A Washington state rancher was sentenced to 11 years in prison for a nearly quarter-billion dollar ripoff of Tyson Foods Inc. TSN, in which it sold more than 260,000 cattle heads that didn't exist.
Prosecutors say that Cody Easterday, 51, of Mesa, Wash., ran the ghost cattle scam for more than four years in order to cover over $200 million in losses he had incurred trading commodity futures.
The federal prosecutors wrote in court filings that the scale of the fraud that Easterday perpetrated is staggering. Easterday stole the $244 million that would have funded the combined police, courts, and fire budget of Yakima, a city of nearly 100,000 people, for more than four years. Easterday, who ran a family farm and feedlot in southeastern Washington, went into business with Tyson in 2016 and offered to buy and feed cattle on the company's behalf until the cattle were ready for slaughter.
As part of the arrangement, Tyson would front Easterbay the money to purchase and feed the cattle, paying back those funds at 4% interest when the cattle were sold for slaughter. Easterbay would keep the difference in price as his profit, according to court documents.
Easterday submitted invoices to Tyson for $2 billion in cattle over the course of four years. Easterday padded the invoices by over 10% with so-called ghost cattle or animals that didn't exist, according to prosecutors.
Easterday did not purchase the cattle. Easterday instead betrayed his victims trust and diverted huge amounts of the proceeds of his fraud to cover huge losses he incurred while recklessly trading commodity futures contracts, prosecutors wrote in court filings.
Easterday entered into a similar arrangement with a smaller, unnamed firm in Washington in 2020, prosecutors said. In all, the prosecutor said he stole $233 million from Tyson and $11 million from the smaller company.
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The scam came to an end in 2020 when Tyson grew suspicious and asked for a full inventory of the cattle that Easterday claimed to have bought for it. He admitted he had been ripping the company off, prosecutors said.
A message to Tyson representatives was not immediately returned.
Easterday was hit with federal wire-fraud charges in March 2021 and pleaded guilty a month later.
Easterday s attorney, Carl Oreskovich, said his client had built a company that brought in $250 million in revenue a year, but he suffered from a gambling addiction that led him to make increasingly risky commodity trades, causing him to fall into a deep financial hole.
Oreskovich said Easterday began trading in cattle futures in 2010 as a hedge against fluctuating market prices, but started taking riskier bets as his father, with whom he had started the business, fell ill and started pulling back from management. The younger Easterday had built a very successful business and helped a lot of people along the way, but he got stuck in a very tough business situation and made some poor decisions about how to get out of it, Oreskovich said. If you lose, you lose big, because the amount of money being transferred back and forth in a business like this is astronomical. Easterday declared bankruptcy and sold off his farm to pay back Tyson and the other company he had defrauded after he admitted what he had done.
Prosecutors said that Tyson was still out over $170 million.