Part 4: The Crash

Cody's swindle comes crashing down, and it’s all thanks to Covid. When a giant meat operation discovers the truth about his ghost herd, they take aim at Cody.

It started as an American success story. The Easterday family took a couple hundred acres of farmland in southeast Washington and grew it into a farming and ranching empire worth millions. Then, it all came crashing down.

Ghost Herd tells the story of Cody Easterday, the man at the center of one of the largest cattle swindles in U.S. history. Easterday invented a “ghost herd” of 265,000 cattle that only existed on paper … and swindled companies including an agriculture giant to the tune of $244 million dollars. Correspondent Anna King has spent two years following the fallout of the crime and its impact on a tight-knit rural community.

Ghost Herd is a story of family and fraud, but also a story about the value of dirt and the shifting powers in the American West.

Listen to all episodes of Ghost Herd, and see behind-the-scenes extras at GhostHerd.org. Or search for Ghost Herd in your podcast app.

Ghost Herd is a joint production of KUOW Puget Sound Public Radio and Northwest Public Broadcasting, both members of the NPR Network.

Episode 4: The Crash

Transcript:

<< EDITOR'S NOTE: Heads up to listeners this story mentions suicide several times. >>

Covid News: the coronavirus is forcing meat companies that feed our country to close processing plants. Nearly 750 employees are infected

Anna King narration: When COVID first hit the county, it caused chaos in our supply chain across the country and the world.

Covid News: Coronavirus cases in Iowa's Black Hawk county have doubled in recent days to 356. And public health officials say 90% trace back to employees at this Tyson meat packing plant.

Anna King narration: People still wanted chicken and beef. So many kill plants across the nation didn't tap the brakes. And that had some big consequences.

Covid News: CBS news has confirmed COVID cases in at least 17 meat processing plants in 10 states.

Anna King narration: I experienced this story first hand. I was there. I reported on the Tyson facility in Walulla outside of Pasco. At the time, many people were staying home -- but meat cutters kept packing their lunch, and heading in.

The Tyson plant at Wallula is massive. Industrial stacks rise up from the building puffing out white clouds. Huge pens with horseback cowboys riding herd, are out back. And twin flag poles -- one with a blue Tyson flag, and another with an American flag flap right out front. About 14-hundred people work here, speaking nearly a dozen languages.

And in May of 2020, some 280 workers at this Tyson plant tested positive. The plant ground to a halt. The health department organized mass vaccine events. And families say several people from the plant even died of COVID.

Delays like this are a big problem for these meat packing plants. Usually, everything works on set schedule. When a calf is born, it's owners know around the date it will be killed for meat. It's that precise. Cattle on feedlots across the Northwest are delivered to the Tyson plant like clockwork.

Alan Schreiber: It was designed to send cattle, as many as 365 days a year into that Tyson plant to be turned into, among other things, Wendy's hamburgers

Anna King narration: Cattle on a feedlot are fed a special ration each day so they will grow fast. It's called "days on feed." But with the delays at the meat facilities, the delivery of animals was backing up. That's a problem. If the cattle are kept on feed for too long, they will become too big. And if they're too big they won't fit the meat plant's saws and equipment.

So, Tyson was scrambling to keep their employees COVID-free and get the plants up and operating again.

Covid News: Tyson says workplaces will be retrofitted with partitions and thermometers.

Anna King narration: Like much of the country, Tyson was in crisis mode. Those at the top had to figure out what to do with all the beef destined for this now shut-down plant. Tyson started to examine more closely the number of cattle it had waiting around. And they noticed a cowpie of a disaster at Cody Easterday's Ranch.

This is Ghost Herd. I'm Anna King.

In the fall of 2020, Covid forced Tyson to look at their inventory closer.

Tyson executives looked into how many cattle were on the books for Cody Easterday's ranch. They found more than 300-million dollars of cattle there.

That's more than they had ever had there. It was bigger than they expected. Tyson's officials started to get suspicious.

