Today, Explained - Where’s the beef?

Episode Date: July 7, 2023

A rancher in the Pacific Northwest scammed two companies out of $244 million. In this episode we first served in February, KUOW’s Anna King — host of the Ghost Herd podcast — explains how Cody Easterday went from ranching royalty to prison. This episode was produced by Hady Mawajdeh, edited by Amina Al-Sadi, fact-checked by Laura Bullard, engineered by Paul Robert Mounsey, and hosted by Sean Rameswaram. Transcript at vox.com/todayexplained Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

Reporter Anna King got a call. One of my farm sources told me, Anna, you gotta look at this. You gotta look at it now. I was kind of freaked out. I hadn't heard from this guy in a couple years. We meet in the parking lot. We're in the headlights. He's on the hood of the car. He's going through these documents and showing me what's going on. And it was the start of the battle between Easterday and Tyson.

Cody Easterday was a wildly successful cattle rancher. Tyson Foods was his biggest client. I discovered that Cody Easterday had stolen $244 million from Tyson and another company, and that he had used fake invoices to do that. Coming up on today explained the story of a ghost herd, how a cattle rancher in the Pacific Northwest made up a bunch of cows and in doing so,

scammed more than $200 million from his clients and what his story says about modern American farming. BetMGM, authorized gaming partner of the NBA, has your back all season long. From tip-off to the final buzzer, you're always taken care of with a sportsbook born in Vegas. That's a feeling you can only get with BetMGM. And no matter your team, your favorite player, or your style, there's something every NBA fan will love about BetMGM. Download the app today and discover why BetMGM is your basketball home for the season.

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If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Today explained Sean Ramos-Furham, and I'm going to kick the show off with a confession. Daily news shows need to take time off too. But when we do, we try to bring you the best of what we do. And that's why Anna King is here. I'm Anna King. I'm a correspondent. I work for Northwest Public Broadcasting and KUOW, and I'm the host and creator of Ghost Herd. Ghost Herd is a podcast that is centered on the case of a major cattle swindle, one of the biggest swindles in U.S.

history. What's a cattle swindle? Since biblical times, there have been cattle stealing. Even in Exodus, they write about this problem of stealing cattle and oxen. And so, as the West is old, also there have been cattle wrestling cases, and people used to run cattle up into canyons and have shootouts all over cattle, which basically equal money. Cattle are money. And so a cowboy, basically a rancher, stole 265,000 cattle from Tyson Fresh Meats and another company in Washington state. But this one happened on paper. So it was a modern day cattle rustling, a modern day swindle. And this particular swindle involves some 265,000 cows being stolen from Tyson Foods. Could I give you one note, Sean?

I'm sorry, but like, okay, just for you to sound awesome to rural people as well. Please, anytime. Yes. Just say 265,000 head of cattle instead of cows, because these aren't cows. Cows are female and they're steers. And so, like, we want to use the right vernacular. That way you'll sound like you, your ace. I love it. I love it. I will do it. So what I'm getting from you, Anna, is 265,000 head of cattle were stolen from Tyson, but they were only stolen on paper. I want to hear that story. Where does it begin?

So it begins with basically this cowboy, this rancher, who is a 51-year-old guy. And when he was a young man, he helped his father start up farming in a bigger way. I think there was no fear in him and he just went for the gusto and he understood everything. He knew just what had to happen and he did it. They went from hundreds of acres of farming to thousands of acres of farming. And they went from not much cattle at all to tens of thousands of cattle. And it was just massive the way that they grew. I don't like using the word empire, but they had a really big, really nice operation going.

There's no two ways about it. They went from several employees to hundreds of employees for their ranch and farming operation. They had fleets of trucks. They had fleets of tractors. They had a private jet and an airplane hangar at the airport. Wow. I mean, the expanse of their operation, they farmed and ranched over three different states. And what happened is at the end of all this, he basically got caught stealing a lot of money

from Tyson Fresh Meats and this other company on the order of more than $200 million. Cody was a bit of a, you know, Icarus, you know, flew too close to the sun. I think he got... Some of the sources that I interviewed during the course of my research over the past couple of years have told me that, like, Cody's a genius, that he's a handshake guy, that he was both socially sharp, but he was also numbers sharp, that he could do spreadsheets like a mofo. He always struck me as a very solid individual. He was not misleading. He was not arrogant, very trustworthy in any kind of the dealings I'd ever had. And so I think he used all those skills, both in his real business, but also when he started to go sideways and he started to steal.

