After Cody Easterday graduated high school, he borrowed money for his first combine. All he wanted to do was farm, his attorney said.
Following the footsteps of his father and grandfather, Easterday, 49, and his family of Mesa then built an agricultural empire that included farming more than 20,000 acres, feeding thousands of cattle and several other spin-off businesses that marketed everything about the rural life.
That American success story has spiraled into a quagmire of legal troubles, bankruptcies and now a criminal conviction. Easterday pleaded guilty Wednesday to a single count of wire fraud and faces up to 20 years in federal prison.
“For years, Cody Easterday perpetrated a fraud scheme on a massive scale, increasing the cost of producing food for American families,” Acting Assistant Attorney General Nicholas L. McQuaid said in a news release. “The criminal division’s prosecutors are committed to swiftly and thoroughly prosecuting frauds affecting our nation’s agricultural and other commodities markets, whether in the heartland or on Wall Street.”
His defense attorney, Carl Oreskovich of Spokane, said that as part of his business dealings, Easterday started trading on the commodities market as a hedge against losses inherent with the up-and-down cycle of agriculture markets.
“He did that successfully for a lot of years,” Oreskovich said. “But he became addicted, like a gambling addiction, to commodities trading and engaged in some very large transactions of millions of dollars, and lost money.”
Like many problem gamblers, Easterday believed he could trade his way back into profits, Oreskovich said. But his losses grew.
“Unfortunately, he covered his market losses and engaged in some false billing practices,” Oreskovich said, “all with the thought that he would make it all back and pay everyone.”
But that hope unraveled last November when officials from Tyson Foods Inc., a company that Easterday had contracted with to purchase and feed cattle, became aware that they had been billed for up to 200,000 cattle that didn’t exist.
Federal investigators watched as Easterday admitted to millions of dollars of alleged fraud to Tyson officials and quietly began probing. It ended Wednesday with the announced guilty plea instead of the usual process of seeking an indictment by using a grand jury.
According to court records, Easterday defrauded Tyson of more than $244 million by charging them for the purchase and feeding costs for hundreds of thousands of cattle that existed only on paper.
The same ghost-herd scenario has spawned lawsuits and bankruptcies by Easterday Ranches Inc. and Easterday Farms, which sold much of the feed used by Easterday Ranches to raise cattle to slaughter weight.
The scheme started in 2016 and operated until Tyson officials discovered discrepancies while discussing its business arrangement earlier this year, according to court records.
Easterday, who is scheduled to be sentenced on Aug.4, faces a maximum of 20 years in prison, but likely will see much less prison time based on federal sentencing guidelines. He has also promised to pay $244 million in restitution, Oreskovich said.
“Everything your hear about Cody Easterday is that he is a very generous, kind and loyal person that is fair in his business dealings,” Oreskovich said. “I think what it shows is just how vulnerable anybody can be to the power of addiciton.”
But the federal officials noted that regardless of how Easterday came to make his decisions, they have real-world consequences for his business partners and rural communities.
“Today’s guilty plea holds the defendant responsible for his extensive and coordinated fraud over many years, resulting in more than $240 million of illicit gains,” said Inspector General Jay N. Lerner of the Federal Deposit Insurance Corp.
As part of the scheme, federal prosecutors also said Easterday defrauded CME Group Inc., which operated the world’s largest financial derivatives exchange.
“On two separate occasions, Easterday submitted falsified paperwork to the CME that resulted in the CME exempting Easterday Ranches from otherwise-applicable position limits in live cattle futures contracts,” according to the news release.
Joseph Harrington, acting U.S. attorney for the Eastern District of Washington, also praised the various federal agencies involved in the case that secured Easterday’s guilty plea.
“I commend the agents,” Harrington said in the statement, “for their dedication to investigating this case and tenacity in ferreting out the fraudulent activity to which the defendant has pleaded guilty.”
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