Tyson sues cattle feeder

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Dave

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Tyson Fresh Meats has filed a lawsuit in an attempt to recover losses from alleged false cattle sales and feed costs by a Washington cattle feeder. The suit was filed in Franklin County Superior Court in Pasco, WA.

Claiming losses of more than $225 million, Tyson is suing Easterday Ranches for recovery of assets and has asked for a court-appointed receiver to take control of Easterday Ranches. Court documents include a request for the current Easterday Ranches staff to turn over everything from keys to financial documents. Court documents also show Cody Easterday, president of Easterday Ranches, admitted to creating the scheme to make up more than $200 million in losses incurred in the commodities trading markets.

In late December, Tyson filed corrected financial results with the Securities and Exchange Commission for its beef segments for fiscal years 2017 through 2020. The report to the SEC – in Form 8-K – specified that Tyson was reporting "misappropriation of company funds" by one of its beef suppliers. The suit filed this week is the first time Easterday Ranches has been named.

"In an effort to ensure the orderly recovery of assets in the aftermath of a fraudulent scheme by Easterday Ranches, Tyson Fresh Meats is asking for a court-appointed receiver to take control of Easterday Ranches," Tyson spokesman Gary Mickelson told Drovers in an email.

"During a recent company-led investigation, we learned Easterday falsified documents to obtain reimbursement by Tyson of more than $200 million in connection with some 200,000 cattle that did not exist. The president of Easterday Ranches admitted to the scheme and acknowledged the fraud was initiated to cover extensive commodities trading losses he had experienced," Mickelson said.

The Easterday family's livestock and farming operations includes, according to the company's website, "more than 18,000 acres of potatoes, onions, corn and wheat. The grain products are used to feed cattle in the Easterday Ranches feedlots." The feedlots have a capacity of about 70,000 head.

In a statement issued in December when it filed the 8-K, Tyson said an internal investigation with assistance of outside advisors, found "no evidence that the company benefitted from the supplier's unlawful conduct or that anyone at the company took steps to alter financial statements to hide transactions resulting from the supplier's unlawful acts."

In the statement to Drovers, Mickelson said, "We are also working with our outside auditor to implement additional financial controls to help prevent or detect this type of activity in the future."

Tyson operates six beef packing plants in the U.S., including one in Pasco, WA, that has a daily slaughter capacity of 2,300 head.
 
I know or have met some of the people involved. Including ones who most likely deeply involved. This has hit the cattle feeding industry in the PNW like a bomb. I would like to know how Tyson gets 200,000 head behind at an operation with 70,000 head capacity. Obviously they need someone who checks up on things. Also if Tyson owns the cattle and is paying to have them fed, that sounds to me like captive supply which is supposed to be illegal. I would think that people will be unemployed and some should be going to prison. The mighty will fall.
 
Be nice to know how much the Easterdays are worth and if they can repay the $200 million. Was this a family operation with one member losing money or was everyone in on it.
 
The commodities markets have made a lot of companies fall.
Unless you walk and count, could any of us really tell the difference between 70k and 100k hd of cattle from sitting in a car or office?

It says that it was for 2017-2020. That's over two full turns for a feed lot.

This kind of stuff happens a lot. Just not on this volume.
 
Be nice to know how much the Easterdays are worth and if they can repay the $200 million. Was this a family operation with one member losing money or was everyone in on it.
It is a family operation. The old man was pretty sharp and he put together a lot. But he was killed in a car wreck a year or more ago. They have 25,000 acres of farm ground which if worth $8,000 an acre is $200 million. But how much of that ground is packing a mortgage? I do know that Cody spent a ton of money getting that feedlot built. Both the construction and legal battles doing it. He also bought a huge mega dairy (30,000 cows) that was having a lot of issues just in the last year or so. That place had to be a huge financial drain.
The head buyer for Easterday's was sit at the sales in October buying everything that walk into the ring. Then suddenly he was missing. I haven't seen him in months. There have been rumors of something going on between Tyson and Easterday floating around for a couple months.
 
The reason I ask is things are not always as they seem. I know people that borrow a million dollars on cattle have a couple thousand acres and seem to be "Rich". The reality is the net worth is zero. I also know people that have the same but are actually making it work and doing really well.
I read were they bought the dairy and needed to dump 15 million on it to get it back in operation. Their cattle feedlot deal sounds allot like chicken or hog houses to me. I've been saying the market is headed that way for several years now.
Hopefully they can straighten things out and keep moving. It sounds like Tyson had an idea of what was happening but needed him to work it out.
 
