Cody Easterday’s bankrupt operations will pay the Commodity Futures Trading Commission $30 million, but only after other creditors are paid, according to an order approved Nov. 17 by a federal judge in Washington.
The settlement OK’d by U.S. Bankruptcy Judge Whitman Holt in Yakima resolves commodity fraud charges against Easterday Ranches, a company formally owned by Cody Easterday, his wife and mother.
The CFTC accused Cody Easterday of filing false cattle purchase and sales reports to the Chicago Mercantile Exchange to further a scheme that defrauded Tyson Fresh Meats of $233 million.
The settlement ensures innocent creditors aren’t punished and that no former owner will benefit from selling Easterday Ranches, according to court documents.
“It puts the CFTC’s restitution claim at the back of the line,” said attorney Chris Durbin, who represents a committee made up of the Easterday creditors.
“The effect of that claim if it were not subordinated (would be) to swamp and overwhelm the estate,” he said.
Cody Easterday pleaded guilty in March to billing Tyson to feed cattle that didn’t exist. Easterday agreed to pay restitution and is scheduled to be sentenced in January.
Federal prosecutors said he used “ghost cattle” proceeds to cover losses speculating on cattle and corn futures. CTFC accused Easterday of filing false reports to the mercantile exchange in 2017 and 2018 that allowed him to increase his speculation.
He is not a party to the order approved Wednesday, and the agreement does not decrease his liability to the CTFC, according to court documents.
Easterday filed for bankruptcy shortly before he was charged with defrauding Tyson. Farmland Reserve Inc., owned by the Church of Jesus Christ of Latter-Day Saints, bought several Easterday farms in Benton County for $209 million at a bankruptcy auction.
The Easterdays have sold other property, including a feedlot, farm equipment and airplane. The Easterday’s farming operations covered about 22,000 acres.
Bankruptcy attorney Richard Pachulski told Holt that creditors want more information about the Easterday family’s remaining business interests.
“The Easterdays have significant personal assets. While people would like a plan sooner than later, without additional information, we will not build a consensus,” he said.
Attorneys for Cody Easterday and his mother, Karen, said the Easterdays have provided thousands of pages of documents. They asked Holt to appoint a mediator.
“I understand some parties want to know every dime and penny she has and every transaction she has entered into the last 40 years,” Karen Easterday’s attorney, Timothy Conway, said.
Pachulski that it would be pointless to have a mediator.
“I don’t think a mediator is going to be helpful now because when a mediator says, ‘How much are the Easterday assets worth? What are we fighting about?’ Nobody will be able to give that mediator an answer,” he said.
Holt said he would ask another judge to mediate, but only if both sides wanted one.