Easterday ‘ghost cattle’ prison term delayed 4th time. How close is $250+ million settlement?
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Easterday Farms and Ranch legal issues
The Easterday Family’s businesses have been embroiled in a bankruptcy case with debtors trying to recover more than $250 million after Cody Easterday was charged with wire fraud in a “ghost cattle” scheme.
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Cody Easterday won’t be headed to federal prison just yet for his role in a $250 million “ghost cattle” scam.
Easterday was due in court next Monday for sentencing in the wire fraud case, which carries a sentence of up to 20 years. But federal Judge Stanley Bastian granted a continuance while Easterday helps wrap up his family’s massive bankruptcy settlement.
Bastian is the chief federal judge for the United States District Court for the Eastern District of Washington.
Easterday pleaded guilty more than a year ago to one count of wire fraud, entering into a plea bargain in March 2021. His sentencing has been repeatedly delayed while he helps attorneys work through a bankruptcy settlement for his family’s businesses — Easterday Farms and Easterday Ranches.
Sentencing is now scheduled for Sept. 19.
Nearing settlement
The bankruptcy case appears to be nearing a conclusion. The next hearing is set for mid July, to update Judge Whitman Holt on the progress both sides are making toward a settlement. He expects to have a final settlement proposal submitted for the court’s approval in August.
According to Easterday’s plea agreement, he defrauded Tyson Foods and other companies out of hundreds of millions of dollars in a “ghost cattle” scheme in order to cover about $200 million of losses on trading commodities futures.
The documents show Cody Easterday was behind a scheme to overcharge Tyson for the care of nearly 266,000 cattle that did not actually exist, by submitting fraudulent invoices.
He was ordered to pay $233 million in restitution to Tyson Foods and $11 million to another company. The second company was later revealed to be Segale Properties in bankruptcy filings.
Since then Easterday has been working to sell off company land, equipment and other assets in order to pay off the debt owed by his family’s companies.
The preliminary settlement framework proposed in May would pay off the money owed to all of the debtors except Segale Properties and Tyson, leaving those companies the option to pursue further relief.
Segale Properties is a commercial real estate company in Tukwila that was owed millions for a loan.
Segale says it’s still owed $7.8 million and Tyson contends it’s owed $261 million.
The settlement also means that other Easterday family members would not be prosecuted for not acting to stop Cody Easterday’s “ghost cattle” scam if they were aware of it.
Easterday’s mother, Karen Easterday, has been representing the family in legal proceedings after the death of her husband, Gale Easterday. He was killed in a head-on crash in December 2020 when he was driving the wrong way on Interstate 182 in Pasco.
The agreement also would see debtors agree to not file documents, submit statements or appear in court in connection with Cody Easterday’s sentencing, pending Department of Justice approval of the stipulation.
It’s not yet clear exactly how much other businesses are owed.
Tyson and Segale are not required to release their direct claims against Cody Easterday, but all other members of the family will be released from liability contingent on making good on their end of the agreement, which includes the sale of some personal property and payment toward the settlement to retain other property rather than selling it.
Sale of equipment, real estate and other assets have generated about $250 million toward the debt, according to court documents.
The largest portion of that comes from the sale of 18,000 acres of land to AgriNorthwest, which is part of the investment arm of the Church of Jesus Christ of Latter Day Saints.
Ghost Cattle
Over a period of four years, Easterday was charging Tyson for the care of nonexistent livestock at their Franklin County operation.
According to his plea agreement, of the nearly 300,000 cattle it claimed in one inventory report, about 266,000 did not actually exist.
For example, one invoice submitted to Tyson showed Easterday had bought 1,568 new head of cattle, asking for a payment of about $1.5 million.
Another claimed 6,312 head of nonexistent cattle, for which Easterday’s company received $5.3 million from Tyson.
Easterday also received about $11 million from the second company, now identified as Segale, for the purchase and care of thousands of head of nonexistent cattle.
Easterday Ranches was supposed to have repaid those funds with 4% interest.
Prosecutors said Easterday embarked upon this scheme in order to cover losses from a decade’s worth of speculative trading in the cattle futures markets using both his own money and the company’s.
This story was originally published June 7, 2022 at 11:13 AM.
