowell Dale Kramer, spoke at the company’s first National Growers Convention in June, 1982, where he urged attendees to remember the anagram MONEY: “M means God is for me; I must live in his plan. O stands for the opportunity provided to me by the Jerusalem artichoke. N expresses the necessity of surrendering ourselves to God. E equals the energy within you. It is greater than all OPEC’s powers and it will serve your God, nation and generation. Y is for you, the one who must apply his faith.” 

AEFS initially thrived. Hundreds of farmers across the upper Midwest signed on to grow sunchoke seed tubers. Contracts required them to purchase seed at high prices—$1.20 per pound, up to 100 times the cost of planting the same acreage with corn—from existing AEFS growers, then pay 40 to 50 percent of their first three years’ worth of sales back to AEFS in exchange for “marketing services.” For every new grower they recruited to the scheme, they would earn additional commissions—which would grow as those new recruits recruited additional farmers to the cause. On paper, it was obvious that the tubers would lead to a future of assured financial security—truly a providential gift from the land. Sure, the market hadn’t been developed yet. But it would be. All farmers had to do was believe. “At AEFS we are a family of believers,” the company’s corporate philosophy stated. “We believe in God, we believe in America, we believe in the farm family and we believe in the Jerusalem artichoke.”  

During the company’s scant two years in business, 2,500 Midwestern farmers, mostly in the Dakotas, Minnesota, Iowa, and Wisconsin, signed on to grow seed tubers for AEFS. All told, they paid the company $25 million. Swimming in money, Hendrickson and Dwier spent lavishly, buying offices, company farms, and a fleet of private planes that flew prospective growers to their Minnesota headquarters to be wined, dined, and pitched on the miracle that was the Jerusalem artichoke. Within the first year, however, AEFS’ financial picture started to wobble. There was a fundamental flaw at the heart of the structure of the business: It required an ever-increasing number of farmers to sign up to grow seed tubers for the earlier growers to get paid. Anyone familiar with the parable of the chessboard and the grains of rice knows that exponential growth works—until it doesn’t.

AEFS implodes

For AEFS’ internal projections to hold true, the company needed to continue recruiting farmers at a breakneck pace. One internal company memo from the autumn of 1982 suggested that there could be 100 million acres of sunchokes growing in the United States by the end of the 1980s—the same amount of acreage as corn. Yet the only potential buyers of the seed remained other farmers who wanted to become seed suppliers, a finite pool growing shallower by the day. 

By late 1982, it was becoming obvious that sunchokes were unlikely to make anybody a gazillionaire. On May 23, 1983, AEFS declared bankruptcy. Growers with sunchokes planted in their fields were left almost entirely without buyers. The exception? A company called Agricultural Growth Industries, Inc., which was founded by Hendrickson and offered $25 per ton for Jerusalem artichoke tops—even less than the price of hay. 

Much worse was to come for Dwire, Hendrickson, and the other managers of AEFS. In 1984, Peter Kasal, an attorney for McLeod County, Minnesota, convened a grand jury to hear charges against AEFS. Dwight, Hendrickson, and their consultant Kramer were indicted for diversion of corporate assets, theft, and theft by swindle. Dwire pleaded guilty to theft by swindle. Hendrickson was found guilty of theft by swindle and conspiracy to commit theft by swindle at a jury trial, and Kramer was found guilty of theft and theft by swindle. 

Despite AEFS’s chicanery, it seems fair to wonder why farmers—most of whom were far from naive to the commodity markets—fell for it. Why sign on to grow a product for which no established buyer existed? “I think it’s human nature that when you’re at the bottom and it looks like there’s no future, you will grasp at something. People were susceptible to really extreme political messages then, too,” said Dr. Pamela Riney-Kehrberg, distinguished professor of history at Iowa State University and the author of When a Dream Dies: Agriculture, Iowa, and the Farm Crisis of the 1980s

Family farms, especially those that had been in the family for multiple generations, were an immensely potent emotional symbol. Many farmers felt the farm crisis had left them with no good choices. “If they lost that land, they were going to be letting down their parents, grandparents, great grandparents, and their children. So when you’re pinched that badly, when you’re that scared, when you’re that ashamed of yourself, you’ll try lots of desperate things,” said Riney-Kehrberg.