What I have heard and my one time hearing Cody speak. I got the impression that he was a high roller with a pretty high opinion of himself. One does have to ask why did he step out and buy that dairy which was already in deep deep trouble with the bank and the state regulators and dump that kind of money into it when he was already fraudulently taking Tyson's money?
His old man made them rich in the potato business. But Cody wasn't comfortable sitting back and watching that money roll in. He wanted to be big time in the cattle feeding business and then branch off into the dairy business with a huge dairy that was already in trouble at a time when dairies are going broke all over the place.
My bet is when the smoke clears he will be close to living off food stamps.
 
I've never heard of any of the people involved but this is an interesting story. I read where he tried to sell his most valuable feed lot and hide the money. Sounds like he just got too deep and lost control of things. Like I said earlier hope it works out for them.
 
The commodities markets have made a lot of companies fall.
Unless you walk and count, could any of us really tell the difference between 70k and 100k hd of cattle from sitting in a car or office?

It says that it was for 2017-2020. That's over two full turns for a feed lot.

This kind of stuff happens a lot. Just not on this volume.
I know same as zero about the feedlot business, but at that volume surely the packer has a system of checks. My neighbors own an implement dealership and there's a company man visits every month to audit what's on the lot. Granted that's not 70,000 pieces but if your job was to audit steers in a feedlot you'd get pretty dang good at it.
 
I know same as zero about the feedlot business, but at that volume surely the packer has a system of checks. My neighbors own an implement dealership and there's a company man visits every month to audit what's on the lot. Granted that's not 70,000 pieces but if your job was to audit steers in a feedlot you'd get pretty dang good at it.
I know a guy who retains ownership on about 400 calves. They are not fed at an Easterday feedlot but it is in the same neighborhood. He says that about once a month unannounced he shows up at the feedlot to look at and count his calves. Not all 70,000 would belong to Tyson but someone should have been in charge of inventory. I would bet someone is in charge of that now.
 
There's a local family here that own a feed mill, egg houses, bull development farm, raise brangus and I believe feed cattle also. They once owned several feed stores and sold fertilizer. They sold all of the stores except the one at the mill and no longer sell fertilizer. It's a second generation deal and the second generation built the egg houses with a lean on everything else, initially had a contract with Wal-Mart but lost it so they've been playing catch up ever since. I was told by a good source that they are on a cash only basis with all suppliers now due to owing them too much money which is why they no longer offer fertilizer. I thought their story sounded similar to the family with the feedlot, first generation built a thriving business and second got greedy and put it all in hock to try to make more money but in the end both will probably lose it all. It's a shame.
 
I know same as zero about the feedlot business, but at that volume surely the packer has a system of checks. My neighbors own an implement dealership and there's a company man visits every month to audit what's on the lot. Granted that's not 70,000 pieces but if your job was to audit steers in a feedlot you'd get pretty dang good at it.
I'm sure there is more to it than the article says.
More than likely who ever was in charge of inventory is involved. I'd guess it's been going on longer than they think. In a 70k hd feed lot it would not be hard to have a semi load "die" and end up in someone else's bank account. That quickly turns into "we got away with it once, I bet we can do 2 loads next time"
Ten years ago the local sale barn and a local feed lot that they used got caught kiting checks to the tune of $400,000 at a time. At the same time 900Hd of cattle vanished over night from that feed lot. Including $425,000 worth. That belonged to someone else.

I think it was 2019. Two brothers from Wisconsin were murdered when they unexpectedly showed up to a custom feed lot that was feeding cattle for them. The feed lot manager had sold the brothers cattle in his name.
 
There's a local family here that own a feed mill, egg houses, bull development farm, raise brangus and I believe feed cattle also. They once owned several feed stores and sold fertilizer. They sold all of the stores except the one at the mill and no longer sell fertilizer. It's a second generation deal and the second generation built the egg houses with a lean on everything else, initially had a contract with Wal-Mart but lost it so they've been playing catch up ever since. I was told by a good source that they are on a cash only basis with all suppliers now due to owing them too much money which is why they no longer offer fertilizer. I thought their story sounded similar to the family with the feedlot, first generation built a thriving business and second got greedy and put it all in hock to try to make more money but in the end both will probably lose it all. It's a shame.
It's them same with Midwest row crop mega farmers. The first generation builds it, the second generation enjoys it, and the third generation pi$$es it away.
 
