Oh My Fraud

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Blake Oliver: [00:00:00] If you'd like to earn CPE credit for listening to this episode, visit your mark CPE ABC.com. Download the app. Take a short quiz and get your CPE certificate. Continuing education has never been so easy. And now on to the episode.

Greg Kyte: [00:00:25] This is. Oh, my fraud. Only two things are certain. Death and taxes. This is a true crime podcast where we spend a lot less time on death and a whole lot more time on taxes. I'm Greg Kyte .

Caleb Newquist: [00:00:37] And I'm Caleb Newquist.

Greg Kyte: [00:00:39] So, Caleb, you and I know each other pretty well, but I have to say, I don't know a whole lot about your upbringing, about your your life before you came became accounting famous. Because, like I know I know you're in a big four firm because and you were a you were P, w C or KPMG.

Caleb Newquist: [00:01:02] Kpmg. Mm hmm. Which I'm sure. I'm sure if there's any like high level KPMG people listening, they'll figure out a way to, you know, to disclaim that in some way.

Greg Kyte: [00:01:15] Right. To distance himself from you.

Caleb Newquist: [00:01:17] Yeah, yeah, yeah. But yeah, I was at KPMG. Yeah. Mm hmm.

Greg Kyte: [00:01:21] Okay.

Caleb Newquist: [00:01:22] Big firm and big firm.

Greg Kyte: [00:01:23] And. And you're in New York and you hated it, and you started a blog where you were pissing on accounting, the accounting profession. You're airing, the accounting profession's dirty laundry, and the blog got big, and that's how you got accounting famous Pretty. Is that a pretty accurate summary?

Caleb Newquist: [00:01:40] I mean, it's close enough. Yeah. Yeah, sure.

Greg Kyte: [00:01:42] Okay, so. So then, but going back your origin story, where did you grow up?

Caleb Newquist: [00:01:48] I grew up in a small town in the middle of Nebraska. Do you know where Nebraska is? Correct.

Greg Kyte: [00:01:53] Okay, I do. I do know. Okay, Because it's just on the other side of Colorado from me in Utah. I've been there once. Oh, I think.

Caleb Newquist: [00:02:03] Lincoln. You bet. Nebraska capital.

Greg Kyte: [00:02:06] But yeah, yeah, I'm actually I spoke at a conference and I became an admiral in the in the Nebraskan Navy is what happened there which was supposed to be hilarious but I still don't know if I get it. Wait.

Caleb Newquist: [00:02:25] Joke. Wait. Did you just make the joke or was it the joke at the time?

Greg Kyte: [00:02:29] No. They presented me with a very official looking document that said that I was. I'm now officially an admirable in the Nebraskan state Navy, and I think the joke is that it's landlocked. So there's no Navy. Oh, in Nebraska.

Caleb Newquist: [00:02:47] Yep.

Greg Kyte: [00:02:48] Hilarious. I mean, that's hilarious.

Caleb Newquist: [00:02:50] Got your.

Greg Kyte: [00:02:50] Sense of humor clearly was from the state just from the dad jokes that that just ferment.

Caleb Newquist: [00:02:57] In Nebraska. Well you know yeah it takes a while for the good stuff to come in from the coasts, you know, like like music, music, jokes. It takes decades for them to get to the middle of the country.

Greg Kyte: [00:03:12] Yeah, well, and so, I mean, I just I think living there sounds awful. Awfully interesting. So what was the name of the town that you lived in? And did it consistently smell like cow shit? Like because I was in a city in eastern Washington in high school that smelled like cow shit so bad that you never got accustomed to it. Like you never went nose blind. It was always a horrible, horrible smell. How on a scale of one to to that level of horrid, how how bad was your city.

Caleb Newquist: [00:03:49] On a scale on a scale of one to horrid?

Greg Kyte: [00:03:52] Yeah.

