One of largest NW cattle ranches sued in Franklin Co. for bilking $225M from Tyson

Easterday Ranches is accused of bilking Tyson Foods out of more than $225 million by charging for 200,000 cattle that never existed.

A lawsuit filed in Franklin County this week by Tyson Foods claims the money was used “to offset over $200 million in losses (company president Cody Easterday) incurred in the commodities trading markets.”

Now South Dakota-based Tyson is looking for the money back, along with 54,000 head of cattle on an Easterday feedlot north of Pasco.

Cody Easterday was not available Thursday for an interview about the accusations, and other members of the family declined to comment to the Tri-City Herald on the lawsuit.

This is the first time Tyson named the cattle supplier it claimed was responsible for a $285 million loss last fiscal year. The company listed the loss on its December filing with the federal Securities and Exchange Commission.

Easterday supplied 2 percent of Tyson’s cattle for meat processing between 2017 and 2020, according to the federal documents.

Tyson said they were quietly working with Easterday Ranches on the problem but that changed on Jan. 22.

“Mr. Easterday and Peter Richter (defendant’s financial advisor) advised Tyson that Easterday Ranches intended to sell its ‘North Lot’ — a feedlot and one of Easterday Ranches’ most valuable assets — within the next few days and dissipate the proceeds (possibly to insiders and affiliates of Mr. Easterday),” according to Tyson’s attorneys.

Now Tyson wants the court to either put a third party in charge of managing the ranch or put a restraining order in place to stop “dissipating assets to the detriment of the defendant’s creditors.”

Faked paperwork

The ranch is part of the larger Easterday farming operations, which includes 18,000 acres of potatoes, onions, corn and wheat.

They use their own grain products to feed the cattle. While the farm is headquartered in Pasco, it has locations in Benton and Franklin counties and in Florida.

Tyson’s beef division operates 12 facilities, including one in Wallula that was at the center of a COVID-19 outbreak last year.

Tyson and Easterday Ranches had worked together for many years before signing a February 2017 agreement that Easterday would buy, feed and take care of cattle on its Franklin County property.

The feedlot reported having a capacity of about 145,000 to 180,500 head of cattle a year.

As part of that agreement, Easterday would submit invoices and get reimbursed for its costs.

When the cattle were ready to sell, they would be delivered to the Wallula processing plant where Easterday would get market value minus what Tyson had already paid.

At the end of Tyson’s fiscal year, Easterday reportedly had 286,000 cattle at a value of $321 million.

“In late November and early December 2020, Plaintiff discovered that its and Defendant’s inventory records related to Defendant’s operations were significantly in error,” Tyson’s attorneys said. “Its investigation, including the admissions of Defendant’s President Cody Easterday, showed there were over 200,000 head of cattle that Defendant reported to be in inventory, but which did not exist.”

For several years, Tyson claims the ranch has been submitting fake invoices and getting paid for feed that was never bought, submitted fake inventory records and “schemed to defraud Plaintiff in a way that has caused Plaintiff losses of in excess of $225 million.”

While he faked buying a bulk of the animals, Easterday still has about 54,000 animals owned by Tyson that aren’t ready to be sold.

Looking for a third party

Tyson’s attorneys are asking a judge to put Easterday Ranches into the hands of a third party that will “take possession of the assets and properties of the defendant,” “collect its revenues” and “operate and manage the defendants business pending completion of an appropriating marketing process for the sale of the Defendant’s real and personal property.”

They believe it’s the only way the ranch’s creditors can be guaranteed that the property will be “managed properly, liquidated appropriately and distributed in accordance with law.”

Tyson’s attorneys are not only looking to get their money back, but they want to make sure they don’t lose the animals Easterday has now.

If they can’t get a third-party manager, they would like the judge to put an order in place stopping them from selling “any assets or property of Easterday Ranches of any kind or nature.”

Loss of patriarch

This is the second blow to the Easterday family in recent months. Longtime patriarch Gale Easterday died in a head-on crash on Interstate 182 in Pasco on Dec. 10.

Easterday, who lived in Mesa, turned onto the interstate heading in the wrong direction and hit an oncoming semi hauling potatoes for Easterday Farms.

The 79-year-old was the second generation to lead the family and was remember for leading new generations into farming and helping usher in a state-of-the-art operation.

Easterday’s father, Ervin, first came to the Columbia Basin in the late 1950s from Idaho to farm in the new Columbia Basin Reclamation Irrigation project.

Gale, his wife Karen and their five children and their families have operated farms and cattle operations in Eastern Washington for more than 40 years.

This story was originally published January 28, 2021 at 12:59 PM.