A Washington state rancher pleaded guilty to defrauding Tyson Foods and another company out of $244 million in costs associated with cattle that didn't exist.
According to court records, Cody Easterday, 49, of Mesa, submitted false invoices and other information to Tyson and an unnamed "company 1" that sought reimbursement for the cost of buying and raising hundreds of thousands of cattle "that did not actually exist."
For more than four years the companies overpaid Easterday for his services, and he used the proceeds for his own personal benefit and to cover millions of dollars in losses incurred by his company Easterday Ranches Inc., court documents said.
The scheme increased the cost of producing food on a large scale, said Acting Assistant Attorney General Nicholas McQuaid of the Justice Department's Criminal Division.
McQuaid said in a written statement that his prosecutors are committed to prosecuting frauds affecting "our nation's agricultural and other commodities markets, whether in the heartland or on Wall Street."
Easterday pleaded guilty on Wednesday to one count of wire fraud and agreed to repay $244,031,132.
He is scheduled to be sentenced on August 4 and faces a maximum penalty of 20 years in prison.
Easterday began submitting false and fraudulent invoices in 2016 and continued doing this through November 2020 to cover losses and other personal and business costs. This resulted in the companies paying more than $240 million to Easterday for cattle that did not exist.
Part of Easterday's proceeds were used to cover $200 million in commodity futures contracts trading losses, according to the U.S. Department of Justice. In connection with that, the rancher also defrauded the CME Group Inc., the world's largest financial derivatives exchange, by falsifying paperwork related to live cattle futures contracts.
Tyson first notified shareholders about the scheme in late December, saying that it had misappropriated $285 million and was working to get the money back through an internal investigation.
A month later, subsidiary Tyson Fresh Meats sued Easterday Ranches to prevent it from prematurely selling a valuable feedlot.
Earlier this year, Tyson spokesman Gary Mickelson said the company was working with an outside auditor to implement financial controls to help detect or prevent fraudulent activity from happening in the future.
Tyson provided no comment on Easterday's plea.
Tyson shares rose 57 cents, or less than 1%, to close Thursday at $74.87 on the New York Stock Exchange.