PASCO, WA – Cody Easterday, co-owner and former president of Easterday Ranches, Inc., is facing civil charges of fraud, false reporting, and violating exchange-set position limits, the Commodity Futures Trading Commission (CFTC) announced today. The charges stem from a decade-long scheme involving fictitious cattle and false claims to a major beef processor.
The CFTC filed the enforcement action in the United States District Court for the Eastern District of Washington. The complaint alleges that Easterday accumulated over $200 million in losses through speculative trading in cattle futures markets. To cover these losses and meet margin calls, Easterday allegedly orchestrated a fraud against a South Dakota-based beef producer.
From October 2016 through November 2020, Easterday Ranches submitted fraudulent invoices and reimbursement requests for more than 200,000 head of cattle that were never purchased or raised, according to the complaint. This deception resulted in the producer paying Easterday Ranches over $233 million in undeserved funds.
The CFTC further alleges that Easterday falsified information regarding cattle inventory, purchases, and sales in applications to the Chicago Mercantile Exchange. These false statements, made in 2017 and 2018, were intended to secure hedge exemptions allowing Easterday Ranches to exceed established position limits in live and feeder cattle futures markets. The exemptions, based on the fraudulent data, were deemed invalid, resulting in violations of exchange-set position limits on at least two occasions.
The CFTC is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, and permanent trading and registration bans against Cody Easterday. They are also pursuing a permanent injunction against further violations of the Commodity Exchange Act and related regulations.
Acting Director of Enforcement Vincent McGonagle stated the CFTC will “vigorously prosecute fraud committed in connection with derivatives trading, including making false statements to exchanges.”
The case is being handled by Ben Sedrish, Ashley J. Burden, Joseph Patrick, Yusuf Capar, Allison V. Passman, Scott Williamson, and Robert Howell of the CFTC’s Division of Enforcement.
Source: CFTC.gov
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