When talking about multi generational businesses you have to look at what needs to happen to keep them that way. I have a business and a small cattle operation, we have one grown son. He could join in but both of us would need to agree to live on less ( not going to happen). He has 4 kids so in order to keep it a 2nd or third generation family business we would need to have the vision to expand with the growing family. With expansion comes risk. These risk are going to be greater than the risk the first family took. I'm not defending the guy but that's just the facts. It's really easy to sit back and say the kids threw it away but unless you know the whole story you don't know what truly went on.
 
When talking about multi generational businesses you have to look at what needs to happen to keep them that way. I have a business and a small cattle operation, we have one grown son. He could join in but both of us would need to agree to live on less ( not going to happen). He has 4 kids so in order to keep it a 2nd or third generation family business we would need to have the vision to expand with the growing family. With expansion comes risk. These risk are going to be greater than the risk the first family took. I'm not defending the guy but that's just the facts. It's really easy to sit back and say the kids threw it away but unless you know the whole story you don't know what truly went on.
The Easterday family had plenty for several generations to come. I believe (not positive) there is just Cody and a brother. I have heard that Cody bought cattle for his kids and that they are tied up because of this deal also.
 
And the plot thickens. Agri Beef already has 3 other feedlots in that area and Washington Beef in Toppenish isn't that far away. Interested side development. Looks like Easterday knew the hammer was about to fall and was trying to sell off assets before the courts did it for him.

While Tyson Fresh Meats lawyers were filing a lawsuit on Monday (Jan. 25) against one of the packer's largest cattle suppliers in Washington state, the ink was still drying on the sale of one of that supplier's feedlots to one of Tyson's competitors.

Easterday Ranches, Inc., has sold its "North Lot" in Franklin County, WA, to AB Livestock of Boise, Idaho, according to a report by Northwest News Network, a collaboration of public radio stations that broadcast in Washington, Oregon and Idaho. The sale was completed Jan. 22, 2021.

The 25,000-head feedlot sits on 1,500 acres with adjacent irrigated and dry farmland spanning multiple sections. It sold for $16 million dollars, according to the Franklin County Assessor's Office.

AB Livestock is a division of Agri Beef Co, based in Boise. Agri Beef co-owns Washington Beef, a beef packer based in Toppenish, WA, with a daily slaughter capacity of 1,550 head. Last July, Agri Beef announced it would open a packing plant in Jerome, ID, that will process 500 head per day and operate as True West Beef.

The sale of the Easterday feedlot raises some issues the court will need to sort out, since Tyson has said it still has 54,000 cattle on feed with Easterday Ranches. It is unknown how many of Tyson's cattle are in the North Lot, and how many could still be under Easterday's watch in its other facility, a 35,000-head feedlot located near Kennewick.

In its court filing, Tyson asked for a court-appointed receiver to take control of Easterday Ranches. Court documents include a request for the current Easterday Ranches staff to turn over everything from keys to financial documents.

"We were not aware the sale was completed when we filed our requests with the court, however, the news does not change our position on the need for a court-appointed receiver to take control of the remaining assets of Easterday Ranches," Tyson spokesman Gary Mickelson said in an email.

Agri Beef is known for producing brands including Snake River Farms, Double R Ranch and St. Helens. The company says the acquisition plays a strategic role in its commitment and vision for growth.

"This acquisition provides AB Livestock the opportunity to increase its business with local Northwest suppliers, while reducing reliance on cattle supplies from Canada," said Matt Buyers, President of AB Livestock in a press release. "It also dramatically reduces our overall carbon foot-print as it brings an additional source of fed-cattle supply much nearer to our Washington processing facility."

Tyson filed its lawsuit in an attempt to recover assets "in the aftermath of a fraudulent scheme by Easterday Ranches" in which Tyson said it lost millions.

In a statement earlier this week, Tyson said, "Easterday falsified documents to obtain reimbursement by Tyson of more than $200 million in connection with some 200,000 cattle that did not exist. The president of Easterday Ranches admitted to the scheme and acknowledged the fraud was initiated to cover extensive commodities trading losses he had experienced."