I want to hear where exactly this goes sideways and how we end up with, you know, a massive cattle theft. But I guess you'll need to tell us how the business of cattle ranching works to begin with. Yeah. So, cattle ranching these days starts in a field of sagebrush with a baby calf born in the spring. They're hot and they're steaming fresh when they come out of their mom and they drop on the cold earth. The ground is usually frozen when these calves are born in February and March. And then their mom licks them dry, and then they grow there on a small range or in an area with their parents for a while

until they're big enough to be separated from their mothers, weaned off, and then they're sent to a feedlot. And a feedlot is a large operation that concentrates cattle and feeds them grain and high-energy food so that they can grow at the quickest rate possible so they can then be slaughtered. So what happens is Cody intersected this at the point where they are brought onto the feedlot and he would bring these small cattle on and he would get a payment from Tyson Fresh Meats for taking these cattle on. Then he got more money for feeding them. So, the Tyson fresh meat would like pay for the alfalfa, for the corn, for the soy that he would feed these cattle in these high concentrated rations. Then when they're all fed and they're all grown up and they're ready for slaughter, then those cattle are weighed out on trucks, on trailers,

and then the operator, in this case Cody Easterday, would be paid a check minus the amount for the feed and minus the amount for the original purchase of the cattle. And this is good business for Cody Easterday. It's great business if the cattle prices are high. Some years the cattle prices aren't high, but most years, like if you're doing a good business, and he had such a scale of business that if the cattle prices were good,

then he would earn a lot of money. Did he have some tough years in there? He had some tough years. And then to make matters worse, he was gambling basically on the futures market. So the futures market is kind of like the stock market, but it's often used in commodities and foods. And so what happens is there's a lag. There's a lag of time between when you plant corn and you harvest corn. And when you have a calf and that calf is

slaughtered as a full grown animal. So in that lag time, a lot can happen with the prices. And so to hedge that bet, to say, okay, I'm going to sell my corn at this price, you buy what's called a position on the market. And that position then kind of insulates you from possible ups and downs on the market. If you're doing it right, you don't earn a lot of money on the futures market, but you also don't lose a lot of money on the futures market, which is really important if you're a farmer trying to navigate this worldwide system of commodities. How does Cody do on the futures market? Cody does terrible. Cody made so many bets on the market and he lost so much money that it's just astounding. I mean, it would have leveled most people just one year of his losses,

but he had more than a dozen years of losses. 2011, $14 million loss. 2012, $17 million loss. 2013, $10 million. 2014, $20 million loss. In 2015, he gained $7 million, but then he lost again. 2016, $6 million. 2017, $18 million. 2018, $59 million, 2019, $30 million, and finally in 2020, $34 million. Holy smokes. It's not that easy to win, and it's really not that easy to that that frequently either at what point while he's incurring these tens of millions of dollars in losses on the futures market does the business go sideways or is it there's a big beef backup. There's like a tide of beef across the whole country that's backing up and can't get through the kill plants. And that's because everybody was coming down with COVID that were workers inside these plants,

and they couldn't process the beef. I remember this story. We covered this story. So, Tyson starts looking at its books a lot more closely, and it starts to realize, uh-oh, we've got a huge amount of beef backing up in Pasco, Washington. And an issue here that Tyson was worried about is that cattle are like a crop, and they're ready at a specific time to be slaughtered. And so, if you don't slaughter them at the right time, they keep on growing. And when they keep on growing, they can get too large for the saws and equipment inside of a beef plant. So then when they sent a guy out there from headquarters, he looked around the pens and he was trying to find all these

cattle and he's like, where are these other cattle? And then they started flying drones. And then pretty quickly, Cody confessed to the executives of Tyson that they had never existed. They were mythic beasts. The claims that the ranch was feeding and caring for 200,000 head of cattle for Tyson that never existed. So it started to unravel really quickly after that, Tyson had to tell its shareholders that it was missing a large amount of cattle. I think it's pretty non-controversial to say that at some point the people in Tyson that were monitoring this didn't do an adequate job monitoring. It was basically an accounting scam that he had stolen this money out from under Tyson and another company

and that he was finally being held to account. And what later happened is that the Department of Justice caught Cody on wire fraud. And Cody is now sitting at Lumpuk Penitentiary. We are back with Anna King in just a minute on Today Explained. Support for Today Explained comes from Ramp. Ramp is the corporate card and spend management software designed to help you save time and put money back in your pocket. Ramp says they give finance teams unprecedented control and insight into company spend. With Ramp, you're able to issue cards to every employee with limits and restrictions and automate expense reporting