Caleb Newquist: [00:03:53] I mean, it was like it was probably like a1i never like. I don't. Oh yeah, I don't know. I mean there was like there'd be days, like if the wind was like, if the wind changed suddenly or something, then maybe you'd be like, Oh yeah, that's something's happening. Or like, you know, there's this, there's this thing called, I think, inversion in weather where the cold air gets trapped, the hot air traps, the cold air and like that keeps, yeah, like the smell of manure from escaping into like the air. Yeah. Like occasionally that could happen. That happens here in Denver. Yeah. It's, it's so it can happen anywhere. But in any case, my, my, my hometown did what? Did not have the enduring manure thing going on. No.

Greg Kyte: [00:04:36] Okay, gotcha. We we have we have bad inversions here in Utah, but it traps in the smells of Diet Coke and crumble cookies. So that's it's different than Nebraska and I guess Colorado. But but so what? What was the name of the town?

Caleb Newquist: [00:04:54] Yeah, sure. The name of the town of my hometown is Ord. Or do I need to repeat it? Your face says I need to repeat it.

Greg Kyte: [00:05:05] Yeah or no, I got it. Or. Or.

Caleb Newquist: [00:05:08] Yeah. Yeah. Aud it's named after a Edward Ord who was a union general in the Civil War. And actually, more, more fun facts. You can see a bust of General Ord at Grant's Tomb in New York City.

Greg Kyte: [00:05:23] Nice, Caleb. So. So tell me more about what what your experience was growing up in AUD Nebraska.

Caleb Newquist: [00:05:30] Yeah. So it was pretty typical. Small town U.S.A., you know, lots of farming and ranching around the town. Sports were big, you know, football especially, and abstinence only abstinence only sex education, you know, pretty, pretty typical, right?

Greg Kyte: [00:05:48] So, no, no condoms on bananas for you in Nebraska. It was just keep that banana in your trousers. How'd that how'd that work out for you? How how would you how would you rate your your growing up time?

Caleb Newquist: [00:06:03] Well, since I didn't grow up on a farm or a ranch, it kind of made me a second class citizen, in a way. Okay. And and I was average to below average at sports, so that didn't help me. And then for the most part, girls weren't interested in me. So the abstinence only sex ed was kind of overkill.

Greg Kyte: [00:06:22] Okay, So. So I'm getting a pretty clear picture now. You you couldn't share a sheep, you couldn't throw a spiral and you weren't having any sex. So to me, that sounds like like the quintessential origin story for someone who eventually became accounting famous. So, yeah, so it's it's making sense to me now. But but, but I mean, I guess it is a little surprising that you don't have, like, more farm in you.

Caleb Newquist: [00:06:54] Oh, I mean, were you getting a farm kid vibe off of me?

Greg Kyte: [00:06:58] Not, not so, not so much that, but just like I've been to enough of those to like to those real rural communities where it's like that. See, I mean what did, did your did your dad like, own the general store, Did you. Or the saloon or the. Well, I guess it wouldn't have been the brothel because the abstinence only sex education. But like what? What what did you do if you didn't do farming and ranching in the little tiny town like that.

Caleb Newquist: [00:07:28] Yeah. Like my my parents were working class folks, but they weren't. Yeah, they were. But they were not farm folks. So, like, my dad was a telecom worker, so. Okay, back in those days, it was like he hooked up your phones and, like, if phones went down, like, you know, he would fix them or like, he would, he would climb up the phone poles and like, in these, in like in in our town and then the other rural towns that were kind of within, I don't know, 30 ish miles. So so yeah, my dad but these days, you know, it's Internet of course. So that's what he did. And then my mom was just like she had like different secretary jobs. Like, she didn't she actually didn't work. She didn't actually work and she didn't go back to work until I was like nine or ten. Okay. She was home with us while we were pretty young. But then she went she, like, worked in the Treasurer's office, the county Treasurer's office for a while, and then she worked in the school system like she worked in the superintendent's office and so stuff like that. And so but yeah, no, no, no farming. But I obviously had friends who grew up on farms and yeah, and.

Greg Kyte: [00:08:33] Stuff, so you had to have like farming adjacent experiences, right. I mean.

Caleb Newquist: [00:08:39] Yeah.

Greg Kyte: [00:08:39] You, you did farm shit at some point, right. Or did I completely avoid it just to make sure that you kept your position as a second class citizen in Nebraska?

