PASCO, Wash. — Tyson Foods is suing an Eastern Washington beef supplier for allegedly defrauding the company out of more than $225 million by falsifying records and submitting faked invoices for more than 200,000 cattle that, in fact, did not exist.
The lawsuit was filed on Monday, Jan. 25, in Franklin County Superior Court, and accuses Easterday Ranches, based in Pasco, Washington, of perpetrating the scheme over a period of several years.
Easterday Ranches is part of the larger Easterday farming operation, which also grows 25,000 acres of potatoes, onions, grain and forage in the Columbia Basin.
The lawsuit maintains that in meetings with Tyson Cody Easterday, the farm’s president, admitted to the fraud, which it says he constructed in order to offset more than $200 million in losses incurred in the commodities trading markets.
Easterday did not immediately respond to messages for comment.
“Over the last several years, Defendant (Easterday) has 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,” the lawsuit states.
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 employs buyers in beef-producing areas who visit independent feed yards and public auctions to buy animals for its processing plants — including 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.”
While Easterday Ranches initially cooperated with Tyson on the investigation, the lawsuit alleges that, on Jan. 22, the farm announced intentions to sell its “North Lot” feedlot within the next few days and dissipate the proceedings — possibly to insiders and affiliates of Cody Easterday.
Mickelson said Tyson is asking for a court-appointed receiver to take control of Easterday Ranches until the situation is resolved.
Notwithstanding the falsified records, Tyson claims it has approximately 54,000 real cattle still located 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.”
The lawsuit asks for either an injunction or receiver to take control of Easterday Ranches to prevent any potential sale of the North Lot, which Tyson states would “have a material negative impact on (Easterday’s) creditors.”
Meanwhile, a draft permit for Easterday Farms to redevelop the former Lost Valley Farms dairy near Boardman, with 28,300 cattle, remains under state review.
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 involving Easterday Ranches.
“At this time the Easterday (dairy) draft permit is still under review,” Cantu-Schomas said. “The state continues to conduct due diligence.”