A cattle rancher in Washington has been sentenced to 11 years in prison for defrauding Tyson Foods and another company out of more than $244 million by charging the victim companies for the purported costs of purchasing and feeding hundreds of thousands of cattle that did not exist.
According to court documents, Cody Allen Easterday used his company, Easterday Ranches Inc., to enter into a series of agreements with the companies under which Easterday Ranches agreed to purchase and feed cattle for them. Per the agreements, Tyson and the other company would advance Easterday Ranches the costs of buying and raising the cattle. Once the cattle were slaughtered and sold at market price, Easterday Ranches would repay the costs advanced – plus interest and certain other costs – retaining the difference as profit.
“The Criminal Division is committed to holding those who carry out fraudulent schemes accountable, especially those that are complex, long-running, and seriously affect our nation’s food industry and commodities market,” said Assistant Attorney General Kenneth Polite, Jr. of the Justice Department’s Criminal Division.
Between approximately 2016 and November 2020, Easterday submitted and caused others to submit false and fraudulent invoices and other information to the two companies. These false and fraudulent invoices sought and obtained reimbursement from the victim companies for the purported costs of purchasing and raising hundreds of thousands of cattle that neither Easterday nor Easterday Ranches ever purchased, and that did not actually exist.
As a result of the fraud scheme, Easterday Ranches was paid over $244 million for the purported costs of purchasing and feeding over 265,000 ghost cattle. Easterday used the fraud proceeds for his personal use and benefit, and for the benefit of Easterday Ranches, including to cover approximately $200 million in commodity futures contracts trading losses that Easterday had incurred on behalf of Easterday Ranches. In connection with his trading, Easterday also defrauded the CME Group Inc. (CME), which operates the world’s largest financial derivatives exchange, by submitting falsified paperwork. This resulted in the CME exempting Easterday Ranches from otherwise-applicable position limits in live cattle futures contracts.
“No one is above the law. Mr. Easterday amassed significant personal wealth, yet, he wanted more, so he defrauded his victims of nearly a quarter billion dollars by charging for cattle that never existed,” said U.S. Attorney Vanessa Waldref for the Eastern District of Washington. “But for the combined and incredible efforts of our law enforcement team, today’s sentence and the $244 million restitution award – one of the largest in our District’s history – would not have been possible. Fraud has a debilitating impact on society by draining our communities’ limited resources. Accordingly, we will continue to prosecute fraudsters to the fullest extent so we can keep our communities safe and strong in Washington State and throughout our great Nation.”
The sentence sends a strong message that individuals who commit fraud will be held accountable for the harm caused to banks, communities and the agricultural sector, said Inspector General Jay Lerner of the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG). “The FDIC Office of Inspector General remains committed to investigating cases of swindle and deception that undermine the integrity of financial institutions, and we will continue to work with our law enforcement partners to bring to justice those who commit such offenses.”