Exclusive | Cody Easterday is now in prison. Why did he file a new suit against Tyson Foods?

More than two months after he was sentenced in the massive “ghost cattle” fraud scheme, Cody Easterday is now in a federal prison.

On Friday, Easterday reported to the Federal Correctional Institute Lompoc in California to begin his 11-year sentence. He will be on probation for three years after that.

But the legal wrangling involving his family’s embattled ranching and farming operations is far from over.

While the bankruptcy case for his family businesses has wrapped up, Easterday is now suing Tyson Foods for breach of contract to avoid paying the rest of the nearly quarter billion he defrauded from the company.

And while Easterday is behind bars, his lawyers are continuing to fight the $244 million in restitution he has been ordered to pay. At the sentencing, U.S. District Court Judge Stanley Bastian ordered him to repay the full amount, but agreed to hear later arguments about offsets.

That’s separate from the Easterday Farms and Ranches bankruptcy case, which recently wrapped up with a settlement schedule of about $11 million. Earlier this month, a final tally for lawyer’s fees was approved for the bankruptcy case, to the tune of $14.75 million.

Only Tyson, Segale Properties and Rabo Agrifinance still had allowable claims. Rabo is holding out for principal and interest owed on a $1 million loan in a separate lawsuit, while the debt to Tyson and Segale are part of Easterday’s criminal restitution order.

Where’s the beef?

Now Easterday is suing Tyson for alleged breach of contract over their “Cody’s Beef” branding deal, which saw Tyson sell premium beef to Nippon Ham in Japan using a marketing campaign centered on Easterday from 2015 to 2020.

The lawsuit was filed on behalf of Cody Easterday, rather than one of the family’s businesses, because his attorneys say the branding deal was struck with him personally.

It’s unclear how much Easterday hopes to gain in the suit, but previous calculations submitted in an argument to reduce restitution in his criminal case would have whittled the amount he owes to just more than what has already been paid, a figure that comes out to less than one-third of the total stolen.

They’re claiming that while Tyson paid for the 65,000 head of cattle involved in the deal, they paid below market value.

Easterday’s lawyers say he’s owed more, based on the premium prices the beef sold for. They claim Tyson refused to share the profits and would not include an accounting of that line of beef during the bankruptcy proceedings.

In the initial complaint during the criminal case, Easterday’s lawyers valued the money owed for the branding deal at $100 million.

It’s unclear how they reached that valuation. They did not provide a value that the cattle was sold to Tyson for or an estimated value of what Tyson then sold to Nippon Ham.

Because cattle prices fluctuate, it is impossible to estimate how much profit Tyson actually made without those figures.

Easterday’s lawyers also previously attempted to fight Tyson over separate cattle feeding fees, but those claims were not included in the new lawsuit.

If all of those offsets were approved, which include payments already made of about $66 million, it would reduce the remaining debt to just $7.5 million.

That means Easterday would have paid back less than 30%, or about $73.5 million of the $244 million he has been ordered to pay.

Tyson has not yet filed a response to the lawsuit.

Bankruptcy wraps

The family’s bankruptcy proceedings have wrapped up, with a tentative settlement agreed on by most debtors. After filing for bankruptcy, the family liquidated its business assets, raising an estimated $250 million.

The largest portion was $209 million for property sold to AgriNorthwest for 18,000 acres. AgriNorthwest is a subsidiary of The Church of Jesus Christ of Latter-day Saints, and already owned property next the Easterday ranch.

The Easterday family agreed to a settlement for most of their smaller creditors totaling $10.76 million to be divided up by 65 businesses, plus the recently approved attorney’s fees totaling about $15 million.

Tyson has an allowable claim of $261 million and Segale has one for $7.8 million, after having received partial payments, totaling about $62.5 million and $3.5 million respectively.

That means the court will allow the companies to continue to pursue payment separately beyond the main bankruptcy settlement that has been reached.

The Easterday Dairy was not included in the bankruptcy case, and the business is still in operation, although it is currently embroiled in lawsuits of its own related to an attempt to bring an Oregon mega-dairy back online.

Why Lompoc?

Cody Easterday is now at FCI Lompoc, a low security prison a few hours north of Los Angeles.

The facility in Santa Barbara County has about 960 prisoners in the FCI portion of the complex. It’s a satellite on the campus of the medium security USP Lompoc, which houses about 2,100 prisoners.

There were repeated delays in Easterday reporting to prison because of negotiations with court officials about which correctional institute would be appropriate.

His initial choice of FCI Sheridan in Oregon was denied because Sheridan is typically used for addiction treatment, according to a court filing.

Easterday was then assigned to FCI Herlong north of Lake Tahoe, on the California side, but his lawyers put in a request for the judge to recommend Lompoc.

At Lompoc, Easterday’s attorneys argued he would have more opportunity to participate in “productive activities” and “evidence based recidivism reduction programs.”

His lawyers say in the filing that these programs would let Easterday earn federal time credits to allow him to transition into a halfway house or home confinement sooner.

They pointed to a farming and livestock program at Lompoc that would be especially suited for him, given his agricultural background.

While it is farther away than Herlong, his lawyers said that the proximity to Los Angeles would allow his family to stay with relatives in Ventura when they visit. Ventura is about an hour and a half away from Lompoc.

The U.S. Attorney’s Office and his probation officer did not oppose the delays, according to the documents filed in federal court.

Cody Easterday took over the family’s Tri-Cities, Wash., based companies in late 2020 after his father and the company’s longtime head, Gale Easterday, died in a wrong-way wreck in Pasco near the company’s offices.

Cody said he stole the money in order to offset more than $200 million in gambling losses on the commodity futures market.