Will Cody Easterday only have to pay back a fraction of the $250M ‘ghost cattle’ fraud?

For nearly a year and a half Cody Easterday has managed to stay out of prison for his $250 million “ghost cattle” fraud scheme because he was helping settle his family’s business empire bankruptcy case.

Cody Easterday pleaded guilty to one count of wire fraud in March 2021, but has had his sentencing delayed several times to allow him to help the financial proceedings.

Over the past decade Easterday Ranches did about $2 billion worth of business with Tyson, according to court filings. Easterday Farms also was making about $250 million in revenue as of 2020.

With sentencing set for Tuesday, the question lingering is just how close are Easterday’s creditors to being paid?

It’s a complicated answer for an enormous bankruptcy case, but there are just a handful of roadblocks left to clear.

In July, most of the major claimants agreed to a tentative agreement.

The settlement

The bankruptcy case covers the debts of both Easterday Farms and Easterday Ranches. The largest claims, related directly to the cattle scam is under the Ranches portion.

Tyson is the largest creditor, followed by Segale Properties. These two companies were the primary victims of Easterday’s fraud, as they paid him to care for more than 265,000 head of cattle that never actually existed.

Tyson has an allowable claim of $261 million and Segale has one for $7.8 million, after having received partial payments, totaling about $62.5 million and $3.5 million respectively.

Their claims are being handled separately from the rest, because they are tied to restitution Easterday may be ordered to pay during his sentencing.

Of the remaining companies owed money, all but one have agreed to a proposed claims schedule. The 65 businesses had claims ranging from $4 million to $300.

In all, the claims add up to $10.76 million and represent the bulk of the debts for the Easterday Farms portion of the lawsuit.

The lone holdout is Rabo Agrifinance, which is pressing to be paid its lawyers fees and interest on a $1 million loan.

Language in a July filing was added that could allow Rabo to preserve their claim while the other businesses settle up. The Easterday companies had defaulted on loans made by Rabo for several of their properties in Franklin County, Wash.

It is unclear whether the liquidated estate will cover the entirety of what is owed, but the family raised an estimated $250 million during the bankruptcy liquidations.

Trustee objections

Last week U.S. Trustees filed objections with the bankruptcy court over three major issues relating to payments to lawyers in the case. The trustees are asking the court to reject the requests.

The first objection involves Dundon Advisers, which was employed by the Farms Committee of Unsecured Creditors to assist them in their duties, according to the filing.

Initially, Dundon had proposed an hourly rate of $492.

In their final fee application, Dundon asked the court to allow them to charge their full hourly rate for services from Jan. 1, 2022 through Aug. 1. The full hourly rate ranges from $600 to $720 an hour. That would see an increase in fees of about $79,000.

The second objection relates to payments requested by B. Riley Advisory Services, who worked on both the farms and ranches portion. In this instance, trustees say that B. Riley is asking for fees for multiple employees attending the same hearings.

They claim that B. Riley often sent three, and sometimes four, members of their staff to hearings and want to charge for each member present rather than one fee for all of them.

In the objection, the trustees say that the fee application does not explain why one senior member of staff in attendance was insufficient.

The last objection is against a request from Pachulski, Stang, Ziehl & Jones, a legal firm representing both farms and ranches.

They are asking for payment for time spent proposing a plan for Easterday Ranches, that would have detrimentally impacted Easterday Farms creditors. The plan, which two versions, was rejected.

The trustees argue that because PSZ&J were representing both sides in conflict with each other, they should not be awarded fees for their failed plan proposals.

Through just the first six months of the bankruptcy case, attorneys had racked up more than $5 million in legal bills. It’s unclear what that final number will look like, but early estimates placed costs at nearly $1 million a month in legal fees.

Restitution question

With the approval of the settlement, all parties except for Rabo, Tyson and Segale would release their claims.

Rabo is choosing to pursue its settlement separately, and is awaiting procedural guidance from the Richland federal court where their claim originated.

Tyson and Segale could ultimately be made whole by way of court-ordered restitution at Cody Easterday’s sentencing.

His attorneys are asking Judge Whitman Holt to hold off on the restitution, as they argue Tyson is owed significantly less.

In a nearly 60-page filing last week, Easterday’s attorneys claim that Tyson actually owes him money for various things, which would ultimately reduce the remaining debt to just $7.5 million.

If the court agreed to their claims, that would mean Cody Easterday ultimately would pay back less than 30%, or about $70 million, of the $244 million he pleaded guilty to stealing.

The biggest claim his lawyers are making is that Tyson owes Cody Easterday $100 million for a branding deal for beef sold in Japan over the course of 7 to 8 years. They claim Easterday’s likeness was used, but he was not compensated.

While marketing materials for that branding deal were included in the filing, a contract or cost breakdown was not. It is unclear how his attorneys settled on the $100 million value.

Cody Easterday’s attorneys are also claiming that Tyson illegally collected $51 million in interest and owes Easterday about $12 million for care and feed of cattle.

Included in the filing is a response from the U.S. Attorneys Office indicating that they are amenable to determining what, if any, other offsets Cody Easterday is entitled to, but would object based on the possible impact to when Easterday would have to report to prison.

They’re asking for a sentence between 10 and 12.5 years in federal prison.

But if Cody Easterday’s attorneys want the court to sentence him to no time behind bars and one year of house arrest with three years probation.

This story was originally published October 3, 2022 at 5:30 AM.

Cory McCoy

Tri-City Herald

Cory is an award-winning investigative reporter. He joined the Tri-City Herald in Dec. 2021 as an Editor/Reporter covering social accountability issues. His past work can be found in the Tyler Morning Telegraph and other Texas newspapers. He was a 2019-20 Education Writers Association Fellow, and has been featured on The Murder Tapes, Grave Mysteries and Crime Watch Daily with Chris Hansen.