On the same day that he pleaded guilty to over $244 million in fraudulent activity, one Washington rancher was also charged with the sale of more than 200,000 non-existent head of cattle to a beef processor.
In the fraud plea, Cody Easterday used his company, Easterday Ranches Inc., to enter into a series of agreements with Tyson and an unnamed company under which Easterday Ranches agreed to purchase and feed cattle on behalf of Tyson and the other company, according to court documents. Per the agreements, Tyson and the unnamed company would advance Easterday Ranches the costs of buying and raising the cattle. Once the cattle were slaughtered and sold at market price, Easterday Ranches would repay the costs advanced (plus interest and certain other costs), retaining as profit the amount by which the sale price exceeded the sum repaid to Tyson and the other company.
According to the U.S. Department of Justice, beginning in approximately 2016 and continuing through November 2020, Easterday submitted and caused others to submit false and fraudulent invoices and other information to Tyson and the company. These false and fraudulent invoices sought and obtained reimbursement from the victim companies for the purported costs of purchasing and growing hundreds of thousands of cattle that neither Easterday nor Easterday Ranches ever purchased, and that did not actually exist. As a result of the scheme, Tyson and the other company paid Easterday Ranches over $244 million for the purported costs of purchasing and feeding these “ghost cattle.”
Easterday then used the fraud proceeds for his personal use and benefit, and for the benefit of Easterday Ranches, including to cover approximately $200 million in commodity futures contracts trading losses that Easterday had incurred on behalf of Easterday Ranches, according to the Justice Department.
In connection with his commodity futures trading, Easterday also defrauded the CME Group Inc., which operates the world’s largest financial derivatives exchange. On two separate occasions, Easterday submitted falsified paperwork to the CME that resulted in the CME exempting Easterday Ranches from otherwise-applicable position limits in live cattle futures contracts.
Easterday pleaded guilty to one count of wire fraud and agreed to repay $244,031,132 in restitution. He is scheduled to be sentenced on August 4 and faces a maximum penalty of 20 years in prison.
The same day he pleaded guilty to wire fraud, the Commodity Futures Trading Commission charged Easterday with counts of similar fraudulent activity. Easterday and Easterday Ranches were charged with engaging in fraud in connection with the sale of more than 200,000 non-existent head of cattle to a beef processor, making false statements to an exchange, and violating exchange-set position limits.
The complaint alleges that, from at least October 2016 to November 2020, Easterday caused Easterday Ranches to submit false invoices and reimbursement requests relating to more than 200,000 head of cattle that Easterday Ranches never actually purchased or raised on the producer’s behalf. Through the use of fraudulent invoices and reimbursement requests, Easterday Ranches received from the producer more than $233 million to which it was not entitled.
“For years, Cody Easterday perpetrated a fraud scheme on a massive scale, increasing the cost of producing food for American families,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division.