Tyson sent a top cattle buyer out to Washington state to check on it. Where were these cattle actually located?

That executive went out to find them ... and couldn't.

Even with COVID backing things up, there were far too many animals on Tyson's books. And far too few in actual pens.

On the evening of Monday, November 30, the man on the ground in Pasco, called back to Tyson's headquarters. He even called an exec right at home.

It was around this time I started hearing rumors. Tyson was missing some beef.

I remember getting several text messages from different farmers and people in agribuisness that were my sources.

Everyone wanted to know who could have pulled off a fraud this big. One ranch stood out in Washington state. One ranch made up 2 percent of Tyson's total beef program across the entire nation.

Easterday Ranches was on everyone's lips.

I was trying to figure it all out. So, I called and texted the head of the Washington Cattle Feeders Association. He refused to talk.

Meanwhile, in early December behind closed doors, Tyson executives and Cody are also trying to figure it all out.

Eric Reubel: You and I both know the facts that one day Cody Easterday picked up the phone called Tyson and said, you know, I admit to certain activities.

Anna King narration: This is Eric Reubel. He's an expert on the Easterday case. And we'll hear more from him later in this episode.

Turns out, right after Tyson visited his ranch and later called to question him -- Cody confessed. He had scammed Tyson and another company out of $244 million dollars. But according to Tyson, Cody only admitted owing the company. He told them he was merely doing some, quote, "forward billing."

The Easterdays and Tyson were in sort of a marriage. They went hand in glove. Tyson wanted a steady supply of beef and Easterday supplied that. It's just that Cody also had a secret. And now, relations were fraying.

Trust was gone. Tyson officials flew drones to count the cattle that were actually on Cody's ranch. They couldn't find hundreds of thousands of animals that they'd already paid for.

As Tyson was unraveling it all, Cody showed them how he meticulously kept track of the cattle that Tyson had paid for -- both those that existed and those that did not.

Tyson officials even asked Cody what he'd done with all the money. He explained that he'd quote "pissed it away on the Merc," referring to his gambling problems on the Chicago Mercantile Exchange.

But Tyson wasn't the only difficult confession Cody had to make.

One night, Cody came home and told his wife Debby what he'd been up to.

We don't know exactly how it went down between the couple, but in court documents, she says:

"Anger does not explain what I felt that night."

But she put her own feelings aside to comfort her husband who had confessed his "most terrible secret." She says that night and the following days were "heart wrenching."

Cody also had to tell his boys. Debby had asked Cody to tell them himself. She wanted them to see their dad vulnerable and heartbroken, without her as the crutch.

After telling his family, Cody gets on a plane to South Dakota to Tyson corporate headquarters.

Tyson and Cody are negotiating a plan to pay the meat-giant back. The plan: he'd still feed cattle but apply any profits to the debts he owed for the previous fraud.

Cody and Tyson were sort of in couple's counseling.

They were coming towards an agreement on how Cody could set things right with the meat giant.

Tyson only talked to us once on background. The company turned down multiple requests for an on-the-record interview.

While Cody was trying to get sorted with Tyson, he had one more confession left. He had to tell his father, Gale Easterday.

Debby says Gale was Cody's very best friend, business partner and role model.

But whether he ever got the chance to come clean to his father, is unclear.

On the way home from the meeting with Tyson in the airport, Cody got word that tragedy had struck.

911: State patrol 9 1 1. What's the location of your emergency? Uh, highway I-82, milepost 13

Anna King narration: Cody's father, Gale, died.

911: There is a semi truck blocking the westbound lane after he hit, uh, what looked to be two pickup trucks in that, on that side, over there

Anna King narration: Gale was the patriarch of the Easterday clan. And a legend in the community -- known for his always-crunched-on weathered cowboy hat.

And tragically, the semi truck that Gale crashed into ... was an a semi truck hauling Easterday potatoes. The family's steer-head brand was painted on the side of the door. Farmer Alan Schreiber told me the crash was just unimaginable.

