Exclusive | Easterday CEO’s ghost cattle fraud case was kept secret until his guilty plea

The indictment that lays out wire fraud allegations against the head of the Easterday agriculture conglomerate was kept under seal for a week until he entered a guilty plea.

Cody A. Easterday, 49, was charged March 24 in U.S. District Court with the single felony count relating to business dealings between his family’s Franklin County-based cattle-feeding operation and Tyson Foods.

In filing the information in the Eastern District of Washington, two Department of Justice attorneys asked to have the paperwork sealed from the public until “further order of the court” or Easterday’s first appearance, whichever came first.

The motion said “public disclosure of the charging document prior to the defendant’s appearance could compromise the current status of the investigation.”

He had a 48-minute hearing last Wednesday in the Yakima federal courthouse before Chief Judge Stanley A. Bastian.

While the hearing was held in open court Wednesday afternoon and Bastian unsealed the case file at that time, a Justice Department news release that was sent out two hours later did not say in which federal jurisdiction Easterday entered his plea.

The case also did not show up in an online court records database — when searching by Cody Easterday’s name — for more than two days after the hearing.

The president and owner of Easterday Ranches admitted concocting a scheme to defraud Tyson and another company out of more than $244 million to offset his losses in the commodities trading markets.

The fraud happened over at least four years, though court documents show Easterday’s losses on the commodity market started 10 years ago.

After pleading guilty, Easterday of Mesa was given permission to remain out of jail until sentencing Aug. 4.

Easterday faces 20 years in federal prison, followed by up to three years of supervised release. He turned over his passport to probation officials.

Commodity trading losses

Tyson Foods and its subsidiary, Tyson Fresh Meats, have been named as victims in the fraud, along with the CME Group. However, federal prosecutors continue to keep secret the name of another victim, only identifying it as “Company 1.”

“Company 1 was a limited liability company organized under the laws of the State of Washington, and its principal office was located in Tukwila, Washington,” according to the information.

Tyson operates a meat processing plant in Wallula and has had longstanding agreements with Easterday Ranches, advancing the money for the costs of feeding and raising cattle to market weight before they are sent to slaughter.

Tyson was billed twice a month for reimbursement.

Easterday charged Tyson and the other company for buying and feeding 200,000 cattle that never existed.

Federal prosecutors point to two fraudulent invoices sent by email out-of-state in May 2020 seeking payment of $5.3 million from Tyson for eight lots of supposed cattle.

It has been dubbed a “ghost-cattle scam” by federal prosecutors.

The fraud went on for at least four years until Easterday admitted to a Tyson employee that he had been submitting fake invoices.

His approximately $200 million in commodity futures contracts trading losses on behalf of Easterday Ranches go back as far as 2011.

Easterday has agreed to pay $244 million in restitution, with the majority going to Tyson Foods and $11 million to Company 1.

It is just one in a number of legal cases involving the family businesses since patriarch Gale Easterday died in December in a head-on crash on Interstate 182 after leaving the main office in Pasco.

Bankruptcies, lawsuits

Tyson sued the cattle supplier in January in Franklin County Superior Court. The company is looking to get its money back, along with 54,000 head of cattle on an Easterday feedlot north of Pasco.

Easterday Ranches and Easterday Farms, the farming side of the operation, filed separately in February for Chapter 11 bankruptcy protection in federal court.

And on Wednesday, the same day as the guilty plea, the Commodity Futures Trading Commission sued Easterday and his company for three violations of the Commodity Exchange Act.

The white-collar crime was investigated by the Federal Deposit Insurance Corporation — Office of Inspector General, or FDIC-OIG, and the U.S. Postal Inspection Service.

As part of the bankruptcy filings, Easterday, his wife and his mother all resigned their officer positions with Easterday Ranches and Easterday Farms before seeking protection. The family also transferred control of the partnership to a group of “independent directors,” who immediately adopted changes.

Boardman, Ore., dairy

While their Mid-Columbia operations are mired in the upheaval, Cody Easterday’s son is pushing forward with plans to open a mega-dairy in Boardman, Ore.

Cole Easterday has reportedly said that his father will not be involved in managing Easterday Farms Dairy on property 60 miles south of the Tri-Cities.

The business paid $66.7 million for the embattled Lost Valley Farm in April 2019 after troubled owner Greg te Velde was forced to shut down the dairy and sell the cattle in his own bankruptcy case.

The purchase price did not include the cows, and the Easterdays have applied for a Confined Animal Feeding Operation permit for a large-scale, commercial dairy with 28,300 cattle.

A coalition known as Stand Up to Factory Farms is pushing for the state to deny the permit and the Oregon Legislature to enact a mega-dairy moratorium, citing the generation of “stunning amounts of air and water pollution.”

“Cole Easterday’s insistence that Easterday Dairy has the ability and the means to run a responsible mega-dairy in Oregon is a contradiction in terms,” Tarah Heinzen, Food & Water Watch’s legal director, said in a news release after Cody Easterday’s fraud admission.

“Easterday Dairy’s failure to report the serious financial difficulties of its sister company, Easterday Ranches, is grounds for (Oregon Department of Agriculture) and (Department of Environmental Quality) to deny the permit, and they should.”

“Mega-dairies are rife with opportunities for environmental mismanagement, groundwater and air pollution, and animal welfare violations, as Lost Valley Farm demonstrated so clearly,” Heinzen added. “Easterday Dairy has given the state no reason to believe it can fulfill its financial obligations and avoid Lost Valley Farm’s mistakes.”

This story was originally published April 5, 2021 at 2:22 PM.