Ghost-Cattle Scheme Spawns Another Lawsuit
Rabo AgriFinance says loans it made to the Easterday family in Washington state are in default, and the international finance and banking company has filed suit in federal court seeking foreclosure on Easterday properties.
The lawsuit is the latest in a string of legal issues that began to unravel in late December when Tyson Fresh Meats announced it was correcting financial results with the Securities and Exchange Commission for its beef segment for fiscal years 2017 through 2020. Tyson’s corrections were necessary after it discovered “misappropriation of company funds” by one of its beef suppliers.
That supplier, court documents revealed in January, was Cody Easterday, Mesa, Washington, who pleaded guilty in federal court to defrauding Tyson Foods Inc. and another company out of more than $244 million by charging them for the costs of buying and feeding as many as 200,000 cattle that did not exist.
The ghost-herd scheme has now led to several lawsuits and bankruptcies by Easterday Ranches Inc. and Easterday Farms.
“The loan is in default and has not been paid,” Rabo AgriFinance said in its April 21 filing for breach of the loan agreement. The complaint further states that Easterday Farms could not be included as a defendant in this civil action because of a stay in place since Easterday Farms filed a voluntary bankruptcy petition on Feb. 8. Easterday Ranches had filed for bankruptcy just one week earlier.
A federal bankruptcy judge consolidated the two bankruptcy proceedings “for procedural purposes,” noting it was simpler to administer them together.
In their separate bankruptcy filings, both Easterday Farms and Easterday Ranches each claimed assets of between $100 million and $500 million dollars, as well as liabilities between $100 million and $500 million.
However, those bankruptcy filings by the Easterday conglomerate “was a separate and independent default” under the loan agreement, Rabo AgriFinance said in its filing.
The Rabo AgriFinance lawsuit names 3E Properties, along with Karen Esterday, Debby and Cody Easterday and Jody Easterday. Karen, Debby and Cody Easterday all are general partners of Easterday Farms, and Jody Easterday and husband Andrew H. Wills have interest in the mortgaged properties, the suit says.
Rabo AgriFinance supplied a nearly $1 million line-of-credit to Easterday’s large onion and potato packing and storage facilities in Pasco and Basin City, WA. Court records show the loan accumulated $58,000 in unpaid interest on the contract and the default within two months. And in the three months since, it has continued to accrue interest of about $580 daily at a 21% rate.
In the Tyson case, Cody Easterday, 49, pleaded guilty to one count of wire fraud and agreed to pay $244,031,132 in restitution, according to a U.S. Department of Justice statement. Tyson spokesman Gary Michelson said in January that Easterday “…admitted to the scheme and acknowledged the fraud was initiated to cover extensive commodities trading losses he had experienced.”
Easterday is scheduled to be sentenced on August 4 and faces a maximum penalty of 20 years in prison but likely will see much less prison time based on federal sentencing guidelines.
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