Alan Schreiber: The, the coincidence, the, the irony, twist of fate, I don't know what you call it, but there's no two ways that you can know about that story and, and not have it be wrenching

Anna King narration: A post on the Easterday company Facebook page memorizes Gale. It says that he had two loves ... farming and family.

People in the community that I spoke to, wondered if Gale knew about the fraud.

If Gale had recently found out about what Cody had been up to, perhaps he was distracted while driving.

Alan Schreiber: When I get upset, my mind starts going a million mi.. And I start thinking about stuff. And I don't think clearly

Anna King narration: Some folks wonder if Gale's crash wasn't accidental. That he might have taken his own life. But Ben Casper, Gale's tire guy, doesn't agree. He told me he once chatted with Gale several years back over lunch at the Frontier Inn. It was soon after another prominent business man in the community had taken his own life.

Ben Casper: And he said, you know, anytime I start feeling like that, I just go to the store and get myself a couple of six packs and then I don't have that problem. I just think that he, I, I don't think that's the way he dealt with problems. I don't think he would've ended it like that.

Anna King narration: But perhaps there is a third explanation for what happened with Gale. The cowboy was 79 years old. And the family states in court documents that Gale's health was suffering, that he had Parkinsons. And the intersection where it happened is a tricky one. Alan Schreiber knows the spot well.

Alan Schreiber: It's not a good intersection. You're supposed to go under the interpass and turn left to go this way. He turned left just before the underpass and went on the on-ramp.

Anna King narration: So maybe the crash was just a tragic coincidence.

According to Cody's wife Debby, Gale never knew about the fraud. Cody never got the chance to confess to his father before the accident.

She says, "It's a gut punch that will remain. Cody never got the chance to tell his dad, this will haunt him forever."

And in the midst of grief, Cody is still trying to hammer out a deal with Tyson. But it turns out, Cody's going to mess with Tyson one more time.

Break

Anna King narration: One of the most important properties the Easterdays owned, is called the "North Lot." It was where they kept the real cattle -- not fake. The on-the-hoof animals bound for Tyson's blades.

The North Lot was 960 acres -- that's about 30 city blocks or -- big enough to be permitted for 30-thousand cattle.

Alan Schreiber: the single biggest source of beef going to the largest meatpacking facility in the Pacific Northwest

Anna King narration: A valuable piece of property. An unencumbered piece of ground. No lean. And really attractive to Tyson. They had to have a place to grow their beef for their processing plant.

But Cody had a different idea. On January 22, 2021, Cody pulled the rug out from under Tyson.

Alan Schreiber: And so in kind of the dead of night, they sold the north feed lot for 16 million dollars to Tyson's competitor

Anna King narration: There would be no deal. Cody sold the valuable property to a giant meat-slicin' competitor called AB Livestock out of Boise, Idaho. It was one of the first public signs that the relationship had soured between Tyson and the Easterdays.

Alan Schreiber: That's a big deal. I mean, we've never seen anything like that. No one's seen anything like this happen in this country of, a ag fraud case like this.

Anna King narration: The Easterday strategy was to sell the property fast. According to court documents, Tyson didn't learn about the sale until after the deal had already closed. Tyson was upset because they claimed that Cody sold the property for below market value.

Tyson was hotter than a red-iron just pulled from the fire. The company got a judge to issue a restraining order against Cody and Easterday Ranches. He couldn't sell or transfer any other land or assets.

But Cody already had all that money from selling off the North Lot out from under Tyson. He immediately dispursed it to those close to him.

According to court documents, about $5 million went to Easterday Farms, and a sibling of Cody's, for owed feed costs. About $2 million went to Easterday Farms for feed that had not yet been invoiced. Nearly another $5 million went to a loan on Easterday Farms. And more than a million went to Cody's lawyers. Cody was using the sale to pay back those close to him, Tyson said.

Just a few days later, Tyson sues Cody. A direct hit back -- for the North Lot sale.

And this is where the close marriage between beef supplier and beef cutter slices open. Tyson was demanding repayment for the stolen money.

