Tyson Foods says it is owed $225 million from cattle supplier
by February 3, 2021 2:58 pm 1,429 views
Tyson Foods says it is owed at least $225 million from Easterday Ranches after the feedlot operator allegedly falsified records and said it fed more than 200,000 non-existent cattle from 2017 through 2020. Tyson Foods said it discovered the billing improprieties in December.
Tyson Foods sued Pasco, Wash.-based Easterday Ranches last month claiming it was billed beginning in 2016 for the feeding of more than 200,000 head of cattle that did not exist. Tyson reported to shareholders a “misappropriation of company funds” by one of its suppliers in late December with an 8-K filing with the U.S. Security and Exchange Commission.
At that time, Tyson did an internal review of Easterday Ranches’ account with the assistance of outside advisors. Tyson estimated in December Easterday’s fraud created an overstatement of $285 million in the value of Tyson’s live cattle inventory at year-end. Tyson said Easterday represented about 2% of the cattle supplied to its beef segment between 2017 and 2020.
Tyson also said it had reevaluated its internal financial controls, through which they identified a weakness in how the company previously confirmed the physical existence of live cattle inventory. Tyson also said it would pursue restitution for losses to date.
Tyson Foods filed suit last week in Franklin County Superior Court against Easterday Ranches claiming the supplier defrauded the company through falsifying records and charging for services not provided. Tyson also asks for a third-party to run the Easterday operations during this legal battle as it had 54,000 cattle on Easterday feedlots that were not yet ready for market.
Easterday Ranches filed this week for Chapter 11 Bankruptcy protection and Tyson Foods is listed as one of the largest creditors in the federal filing being owed an estimated $238 million.
Tyson Foods said the Easterday president admitted to the scheme and acknowledged the fraud was initiated to cover intensive commodities trading losses. Tyson reiterated to Talk Business & Politics it is working to recoup the losses and implement financial controls to help prevent or detect this type of activity.
The Washington Department of Agriculture also launched an investigation into how 200,000 cows might have slipped through the inspection process. Easterday records are being audited by the state and the fraud allegations are being dubbed as a “modern-day cattle rustling scheme.”