Caleb Newquist: [00:08:52] Yeah. I mean, like I said, I had plenty of friends who. Who grew up on farms, grew up on ranches. And so I would I would, you know, go out there and have these occasionally I would have these awkward agricultural experiences. I remember I remember going to a branding, for example, okay.

Greg Kyte: [00:09:08] Like where they branded cows or they branded each other, because I'm also thinking these are these are like farm kids. That could be either way.

Caleb Newquist: [00:09:15] It could go, it could go, it could go bad. Yeah, I've seen No, they were they were they were branding cattle. Yeah.

Greg Kyte: [00:09:20] Okay. Gotcha. But what was what was branding cattle like?

Caleb Newquist: [00:09:25] Mostly it smelled, you know, burning cattle, hair and flesh. Okay. Lots of lots of poop, obviously. Okay. But like, you know, real life cowboys castrating the male calves, you know, In fact, like, a good friend of mine that I grew up with, his dad, we used to joke, some of us, that his dad was like, he was the Marlboro Man, you know, from the old ads. Oh, really? Yeah, Like.

Greg Kyte: [00:09:51] He the lone cowboy riding his horse through the cattle field chain smoking and developing. Acima.

Caleb Newquist: [00:09:59] I mean, more or less. But he had the hat and he just was like, he was just he was always I saw him on a horse, like, I don't think I ever not saw him on a horse. And so and so. But the sweetest guy, though, like you, just a sweet man and but like a real deal cow cowboy, like, smoked. But he didn't smoke Marlboros. He smoked non filter camels. So he was he was extra hardcore, right?

Greg Kyte: [00:10:25] So really really put the accelerator on that emphysema. Yeah. Nice. Well so today's case, the reason we're going there is that today's case is all about farming and ranching. There's no Marlboro Man in our story, but we do have someone who, instead of burning cigarets, burned his family's generational wealth in the city of Pasco, Washington. There was a farmer in eastern Washington. His name was Cody Allen Easterday. Pretty weird name. Reminds me you've seen Dumb and Dumber, right.

Caleb Newquist: [00:11:09] Caleb, I. I absolutely have. Yes.

Greg Kyte: [00:11:12] And so Jim Carrey's character is Lloyd Christmas, but this guy's name is Cody Easterday, which seems like that would be a good a good duo. Maybe a weird of weird names.

Caleb Newquist: [00:11:26] Yeah, if you if you have if you're if you have surnames that are Christian holidays or something, right. Sure. Right. Yeah. Why not?

Greg Kyte: [00:11:33] Just like Harry Halloween? I don't know. But regardless, Cody Easterday, he owned a ranch that was had a very creative name called Easterday Ranches. And there was an associated farm called Easter Day Farms. And these were established. The farm was established first. It was established back in 1958 by a fellow named Irvin Easterday, who was Cody's grandfather, and Easterday Farms. The farm part, they were this is big, you know, Eastern Washington, eastern Oregon, Idaho. We're talking onions and potatoes is was their main staple crop that they had there. You know, you know, Eastern Washington. You know, Eastern Washington's famous for onions.

Caleb Newquist: [00:12:19] I, I had no no idea that.

Greg Kyte: [00:12:22] Yeah.

Caleb Newquist: [00:12:23] I thought it was mostly I thought it was well known for meth. That's what it was. Well known.

Greg Kyte: [00:12:27] Well, that's that's how you get the energy to to raise just some of the best sweet onions that you're ever going to taste. I mean, if you still have the sense of taste after all the meth that you've consumed. Right. But yeah, Walla Walla, sweet onions. You've ever heard of those? Nope, Just me because I grew up there. Awesome. But Easter Day Ranch is usually farms, so they also. They did some corn, some wheat as well. Yawn. Who cares? Yesterday, the family was in Cody because he he was born into all this. It was a very rich, very successful farming families. As a matter of fact, they were like, well-known, well-established as like the one of the biggest farmers and ranchers in that part of the country. They. Here's Caleb. Here's how big their ranches were. They supply. How big, How big. Greg, I'm glad you asked. They supplied Tyson Foods with 2% of their beef, which you might go 2%. That's not a lot, but that's a fuck ton of beef because Tyson.