Besides, it wouldn’t have been the first time that a new crop transformed American agriculture. Super-productive hybrid corn had been introduced in the 1930s, and soybeans had become the nation’s second most valuable crop in the 1960s. There was no reason the sunchoke couldn’t be the next soybean. And, of course, there is a long American tradition of creating products first and developing demand for those products second. “If AEFS was a scheme built upon a product for which there was no demonstrated use, how was it, in that respect, different from a thousand other successful industrial products?” Paul Gruchow asks in his preface to Amato’s book. Leap, in other words, and trust the market to catch you. 

These crispy Jerusalem artichokes are paired with aged balsamic to amplify their sweet and nutty flavor.

Photo by Michael Graydon + Nikole Herriot

Why aren’t sunchokes more popular?

Jerusalem artichokes’ unique, nutty flavor and distinctive crisp-when-raw, starchy-when-cooked texture is easy to like. Sean Sherman, chef and founder of The Sioux Chef, says he’s used sunchokes many different ways on his menus, including making them into chips, dehydrating them, boiling them, grinding them into flour, and roasting them. Different varieties have different shapes and colors, ranging from gnarled pale buff forms the size of a fist, to smooth, elegant rhizomes with deep burgundy skin. “I think they’re so beautiful,” says Sherman. “I love simply roasting them. I just love the knobbiness of them.” 

So why didn’t they catch on as a mainstream food item after the AEFS fiasco? Although they are productive, tasty, and easy to grow, sunchoke’s thin skin makes them difficult to harvest by machine. They also don’t store terribly well, requiring specific temperature and humidity conditions to last more than a few weeks. Plus,  while sunchokes failed to replace petroleum at the gas pump, they are notoriously productive of another type of gas, earning them the unfortunate nickname of “fartichokes.” John Goodyer, a 17th-century English botanist, complained that “they stirre and cause a filthie loathsome wind within the bodie.” Some of it seems to boil down to individual reactions; anecdotally, some people can happily eat sunchokes with no ill effects, while for others, munching on the same dish can leave them miserable. 

The culprit is inulin, which is largely indigestible for human beings—but, it turns out, is savored by some of our gut bacteria, who respond by producing enthusiastic quantities of gas. As embarrassing as that flatulence might be, it may also indicate some benefit for our health. One 2020 study of mice suggests that Jerusalem artichokes “may be superior for promoting a healthy gut,” thanks in part to the high amount of inulin they contain. That same inulin content is also what gives sunchokes a lower glycemic index than other root vegetables like potatoes, carrots, or parsnips. 

If you like sunchokes, you don’t necessarily have to resign yourself to their side effects. Michael Washburn, director of preservation at Seed Savers Exchange, says he’s heard a range of theories about how to prepare sunchokes to maximize digestibility, including waiting to harvest them until after several frosts, or exposing them to acid during cooking. Much as sunchokes need to be treated with acid before fermentation to produce ethanol, boiling them in water laced with lemon juice or pickling them in vinegar converts some of their indigestible inulin into digestible sugars via a process called acid hydrolysis. Others call for lacto-fermentation or brining in salt water to neutralize their gastrointestinal effects. Of course, your mileage may vary, and the only way to know for sure how your body will respond is to experiment. 

The good news is that experimentation has the potential to be very delicious. Simmered and pureed with butter and herbs, they produce a mash that is somehow simultaneously silky and airy, the perfect foundation for a pan-seared pork chop or chunk of roasted salmon. Roasting them in olive oil coaxes out tender interiors encased by crunchy-chewy caramelized edges. Or follow Sherman’s lead and slice them thin before frying them into shatteringly crisp chips as addictive as any made from potato. Just don’t expect to be filling your car’s fuel tank with them anytime soon.