U.S. trustee objects to millions of dollars in fees in Easterday bankruptcy case

Published 4:15 pm Friday, September 23, 2022

YAKIMA, Washington — A Justice Department official has objected to millions of dollars in fees sought by financial advisers and a Los Angeles law firm involved in liquidating Cody Easterday’s farming empire in Eastern Washington.

Assistant U.S. Trustee Gary Dyer claims that Pachulski Stang Ziehl & Jones overbilled for legal services, while B. Riley Advisory Services and Dundon Advisors overcharged for financial advice.

Dyer filed the three objections Thursday, Sept. 22. The three firms are among the professionals who took part in selling Easterday’s assets in the Columbia Basin to pay fraud victims and other creditors.

U.S. Bankruptcy Judge Whitman Holt already has awarded millions of dollars in fees taken out of sale proceeds. Firms are submitting their final bills for the judge’s approval.

A spokeswoman for B. Riley declined to comment. Dundon Advisers and Richard Pachulski, the lead lawyer in the bankruptcy proceedings, did not respond to requests for comment.

Easterday Farms and Easterday Ranches — both owned by Cody Easterday, and his wife and mother — filed for bankruptcy shortly before Cody pleaded guilty last year to wire fraud.

Easterday, 51, stole a total of $244 million from Tyson Fresh Meats and Segale Properties by billing them for cattle he never bought or fed. He will be sentenced Oct. 4. He remained free while helping to sell the two businesses’ assets.

Palchulski’s firm spearheaded the settlement between Tyson, Segale, other creditors and the Easterday family. The firm has been awarded $13 million and seeks another $1.7 million.

Dyer argues the court should withhold about $460,000 for the three months the firm spent finalizing the settlement.

Pachulski represented Easterday Farms and Easterday Ranches, businesses with different assets and creditors, but negotiated a deal favorable to Easterday Ranches, Dyer alleges.

The firm, he wrote, “represented two clients on the opposite side of a negotiation and negotiated a proposal that favored one client to the detriment of its other client.” 

In a filing seeking compensation, the L.A. law firm said it was an honest broker that painstakingly negotiated thorny legal issues and recovered 100% for Easterday Farm’s creditors.

Earlier in the case, Dyer objected to the law firm’s fees. Richard Pachulski’s hourly rate is $1,745, according to court records. Holt rejected Dyer’s complaint, saying Pachulski was well worth the money.

B. Riley Advisory Services of Atlanta and Dundon Advisors of White Plains, N.Y., advised committees that represented creditors. They seek about $1.4 million apiece. 

Members of the firms attended about 30 telephonic court hears. At any one hearing, up to four members from each firm listened in. That was three too many, according to Dyer.

The hourly rates for B. Riley representatives ranged from $435 to $575 an hour. The hourly rates for Dundon’s members ranged from $533 and $715, according to court records.

Considering their hourly rates, each firm should have someone capable of attending and reporting to the others, Dyer stated.

Dyer also claims Dundon hiked its rates mid-case, without notice or “providing any evidence of their extraordinary efforts and results.”

Cody Easterday has pledged to pay restitution. He has repaid Tyson $62.4 million, but still owes about $170 million. He has repaid Segale $3.5 million, but still owes about $7.5 million.

The Justice Department is recommending a prison term between 10 years, one month and 12 years, seven months. Easterday’s attorney is seeking three years of probation.

Easterday was addicted to gambling and resorted to fraud to cover his losses from betting on the future price of commodities, according to the attorney.

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