CFTC Files Charges Against Easterday

BT Feedlot Feed Truck
BT Feedlot Feed Truck

Cody Easterday, the Washington state rancher who pleaded guilty to defrauding Tyson Foods of more than $244 million late last month, faces new charges from the Commodity Futures Trading Commission (CFTC).

Easterday Ranches Inc., and Cody Easterday were named in a civil enforcement action by the CFTC in federal court charging them with engaging in fraud for the sale of more than 200,000 non-existent cattle to a beef processor, making false statements to an exchange, and violating exchange-set position limits.

The CFTC complaint seeks restitution, civil monetary penalties, permanent trading and registration bans against Easterday, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.

“The Commission will vigorously prosecute fraud committed in connection with derivatives trading, including making false statements to exchanges to exceed the applicable limits on their positions,” CFTC Acting Director of Enforcement Vincent McGonagle said in a press release.

The CFTC complaint states that Easterday accumulated more than $200 million in losses over a 10-year period from speculative trading in the cattle futures markets. To meet margin calls, Easterday devised a scheme to defraud Tyson, one of his biggest business partners, the complaint alleges.

The complaint also alleges that Easterday caused Easterday Ranches to report false or misleading information concerning its cattle inventory, purchases, and sales to the Chicago Mercantile Exchange in at least two hedge exemption applications seeking permission to exceed the exchange’s position limits.

Easterday allegedly made the false statements to the exchange in 2017 and 2018 to avoid disciplinary actions and scrutiny when Easterday Ranches exceeded exchange-based position limits in the live cattle and feeder cattle futures markets. Because they were based on false or misleading information, the hedge exemptions were invalid. As a result, Easterday Ranches violated exchange-set position limit violations on at least two occasions, the CFTC said.

 

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