Modern-day cattle rustling

By Leisa Boley Hellwarth

They call it “Cattlegate.” It’s a modern-day cattle rustling scheme. Let’s start at the beginning.

            In 1958, Ervin Easterday moved his family and farming operation from Nampo, Idaho to southeastern Wash., where he purchased 300 acres of undeveloped land in the new Columbia Basin Reclamation Irrigation project. With a meager annual rainfall of 7 inches per year, the new supply of water from Grand Coulee Dam changed this land forever. 

            As a young man, Ervin’s son, Gale, said he worked what seemed like endless hours on a Caterpillar leveling and clearing this new ground so water had access to run down furrows.

            By 1979, Gale and his wife, Karen, were the sole owners of Easterday Farms. They had five children who grew into the ever-expanding operations that included Easterday Ranches, Easterday Farms, multiple vegetable sheds, 2 restaurants, a construction company, a hay company, and a re-packing facility in Florida, south of Jacksonville. Apparently, Gale and Karen filed a Chapter 12 bankruptcy in 1987, but the Easterday agricultural enterprises became one of the largest agricultural operations in the entire state of Washington.

            In 1989, son Cody became a partner in Easterday Farms and 23,000 acres of potatoes, onions, corn and wheat. Cody was also a partner in Easterday Ranches. In October, 2016, Easterday Ranches contracted to buy and raise cattle for the Tyson beef packing plant near Pasco, Washington. (They also contracted with another unidentified company as well.) The two companies advanced money for those costs. Then, once the cattle were slaughtered and sold at market price, Easterday Ranches would repay the money with interest and keep whatever came in above sale price as profit.

            However, as a result of the scam, there was no money to repay Tyson and the other company because the hundreds of thousands of cattle for which they had previously paid Easterday Ranches were never on the feedlot. These missing cattle are known as the “ghost herd,”

            In December of 2020, Tyson discovered that 200,000 cattle they and another company had paid for did not exist. Tyson lost $225 million; the two companies together lost $244 million. On Dec. 10, Gale Easterday died when his vehicle struck an Easterday semi head-on on Interstate 182 in Pasco, Wash. Gale was apparently trying to enter the freeway from an exit ramp. 

            On Jan. 22, 2021, Easterday Ranches sold the North Lot Feedlot (where the ghost herd was supposed to be housed) to AgriBeef, a Tyson competitor for $16 million. Of the $15.1 million of sale proceeds that were dispersed, Easterday Ranches paid $12 million directly to Easterday Farms and other Easterday-owned enterprises. 

            Three days later, Tyson sued Easterday Ranches for $225 million for the missing ghost herd. On Feb. 2, Easterday Ranch filed for Chapter 11 bankruptcy protection. Six days later, Easterday Farms also filed for Chapter 11 bankruptcy protection and sought permission to sell 23,000 acres. On that same date, Tyson moved the bankruptcy court requesting a trustee be appointed to oversee management of the debtor.

            On March 31, 2021, Cody Easterday pleaded guilty to one count of wire fraud and agreed to repay $244,031,132 in restitution. Apparently, during the plea hearing, the federal judge pointedly asked Tyson why it took them so many years to discover that 200,000 head of cattle were unaccounted for. On that same day, the Commodity Futures Trading Commission sued Cody Easterday for three violations of the Commodity Exchange Act.

            Long story short. Cody Easterday admitted that he billed Tyson for animals that were never produced to cover his margin calls. Since 2011, Cody lost over $200 million playing the cattle futures market. 

            Experts on gambling say there are three phases to the addiction: winning; losing; and desperation. Apparently, Cody was in the desperation phase for a number of years. One of the articles that covered this case included a photocopy of a handwritten note where Cody itemized his trading losses since 2011. He only made money in 2015, over $5 million. 

            The Washington Department of Agriculture’s audits didn’t discover any discrepancies. Apparently, they merely reviewed invoices that matched checks received. Nobody ever attempted to count any cows. This sounds like auditing a grain elevator but not conducting an actual physical inventory.

            Cody Easterday, age 49, of Mesa, Wash., is scheduled for sentencing on Aug. 4. He faces a maximum penalty of 20 years. Several experts believe he will receive at least 7 years of confinement in a federal penitentiary. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. 

            Most legal experts watching these bankruptcy cases believe they will result in liquidation of both Easterday Ranches and Easterday Farms. The $12 million paid to Easterday entities from the sale of the feedlot will likely be contested by the creditors as preferential transfers.

            The rest of the family’s assets may also be at risk. If you don’t follow the corporate formalities — and if you don’t in fact treat companies as financially separate companies and they are doing business with each other — there is a danger that the companies can be treated as one for purposes of bankruptcy.            This is a sad story. And I have a hard time feeling sympathy for any of the participants. Perhaps Mahatma Ghandhi said it best. “Earth provides enough to satisfy every man’s needs, but not every man’s greed.”

Leisa Boley Hellwarth is a dairy farmer and an attorney. She represents farmers throughout Ohio from her office near Celina. Her office number is 419-586-1072. 

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