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creator and host of the Ghost Herd podcast. Anna, this is a quarter billion dollar cattle swindle. Does stuff like this happen on the regular out there, or is this a rare event? Well, I mean, I think that cattle rustling still happens across the West. You'd be surprised, but there are whole factions of armed sheriffs that go after cattle wrestlers across this country. It's especially big in Texas, Oklahoma, Oregon. But this kind of scale, I mean, this is kind of like the Enron of the cattle business. Which is to say, to your knowledge, we've never had a cattle swindle bigger than Cody Easterdays? It's one of the largest. I think that you have

to account for inflation and crazy times back in the day. But for our knowledge, this is one of the largest cattle swindles in history in the U.S. How did people respond to the scale of this scam when they found out? You know, I think neighbors were just sick. What did you think when you first heard about Cody's deal, just in general, just like as an observer? Unbelievable. It's the only word I got. for years, including myself. I used to call Cody up as a young reporter for the Tri-City Herald when I was a gumshoe reporter trying to turn out ag reports, and I used to call him. And,

you know, it's just like the Easterday name out here is like golden. It's like everybody knows it. You can't throw a rope without hitting an Easterday in the ag business out here is like golden. It's like everybody knows it. You can't throw a rope without hitting an Easter day in the ag business out here. You know, you ask, you know, if I knew anything about, you know, any, you know, history of suspicious behavior in their business dealings. It's like, no, not at all. I think they were widely and just widely considered to be exceptional farmers. What is your sense of what can drive a cattle rancher to risking everything, a multimillion dollar business, an empire? You said he was operating in three states and had a house in Florida and in Idaho, risking it all.

I mean, there's a saying called all hat, no cattle. It kind of means a guy with swag, you know, kind of has more swag or better clothes than maybe his business is doing. And I think that's what Cody, Cody convinced everybody to believe in him. It's just like, maybe he got so big that he just didn't want to fail, and that drove him to not fail by stealing or something like that. I can't really get into his head. I don't really know exactly why, but it was a big burden to bear, and it started unraveling his family, even through his wife's own writings in the court documents. What does this story have to say about agricultural work more broadly in America right now, Anna? So a large theme of this work that we did is discovering the value of dirt. Huh.

The value of the soil under our feet. And we have to realize that all of this land that we are profiting off of and living on is stolen land to begin with. But after you get past that and the indigenous cultures that have suffered because of our government policies and colonization, you get to the point where you're saying your grandpa's farm is not what's going on anymore. There are no 80 and 100 acre farms that are profitable in Washington and Oregon right now. There might be some left, but they're getting larger at an accelerating clip. And what we're seeing is huge money being dropped in from outside of agriculture into ag lands. And so ag lands are churning over. They're just chewing through the real estate out here. People from California

are fleeing. They don't have water. So they're fleeing up into the Northwest to start farming up here. It's just an immense pressure on the real estate. And farmers are becoming renters. More and more land is owned by fewer and fewer people. And so all of your meat is coming from like five companies. And so just a handful are controlling everything that we eat and they monopolize the prices. Food stability is huge, Sean. Like we have the war in Ukraine and the wheat that has grown in the Ukraine, and you realize how tenuous things are when just one war can like shift the entire world supply of wheat. And then you look at climate change and the intense climate outfall that we're seeing, the fires in the Northwest and the droughts and the record temperature summers that we're seeing. And you realize that all of this land, the value of dirt

is going to keep going up because what are you going to need to do in the future? You're going to need to eat and you're going to need clean water. And farming and the lands around here in the Columbia Basin do those two things. And that's why billionaires are seeing the writing on the wall, and they're basically just doubling down on their investment into good agricultural lands with clean, fresh water rights. It's so clear that Cody Easterday is the loser in this story. He was all hat, no cattle, and now he's in jail. Who's the winner? It's not Tyson for sure, but I think the winner in this deal is the people that bought the land that came out of this travesty, this sad story, the Church of Jesus Christ of Latter-day Saints. Huh.

What are they going to do with the land? Well, they're going to grow massive amounts of crops. They're one of the largest farmers in America. They own massive swaths of Florida. Wow. They own massive swaths of farm ground up here. They have fleets of white trucks that roll around up here and farm. They're unmarked white trucks, but you know who owns them. And they grow massive potatoes, onions, any kind of crop you can think of.

They walked away with a prime piece of Columbia ground. I was there on the gravel road that leads by this farm. Sean, it's gorgeous. You look out and you see a huge bend of the Columbia River sparkling in the distance. And hills drop away from you, these massive hills with pivot lines. Pivot lines look like dragonflies on the landscape. They're crouched over the crops and they have sprinklers that go all the way across the landscape. And I was sitting there on a summer day looking across there, hawks flying off of the power poles there.

I mean, it's gorgeous land, and they walked away with it, and it will only increase in value as our food, our security, climate change goes on. And I hope by thy good pleasure Anna King, she's the host of the Ghost Heard podcast from Northwest Public Broadcasting and KUOW. Shout-outs to our listeners on KUOW. Ghost Heard is a six-part series. Listen to the podcast wherever you listen. We used a bit of their music in the show today.

We also used some from the Mormon Tabernacle Choir. Blessings to everyone involved. Our program today was produced by Hadi Mawagdi, edited by Amina Alsadi, fact-checked by Laura Bullard, and mixed by Paul Robert Mounsey. I'm Sean Ramos-Furham, and this is Today Explained. explained. is precious love.