Thursday, August 11 2022

After more than a year of negotiationsthe Easterday bankruptcy settlement is nearing completion for dozens of businesses that are owed money.

At a recent hearing, attorneys and Federal Bankruptcy Court Judge Whitman Holt in Yakima discussed the latest on a proposed claims schedule for 65 companies with claims ranging from $300 to $4 million.

In total, the claims total $10.76 million and represent the majority of the debts of the Easterday Farms side of the lawsuit.

The Easterday Ranches portion is still ongoing and includes more than $260 million in claims from Tyson Foods and segale properties.

A former Easterday Ranches North Lot cattle feedlot on Blanton Road near Eltopia in rural Franklin County.

Up to this point Rabo Agrofinance he’s the only one holding out, as he tries to get more than $1 million owed on home loans.

Attorneys for many of the other firms reported that their clients voted and approved the tentative settlement amounts, most with more than 90% voter approval.

Judge Holt said that while Rabo could “throw a grenade” over the settlement, it’s probably not the best course of action. Instead, language was added in a recent filing that will allow Rabo to preserve his claim while the other companies settle.

The Easterday companies had defaulted on loans made by Rabo for several of his properties in Franklin County.

The Basin City property has now been sold as part of the liquidation process, and Karen Easterday will retain ownership of the Pasco onion shed.

The Easterday Farms fresh onion facility on North 1st Avenue in downtown Pasco.

The Easterday Farms fresh onion facility on North 1st Avenue in downtown Pasco.

Judge Holt said he was pleasantly surprised by the speed of the proceedings, noting that he has seen similar-sized cases take years to resolve.

“A common trope is that a bankruptcy case is like a giant iceberg and the judge only sees what is above the water. Assuming that’s true, I’ve seen quite a bit of the tip of the iceberg, and I can only imagine what you’ve been dealing with throughout the entire underwater case,” he said. “If this case is closed by the end of the year, or early next year, it will be way ahead of many cases that have been filed (recently).”

He also praised the companies and their legal advisors for their willingness to work together to find a solution.

In addition to Rabo’s claim, Tyson still has a $261 million allowed claim and Segale has one for $7.8 million.

‘Ghost cattle’ scam

Tyson’s claim stems from a “ghost cattlescheme perpetuated by Easterday’s president, Cody Easterday, in which he charged the company for caring for more than 200,000 head of cattle that did not exist.

Cody Easterday pleaded guilty to wire fraud charges and will be sentenced in September, or once the bankruptcy case is resolved. His sentence has been moved several times. to allow you to cooperate in the lawsuit. He faces up to 20 years in prison.

Segale’s claim stems from a loan to buy thousands of head of cattle.

The settlement also means that other members of the Easterday family would not be prosecuted for failing to act to stop Cody Easterday’s “ghost cattle” scam if they knew about it.

Cody Easterday of Easterday Ranches and Farms is shown in this file photo in his old feedlot south of Kennewick.

Cody Easterday of Easterday Ranches and Farms is shown in this file photo in his old feedlot south of Kennewick.

Easterday’s mother, Karen Easterday, has been representing the family in legal proceedings after the death of her husband, Gale Easterday. He was killed in a head-on crash in December 2020 when he was driving the wrong way on Interstate 182 in Pasco.

The settlement would also see the debtors agree not to file any documents, enter statements or appear in court in connection with Cody Easterday’s sentencing, pending Justice Department approval of the stipulation.

Tyson and Segale are not required to waive their direct claims against Cody Easterday, but all other family members will be released from liability contingent on fulfilling their end of the settlement, which includes the sale of some personal property and the payment of the agreement to retain another property rather than sell it.

Sale of equipment, real estate and other assets have generated about $250 million toward the debt, according to court documents.

Most of that comes from the sale of 18,000 acres of land to AgriNorthwest, which is part of the investment arm of The Church of Jesus Christ of Latter-day Saints.

Notable settlements

In total, there are 65 claimants who have approved the provisional settlement for a total of almost $10.76 million.

The settlements range from $310 owed to Newhouse Manufacturing to $4 million owed to The McGregor Company.

Some of the more notable or local claims include:

  • John Deere Financial – $2.3 million

  • Finance DLL – $1.35 million

  • Core Machinery Sales – $740,000

  • Labor Plus Solutions – $455,000

  • Cornado Garza Trucks – $187,000

  • Lad Irrigation Company – $61,000

  • Pasco Lynx – $59,500

  • Basin City Auto Parts – $24,000

  • Benton PUD – $23,000

  • Connell Oil Inc. – $2,700

non-existent livestock

Over a four-year period, Easterday was charging Tyson for caring for nonexistent livestock at its Franklin County operation.

According to his plea agreement, of the nearly 300,000 head of cattle he claimed in an inventory report, some 266,000 did not actually exist.

For example, an invoice sent to Tyson showed that Easterday had purchased 1,568 new head of cattle and asked for a payment of about $1.5 million. Another claimed 6,312 head of nonexistent cattle, for which Easterday’s company received $5.3 million from Tyson.

Easterday also received some $11 million from the second company, now identified as Segale, for the purchase and care of thousands of nonexistent cattle.

Easterday Ranches was supposed to have repaid those funds with 4% interest.

Prosecutors said Easterday embarked on this scheme to cover losses from a decade of speculative trading in the cattle futures markets using both his own and the company’s money.

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