Here’s one way to do the cattle business. You buy some small cows, feed them until they are big cows, then kill them and sell the meat.
Here’s another way. You get paid by someone else who wants to kill the cows and sell the meat but doesn’t want the hassle of buying and feeding them. You do that bit for them, billing them along the way for the cows and the food, and then there is a mechanism for you either getting a profit or taking a loss when the meat is finally sold.
Or then again a less conventional way to do it would be to spend a few years billing other people about $244 million and saying you were buying and feeding 265,000 cows with it, but then actually doing other stuff with it, like covering maybe $200 million of live cattle futures trading losses at the CME and also buying a plane. This is a bit like the other ways, but without the cows.
Anyway, here is the US Department of Justice on October 5: “A cattle rancher in Washington was sentenced yesterday to 11 years in prison for defrauding Tyson Foods Inc. 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.”
Milking it
It’s not clear how this was ever going to end well for Cody Easterday of Mesa, Washington, the cattle rancher in question. You might think it would be easy to check that everyone you have paid for cows is actually delivering them to you, but it’s not as straightforward as all that when you are dealing with so many. But it still seems likely that at some point Tyson Foods, which lost $233 million through the fraud, would have rumbled the scheme. And in an internal audit in 2020, it did.
Chief district judge Stanley Bastian, sentencing, said that the case was “the biggest theft or fraud I’ve seen in my career – and the biggest I ever hope to see”.
Along the way, Easterday had also defrauded the CME, according to the Department of Justice statement, by submitting false paperwork that exempted his firm, Easterday Ranches, from certain position limits in live cattle futures contracts. He racked up his CME losses through trading between 2011 and 2020, according to court documents.
Easterday pleaded guilty in March 2021. His companies – which by that time comprised an empire of more than 22,000 acres, 150 employees, an aeroplane and annual revenues of more than $250 million – collapsed into one of the largest bankruptcy cases in Eastern Washington history. Some 18 months of liquidation saw Tyson and the other company get back about $65 million.
“The scale and brazenness of Mr Easterday’s fraud is immense,” said assistant US attorney Brian Donovan, who handled the restitution and bankruptcy proceedings on behalf of the government. “The amount he stole – nearly a quarter of a billion dollars – would have funded the combined police, courts, and fire department budget of Yakima [about 100 miles away], which is a city of nearly 100,000 people, for more than four years.”
