Shane Miller

Tyson Fresh Meats provided details Friday to back claims that Cody Easterday piled on another layer of deceit by selling his cattle feedlot for $16 million to competitor Agri Beef after defrauding Tyson.

Easterday told Tyson last December he could sign over the North Lot cattle operation in Pasco, Wash., to begin making amends for billing Tyson for cattle he never delivered, according to documents filed in the U.S. Bankruptcy Court for Eastern Washington.

Tyson said it was blind-sided a month later by Easterday selling the lot to Agri Beef, which also has a processing plant nearby. Tyson said it never had a chance to top Agri Beef’s offer.

A lawyer for bankrupt Easterday Ranches told a judge Aug. 18 that Tyson offered only $10 million. Tyson calls the claim “a ruse.”

“Tyson never offered to purchase the North Lot for $10 million,” the company states.

Cody Easterday is due to be sentenced for fraud Oct. 5 and has agreed to repay Tyson $233 million and another company an additional $11 million.

Tyson is asking a bankruptcy Judge Whitman Holt in Yakima to give it standing to challenge the sale to Agri Beef, which closed a week before Easterday filed for bankruptcy on the family’s remaining farms.

Tyson calls the $16 million paid by Agri Beef “woefully inadequate” and a fraud on creditors.

Pachulski Stang Ziehl & Jones, the Los Angeles law firm heading up the bankruptcy, defends the sale to Agri Beef.

A firm lawyer, Alan Kornfeld, told Holt that Tyson submitted a “soft” $10 million offer last year.

Tyson fired back in the new court filings. Tyson actually expected Easterday to sign over the feedlot once the fraud was uncovered.

“During our meeting last week you told us you could transfer the North Lot and the ER cattle brands as a first step to reimbursing Tyson,” Shane Miller, Tyson’s group president of fresh meats, said in a Dec. 12 email to Easterday.

Miller told Easterday the company was using $10 million as a “place holder” in the transfer agreement to indicate the value of the land for tax purposes. Later in the month, the value was revised downward to $2.9 million based on an appraisal.

By cutting out Tyson, Easterday Ranches “was free to dissipate well over 80% of the sale proceeds to insiders, affiliates and professionals,” according to Tyson.

Some $11.7 million went to Easterday Farms and the English Hay Co., both owned by Easterday family members.

Pachulski Stang Ziehl & Jones, which represented Cody Easterday before he filed for bankruptcy, collected a $600,000 fee, while Easterday’s financial adviser, Paladin Management Group, got $625,604. Paladin partners are involved in the Chapter 11 bankruptcy proceedings.

The law firm and management group have “apparent conflicts” in reconsidering the sale to Agri Beef, according to Tyson.

The parties are scheduled to be back before the judge on Wednesday. Easterday Ranches lawyers are demanding Tyson provide a wide range of documents related to its claims. Tyson says the demands are unjustified.