This lawsuit was a bombshell. No one was expecting such a large scale fraud. And the Easterdays were just so well respected in our community.

I'd known Cody for more than a decade. We used to talk alfalfa and cattle when I was a young ag reporter for the Tri-City Herald. Cody and I were never friends -- we weren't barbecuing burgers in the backyard. But, I've known him as a pillar in the community.

As an ag reporter, you couldn't help but slam into the Easterday name all the time. So I was shocked when I found out he was accused of lying in a big way. But there it was in black and white in the legal documents.

I published my first Easterday story on Jan. 27th, 2021. That's the week Tyson filed a lawsuit in Franklin County Superior Court. After my story about the Tyson lawsuit against Cody published, my phone just blew up. Texts, calls.

Ben Casper: When this hit two, two years ago with Gale and Cody, I could not sleep for, I don't know, weeks I, I got sick.

Anna King narration: The downfall of the Easterdays hit many people in the community hard.

Stacy Kniveton: I was just disbelief,

Olivia Grassl: makes you sad

Stacy Kniveton: don't condone it. But at the same time, you're just, you feel bad.

Darryl Olsen: When I heard it, I thought , I don't see Cody doing something that would've been considered a criminal action I just thought this has got to be an accounting error

Anna King narration: but it wasn't an accounting error. Cody did do this. In fact, in the spring of 2021, on March 31st, he pleads guilty to a federal charge of wire fraud. He could be facing up to 20 years in prison. And he has to pay back $244-million-31-thousand-and-132-dollars.

So Cody's in a lot of trouble. And he knows it. He declares bankruptcy in federal court.

Bankruptcy puts the pause on all pending litigation. This gives time to see what's good in the business and what is bad and needs to be cut out. So when Cody declared bankruptcy it gave him time to rehabilitate his business, even with Tyson sharpening knives. But this particular bankruptcy had an extra twist:

Eric Reubel: and, you know, owing to the fraud and, and the, the, the expediency, there was little time, there was no time for any preparation by the bankruptcy. So the debtors filed for bankruptcy in what, what we would call a free fall.

Anna King narration: This is Eric Reubel again. He is with a group called Dundon Advisers and worked on the Easterday bankruptcy case representing the Farm's unsecured creditors.

This idea of a free fall bankruptcy Eric mentioned is unusual. Most of the time a bankruptcy can be seen coming. The owners and creditors know the business is struggling. It isn't a surprise things are going south. A free fall bankruptcy is opposite. Things are super chaotic.

And that was a big problem when you have thousands of hungry cattle used to a regular feeding time.

Eric Reubel: the ranch had the potential for a great, a great tragedy. You know, I mean, one of the biggest risks in livestock cattle operations is the maintenance of, of cattle in a humane kind of way.

Anna King narration: There were still more than 70-thousand head of real cattle on Cody's feedlots. And they had several more months left to mature.

Eric Reubel: ready to go to, you know, where cows go, t, uh, to the slaughterhouse, I guess.

Anna King narration: All the Easterday's assets for both their Farms and Ranches were locked up by the bankruptcy. So there was no ready money for feed. The cattle on Cody's lot were in danger of starving.

Eric says there have been bankruptcy cases in the past where animals experienced abuse and maltreatment.

Everyone involved in the Easterday case wanted to avoid that tragedy.

Plus, cattle are valuable. They're like a living bank account -- as long as you keep them fed and healthy, they'll eventually pay when they're ready.

So there was Tyson's profits just lazing there, tails swishing. The land the cattle were standing on was sold out from under their cloven hooves.

The judge and the lawyers scrambled to get a deal with the feed companies. If these companies kept up deliveries, they'd get paid.

So, some cattle were moved. While, the more mature cattle were taken care of on enemy ground. And when they were ready for slaughter, they were shipped in batches to the Tyson plant.

Andrea Coles Bejerre: I mean, the way the patriarch of the family kind of built up this enterprise that started as a family business and continued as a family business um, it was kind of a beautiful culmination of a lifetime of effort.

