LINCOLN, Neb. (DTN) -- The Commodity Futures Trading Corp.'s lawsuit against former eastern Washington rancher Cody Allen Easterday was stayed in a federal court, pending the outcome of his ongoing bankruptcy case.
Easterday pleaded guilty to defrauding Tyson Foods and another unnamed company $244 million in costs for buying and feeding hundreds of thousands of cattle that didn't exist.
Easterday already has been granted a stay in his criminal sentencing by the U.S. District Court for the District of Eastern Washington, to June 13. Easterday could face up to 20 years in prison. The court granted a stay on Feb. 15 to the earlier of May 10, 2022, or the effective date of Easterday's final Chapter 11 bankruptcy plan.
The CFTC sued Easterday on March 31, 2021, alleging the rancher committed commodities fraud, made false statements to a registered entity, and exceeded exchange-set position limits.
As part of a consent order from the court in December, Easterday is not only required to make restitution to Tyson but was ordered to pay a $30 million civil penalty.
The CFTC's complaint stated Easterday amassed more than $200 million in losses during a 10-year period, trading cattle futures on both his personal and business accounts. Easterday then admitted last fall he had caused Easterday Ranches to submit invoices for cattle that never existed to cover millions of dollars of those trading losses.
The CFTC complaint seeks restitution, civil penalties, and permanent trading and registration bans on Easterday.
On several occasions, according to the CFTC complaint, Easterday carried positions in live cattle futures that exceeded CME exchange-set position limits and "materially overstated" cattle inventory, purchases and sales.
Easterday operated Easterday Ranches and Easterday Farms, an extensive family farm operation in eastern Washington involved in cattle feeding as well as 22,500 acres of potatoes, onions, corn and wheat in the Columbia Basin.
Beginning in 2016 and continuing through November 2020, Easterday, Mesa, Washington, submitted false and fraudulent invoices and other information to Tyson and another company, according to court documents and the U.S. Department of Justice.
The Easterday Ranches Inc. owner received reimbursement from the companies for the purported purchase and growing cattle the company never actually bought.
In June, a company connected to the Church of Jesus Christ Latter-day Saints submitted a winning $209 million bid for the Easterday assets, according to court documents filed in federal bankruptcy court. The second-highest bidder was an investment company tied to Microsoft founder Bill Gates.
After the Tyson lawsuit was filed, Easterday Ranches filed for Chapter 11 bankruptcy protection on Feb. 1, 2021.
According to the filing in the U.S. Bankruptcy Court for the District of Eastern Washington, Easterday lists liabilities and assets of $100 million to $500 million. The company said it has between 200 and 999 creditors, with Tyson Fresh Meats listed as the top creditor at $225 million.
Easterday Farms -- started in 1958 by Cody Easterday's grandparents -- also filed for Chapter 11 bankruptcy protection that same week. Easterday Ranches filed with the court last week seeking approval to sell 22,500 acres of land.
In addition, Easterday purchased a troubled dairy in Morrow County, Oregon, in 2019, housing more than 28,000 cows. The 7,228-acre dairy is not part of the bankruptcy.
Todd Neeley can be reached at email@example.com
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