SPOKANE — The head of a huge Central Washington cattle operation pleaded guilty last week in federal court to defrauding Tyson Foods Inc. of more than $244 million in what prosecutors say was a scheme to cover his company’s losses in commodities trading.
Mesa resident Cody Easterday, 49, president of Easterday Ranches Inc., pleaded guilty to one count of wire fraud and faces up to 20 years in prison when he is sentenced Aug. 4, according to federal prosecutors. By pleading guilty, he admitted to filing invoices to get paid for cattle that never existed.
“For years, Cody Easterday perpetrated a fraud scheme on a massive scale, increasing the cost of producing food for American families,” Acting Assistant Attorney General Nicholas L. McQuaid said in a news release. “The Criminal Division’s prosecutors are committed to swiftly and thoroughly prosecuting frauds affecting our nation’s agricultural and other commodities markets, whether in the heartland or on Wall Street.”
According to court records, Easterday defrauded Tyson of more than $244 million by charging them for the purchase and feeding costs for hundreds of thousands of cattle that existed only on paper.
The same ghost-herd scenario has spawned lawsuits and bankruptcies by Easterday Ranches Inc. and Easterday Farms, which sold much of the feed used by Easterday Ranches to raise cattle to slaughter weight.
The scheme started in 2016 and operated until Tyson officials discovered discrepancies while discussing its business arrangement earlier this year, according to court records.
Easterday used the fraud proceeds for his personal use and benefit, and for the benefit of Easterday Ranches, including to cover about $200 million in commodity futures contract trading losses that Easterday had incurred, federal prosecutors wrote.
Federal prosecutors also said Easterday defrauded CME Group Inc., which operated 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,” according to the news release.
“Today’s guilty plea holds the defendant responsible for his extensive and coordinated fraud over many years, resulting in more than $240 million of illicit gains,” said Inspector General Jay N. Lerner of the Federal Deposit Insurance Corp.
Joseph Harrington, acting U.S. attorney for the Eastern District of Washington, also praised the various federal agencies involved in the case that secured Easterday’s guilty plea.
”I commend the agents ... for their dedication to investigating this case and tenacity in ferreting out the fraudulent activity to which the defendant has pleaded guilty,” Harrington said.