Washington ranch co-owner Cody Easterday defrauded Tyson Foods of $233 million and another company of $11 million by selling more than 200,000 head of cattle that only existed on invoices, according to a plea agreement unsealed April 1.
Easterday, former manager of the Easterday Ranches feedlot in Pasco, pleaded guilty March 31 to one count of felony wire fraud and faces up to 20 years in prison.
He also faces civil charges filed March 31 by the Commodity Futures Trading Commission for allegedly reporting false or misleading information to the Chicago Mercantile Exchange.
Easterday, 49, entered the plea to the criminal charge in U.S. District Court for Eastern Washington. Federal Judge Stanley Bastian in Yakima accepted the plea and set sentencing for Aug. 4. According to the plea deal, prosecutors agreed not to bring additional charges.
“For years Cody Easterday perpetrated a fraud scheme on a massive scale, increasing the cost of producing food for American families,” Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department Criminal Division said in a statement.
Efforts to reach Cody Easterday or his attorney, Carl Oreskovich, were unsuccessful by deadline.
The CFTC alleges Cody Easterday violated the Commodity Exchange Act by reporting false or misleading information about the ranch’s cattle inventory, purchases and sales to the CME, the world’s largest financial derivatives exchange.
The false statements were made in 2017 and 2018 to avoid scrutiny and discipline, according to the CFTC complaint.
Easterday allegedly ran up more than $200 million in losses over 10 years from speculative trading in the cattle and corn futures markets. To meet margin calls, Easterday allegedly defrauded one of the feedlot’s biggest business partners of more than $233 million, according to the complaint.
The complaint does not name the producer, and a CFTC spokeswoman said the commission could not identify the producer.
The complaint says the producer is based in South Dakota and operates a beef processing plant in Pasco and is “part of a family of companies that together constitute one of the largest food suppliers in the world,” a profile that fits Tyson Fresh Meats, which is based in Dakota Dunes, S.D.
Tyson has previously said that it led an investigation last year and found that the misappropriation of funds had cost the company more than $200 million.
Easterday had an agreement with the company to procure and care for 145,000 to 180,000 head of cattle a year, according to the complaint.
The complaint alleges that from at least October 2016 to November 2020, Easterday submitted false invoices and reimbursement requests for cattle that it never purchased or raised for the producer.
“Given the parties’ long business relationship, the producer justifiably relied on the invoices submitted by Easterday Ranches and paid Easterday Ranches more than $233 million to which it was not entitled,” the complaint states.
A producer’s representative confronted Easterday with evidence of the fraud last fall, according to the complaint.
The commission seeks restitution, civil monetary penalties, and permanent trading and registration bans.
According to the plea agreement with the Justice Department in which he pleaded guilty to wire fraud, Easterday will have to set aside no less than 10% of his monthly income toward paying restitution.
Easterday Ranches filed for bankruptcy in February, and Cody Easterday resigned as an officer of the business, according to court records.
Cody Easterday’s son, Cole Easterday, said April 1 that other family members still plan to reopen Oregon’s second-largest dairy near Boardman and that his father is not involved in the project.
Cole Easterday and his brothers, Clay and Cutter, own Easterday Dairy LLC. The company formed in early 2019 after the family purchased the former Lost Valley Farm for $66.7 million.
In a statement, Cole Easterday said his father is not in management or control of the dairy enterprise.
Easterday Dairy LLC has applied for a new Confined Animal Feeding Operation, or CAFO, permit from the Oregon Department of Agriculture and Department of Environmental Quality to operate the farm with 28,300 cattle.
“I cannot comment on the situation with Easterday Ranches, as neither my brothers or I are involved in that operation,” Cole Easterday said.
“Easterday Dairy LLC will continue to comply with our current permit, and will continue with our CAFO application. We are looking forward to the operation and success of our dairy.”
Lost Valley Farm started in 2018 on 7,228 acres in what used to be the Boardman Tree Farm. The dairy was shut down within a year after racking up more than 200 violations of its CAFO permit and its owner filing for bankruptcy.
The Easterdays bought the property — excluding cattle — at an auction and promised to invest millions of dollars upgrading wastewater facilities to ensure environmental compliance.
“We will invest what we need to make the dairy operational,” Cole Easterday said.