Anna King narration: This is Andrea Coles-Bjerre. She's an expert on corporate bankruptcy at the University of Oregon's School of Law in Eugene. She says no one really wins totally in bankruptcy. But the goal is for everyone owed money to get something.

Andrea Coles Bejerre: Maybe the most successful bankruptcies are ones where no one wins, . Um, that's sort of the goal of bankruptcy is not to have anyone walk away from bankruptcy, feeling like. Yeah, I've got all the marbles. Um, but to have everyone feel a little bit, share the pain, everyone to have a little bit, everyone to get a haircut a little bit, um, so that everyone could come out with something rather than one or two people coming out with everything.

Anna King narration: The shared pain of this bankruptcy hit the Columbia Basin farming community in the chops.

Alan Schreiber: it took a, uh, really well respected family name and drug it through the mud. And it has a significant economic impact on this community. And it's, it's just, it's all too bad. It's terrible. It's it's saddening.

Anna King narration: Alan Schreiber tells me dozens of people that worked for Cody lost their jobs. Alan personally knows one of those former employees.

Alan Schreiber: She worked there for 20 some years and doesn't have a paycheck now. She's we'll say a little older and she thought she was gonna, she gonna retire rather than to go back out and start over again in a new job.

Anna King narration: In total, Alan believes that the Easterday operation shutting down is going to cost the Columbia Basin community tens of millions of dollars.

Andrea Coles-Bjerre says this entire Easterday saga is like a Shakespearean tragedy.

Andrea Coles Bejerre: it's sort of, uh, an empire that grew and, and then collapsed. And maybe through some tragic flaw of, of the main player.

Anna King narration: For his part, Eric Reubel sees this whole Easterday bankruptcy as cinematic.

Eric Reubel: this is a great American tragedy to, to some degree, you know, it, it has all the elements of a very, and it's classically American.

It's a great American success story that ends, that is crippled by greed

Anna King narration: it wasn't just a bankruptcy that split up bank accounts, sold off fleets of trucks and tractors -- the biggest part of the bankruptcy was the sale of 22,000 acres of farmland. It's a swath of intensly valuable dirt. The heart of Cody's farming empire.

That former empire is outside of Finley, Washington.

When you drive up to what's now called Riverbend Farm, there's a place where the pavement ends. And the gravel starts.

It's where hawks glide off power poles that reach out across a long ridgeline. In the distance, the Columbia River glints. The low afternoon light reflects off irrigation pivots pouring on the water to tall-as-my-head corn.

Megan Farmer, my photographer, flies a drone from a county road over this acreage just before sunset. From the 400-foot view this land is beautiful -- expanses of green corn in tight rows. Irrigation pouring on. And these 22,000 acres of valuable farmland show us what the future of farming in America will look like.

Long black shadows hug the landscape where we stand. It makes me appear much taller than I actually am. It's quiet here.

It belies a coming battle between two ag giants.

It's a battle over this land. And it's a battle over that blue ribbon of fresh Columbia River water rolling past here.

That's next time on Ghost Herd. I'm Anna King.

Credits

Anna King narration: Ghost Herd is a joint production of KUOW Puget Sound Public Radio and Northwest Public Broadcasting, both members of the NPR Network, a coalition of public media podcast makers. To support our work, contribute to KUOW, NWPB or your local NPR station … and tell a friend or two about this podcast. It helps.

Ghost Herd is produced by Matt Martin, and me, Anna King. Whitney Henry-Lester is our project manager.

Jim Gates is our editor.

Fact Checking by Lauren Vespoli

Cultural edit by Jiselle Halfmoon

Our logo artwork is designed by Heather Willoughby.

Original music written and performed by James Dean Kindle

Recorded by Addison Schulberg

With additional musicians Roger Conley, Andy Steel and Adam Lange

I'm your host Anna King.

If you have thoughts or questions about Ghost Herd, we’re listening. Get in touch at KUOW.org/feedback