Lawyers for Cody Easterday are asking for leniency in his sentencing of one count of wire fraud, stating he has a “gambling disorder” and has “worked tirelessly” to increase the value of the estate in the bankruptcy proceedings.
The U.S. Department of Justice (DOJ) has recommended Easterday spend between 10-12 years in prison, have three years supervised release and be ordered to repay Tyson Foods Inc. and other victims over $244 million.
In a memorandum filed on Sept. 19 to the U.S. District Court for the Eastern District of Washington, the DOJ said the “sheer magnitude of the fraud that Easterday perpetrated is staggering.” The memorandum details that Easterday, from 2016 until 2020, submitted fraudulent invoices and other information to obtain repayment from Tyson and another company.
It noted an example of a false inventory report sent to Tyson in November 2020, showing Easterday Ranches had purchased 296,535 head on behalf of Tyson. Of that total, 263,780 head were known as “Loc 99,” an internal designation for the “ghost cattle” that had never been purchased or delivered to Easterday Ranches.
Easterday also submitted false invoices and bills of sale from March to September 2020, seeking payment from “Company 1” for ghost cattle totaling over $11 million. In other court documents, “Company 1” is known as Segale Properties in Tukwila, WA.
DOJ noted that Easterday has “taken responsibility” for his actions and commended him for his conduct after admitting to the scheme by maximizing the estate’s value to repay the creditors. The memorandum stated Tyson Foods Inc. has received over $62 million, and “Company 1” has received about $3.4 million from sold properties and other Easterday Farms, Easterday Ranches and family assets.
DOJ continued while Easterday has accepted his responsibility, it does not excuse his four years of dishonesty. Still, it does account for a reduction in the sentencing guidelines from what would have been over 14 years.
Easterday’s attorney, Carl Oreskovich, argued in the defendant’s sentencing memo that Easterday “became more aggressive and speculative in his trading activity” following the decline in health of Gale Easterday—Cody Easterday’s father.
“He became addicted to the gamble of the trade and over an approximate five-year period, sustained approximately two-hundred million dollars ($200,000,000) in losses,” court documents show.
Easterday began submitting false invoices for nonexistent cattle to Tyson Foods to cover the losses from speculating on cattle and other commodity futures.
“Mr. Easterday’s fall from grace stems from high-risk commodities trading. In this vein, Mr. Easterday has been diagnosed with a ‘severe gambling disorder,’” court documents said.
Oreskovich and Easterday’s attorneys documented his addiction with diagnoses from three mental health professionals. All three professionals in court documents stated Easterday had trouble focusing on other things and thought he “could turn things around” when there were positive trades. They recommended Easterday continue counseling.
Oreskovich argued that Easterday was forthcoming in bankruptcy proceedings and “saved $50,000,000 in value versus simply walking away from the operation previously.” Additionally, they said he should be sentenced to three years of probation, including one year of electronic home detention, in part due to him pleading guilty to one count of wire fraud immediately.
“The court should consider Mr. Easterday’s efforts to mitigate the harm, including his voluntary cessation, self-reporting, and diligent efforts to pay restitution and assist in the bankruptcy proceedings. Furthermore, Mr. Easterday has been living his own private punishment as he lives with the knowledge that he has brought shame to himself, his family, destroyed Easterday Ranches and Farms business, and left employees jobless,” court documents said.
DOJ filed an objection on Sept. 26 to Oreskovich’s sentencing memorandum and request for probation and home detention, stating it should be rejected out of hand.
“In seeking such a slap on the wrist, Easterday asks the Court to (i) completely ignore the magnitude of his theft and the (sentencing) guidelines range that results from it, (ii) focus instead on Easterday’s alleged gambling addiction, and (iii) give Easterday out-sized credit for admitting his wrongdoing early and helping with the orderly liquidation of Easterday Ranches and Easterday Farms,” court documents state.
The documents continue that the sentencing guidelines should not be ignored and that Easterday stole more money than what he lost in trading commodities futures contracts. The DOJ states an addiction to gambling does not provide the basis for stealing $45 million more than he lost.
“That extra $45 million at the very least helped continue his lifestyle as the scion of a rich and powerful ranching and farming family in southeast Washington state—and the benefits that went along with it,” the DOJ said.
Tyson restitution dispute
Oreskovich filed documents on Sept. 26 asking the court to continue the restitution portion of the sentencing, stating Tyson Foods Inc. is only owed roughly $7.5 million based on three offsets in the restitution.
Court documents show Easterday Ranches Inc. is owed $11.9 million for feed and cattle services rendered before and after bankruptcy proceedings and claim the amount was not disputed by Tyson. They also say Tyson collected over $51 million in interest and guaranteed funds from Easterday Ranches in violation of the Packers and Stockyards Act of 1921, which prohibits a packer from collecting from the seller of the livestock any compensation in the form of commission, yardage or other service charges.
Lastly, Oreskovich stated Easterday participated in a marketing venture called “Cody’s Beef” in Japan for several years and was not adequately compensated. Under the agreement, Easterday’s face and likeness were used for at least seven years in an agreement with Nippon Group to promote beef from Easterday’s southeast Washington ranching business.
“The beef is cultivated with utmost care by Cody on a ranch in Washington state in the United States,” the advertising text read in court documents. “Making the ranch the main source has enabled delivery of reliable American beef!”
The advertisement continues to say the Tyson Pasco plant, “slows down the line speed more than normal and emphasizes extra care on work rather than production efficiency.”
Oreskovich is asking $100 million for the use of Easterday’s likeness for at least seven years without sharing in the profits or paying for the name and likeness.
Easterday is scheduled to be sentenced on Oct. 4 by U.S. District Judge Stanley Bastian. — Charles Wallace, WLJ editor