The lawsuit states Easterday "submitted false invoices to Plaintiff (Tyson) for reimbursement, identifying cattle that did not exist; has requested and received reimbursement from Plaintiff for feed that was not in fact purchased; has submitted fictitious inventory records to Plaintiff; and has otherwise schemed to defraud Plaintiff in a way that has caused Plaintiff losses in excess of $225 million."
 
Cat is definitely out of the bag on this deal. Could be big trouble for some people.
 
And now Easterday is claiming chapter 11 bankruptcy. How do they get 1.08 million back on a animal pharmaceutical company?

Easterday Ranches has filed for Chapter 11 protection amid allegations the Eastern Washington cattle supplier bilked Tyson Foods out of $225 million by submitting fake invoices for more than 200,000 cattle that did not exist.

Court documents filed Monday list the 20 largest claims against Easterday Ranches, totaling more than $236 million — including $8.6 million to Segale Properties, a Seattle-based commercial real estate company; $1.08 million to Animal Health International in Sunnyside, Wash.; and tens of thousands of dollars to other local farmers, vets and contractors.

No other claim, however, comes close to the $225 million sought in a lawsuit Tyson Foods filed last week in Franklin County Superior Court.


The meat processing giant accused Easterday Ranches, based in Pasco, of collecting money to buy, raise and feed more than 200,000 cattle that would be supplied to a nearby Tyson beef plant. Except for one thing — the cattle, it was later discovered, weren't real, the company alleges.

Easterday has not responded to messages for comment.

Easterday Ranches is part of the larger Easterday farming operation. The family also grows 25,000 acres of potatoes, onions, grain and forage in the Columbia Basin.

A report in the Spokesman-Review newspaper states the Washington Department of Agriculture will launch a review of the allegations, and how 200,000 nonexistent cattle may have slipped through its inspection process.

The case also casts doubt on plans by Easterday Farms to redevelop the former Lost Valley Farms dairy near Boardman, Ore., with with 28,300 cattle.

In a 2019 interview with the Capital Press, Cody Easterday said the farm plans to invest $15 million in the dairy, including completion of a wastewater treatment system that was never finished under the previous owner.

Lost Valley Farm was shut down in 2018 after racking up more than 200 environmental violations. Opponents are now pushing for a moratorium on so-called "mega-dairies."

Andrea Cantu-Schomas, a spokeswoman for the Oregon Department of Agriculture, said the agency is aware of the lawsuit between Easterday Ranches and Tyson Foods.


For now, ODA continues to review draft permits for the dairy, though Cantu-Schomas said they are in talks with partner agencies, including the Department of Justice, considering recent developments.

"At this time the Easterday (dairy) draft permit is still under review," she said. " The state continues to conduct due diligence."

According to the Tyson lawsuit, farm president Cody Easterday admitted to the scheme, falsifying records and collecting reimbursement from Tyson over a period of several years, which was done to offset more than $200 million in losses incurred in the commodities trading markets.

Tyson Foods is the world's second-largest processor and marketer of chicken, beef and pork. The company does not own or operate feedlots, but has buyers in beef-producing areas who visit independent feed yards and public auctions to buy animals for its processing plants. That includes one near Pasco, which Easterday Ranches supplied.

Tyson entered into a cattle feeding agreement with Easterday Ranches in 2017. In a filing with the U.S. Securities and Exchange Commission, Tyson reported that Easterday provided roughly 2% of the company's beef during the last four fiscal years.

Gary Mickelson, senior director of public relations for Tyson, said the company became aware of fraud during a recent company-led inspection.

"As we disclosed in December, this misappropriation of funds has cost Tyson more than $200 million, which the company is working to recoup," Mickelson said in an emailed statement. "We are also working with our outside auditor to implement additional financial controls to help prevent or detect this type of activity in the future."

Mickelson said Tyson is asking for a court-appointed receiver to take control of Easterday Ranches until the situation is resolved.

Tyson claims it has approximately 54,000 real cattle still on Easterday's feedlots and grow yards.

"Those cattle are of various ages and various weights, most not yet ready for market," the lawsuit states. "Those cattle require continued feeding, maintenance and other care on a daily basis, or their value will quickly and dramatically deteriorate."
 

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