Caleb Newquist: [00:13:39] Tyson's cranks out they they they crank out some beef.

Greg Kyte: [00:13:42] Those Yeah well and a lot of people don't know this the meat industry in the United States 73% of all the meat that we consume is produced by four companies. Yeah. So there's there's, it's I don't know what it is, Caleb, but every industry seems like it has a big four. And so the meat industry is just like that. And Tyson Foods is one of the big four. So the fact that they provided 2% of the beef to Tyson Food, that's that's just tons of here's here's they have 22,000 acres of farmland. They have 150 employees. They had annual revenues of a quarter of $1,000,000,000 a year, $250 Million was their revenues, not their profits. That was their revenues every year. So it was a big operation, even to the point where these guys had a private plane and a hangar they they sponsored. Again, I'm going to show just my you know, the fact that my world just is what I've experienced. But have you ever heard of the Pendleton roundup, the rodeo, the Pendleton roundup?

Caleb Newquist: [00:14:47] Absolutely. Never heard.

Greg Kyte: [00:14:48] Of it. Nice. So the Pendleton roundup is a gigantic rodeo in eastern Oregon. I know about it because my dad lived in Pendleton, Oregon, for, gosh, probably ten or 15 years.

Caleb Newquist: [00:14:59] And so and that was. Wow. Wow. Did you have to go to the Pendleton roundup?

Greg Kyte: [00:15:03] I didn't have to go. He never took me. But it was one of those things, even even as more of a well, not a city kid. I was a suburb kid, but like everybody in eastern Oregon and eastern Washington, they were all about the Pendleton roundup. And it was sort of like that actually sounds like it's probably pretty awesome. So these so the Easter days, they were one of the major sponsors of the Pendleton roundup. That's how big they were. They were they were a big fucking deal in ranching and farming. Yes. Amazing.

Caleb Newquist: [00:15:49] All right. So here's how cattle ranching works. More or less. It's not going to be perfect, but we're going to try to cover it. Right.

Greg Kyte: [00:15:56] This is an outsider's perspective, right?

Caleb Newquist: [00:16:00] You buy some calves, okay. Some baby cows, right? Yeah. You raise those baby calves. Those those those baby cows. Calves into cows.

Greg Kyte: [00:16:10] Okay. And then wait, so the baby cows become adult cows?

Caleb Newquist: [00:16:13] What? Yeah, it's. I mean, it's just how nature works. Greg Wild. And then you butcher the cows, but. It's maybe not quite so simple. All right. And there are three main types of cattle ranchers. The first type is called a cow calf operation. And you know what these folks do, Greg?

Greg Kyte: [00:16:38] I would assume they have cows and calves.

Caleb Newquist: [00:16:41] Right. They make the baby name. Oh, yeah. They make. They make the baby cows. Gotcha. And after the calves are weaned, they head off to the second type of ranch, which is called a backgrounder operation. Okay. The cows go through.

Greg Kyte: [00:16:57] Background checks and get security clearance.

Caleb Newquist: [00:17:01] Yeah, And then drug tested and, you know, the usual. But, no, this is where they make where they grow up.

Greg Kyte: [00:17:07] They can keep top secret files from the Pentagon on their feedlot.

Caleb Newquist: [00:17:15] Yes. Anyway, this is where the. So these backgrounder operations is where the cows grow up. Okay. Easterday Ranches was the third type of ranch, which is called a finishing operation, also known as a like commonly known as a feedlot. Okay, so that's a feedlot.

Greg Kyte: [00:17:33] You said feedlot prematurely. This is a this is actually a feedlot.

Caleb Newquist: [00:17:37] Yeah. And so. I so there were, there were multiple feedlots around Ord where I grew up. I remember specifically, but my understanding is that there were all types of operations. There are all types of operations around my hometown. So okay, for what it's worth, for what it's worth. Right.

Greg Kyte: [00:17:56] Well, and and I was I mean, obviously I was playing a little dumb for you to to go through that. Explain. And one of the other interesting things that I learned about these three types of cattle ranchers, there's very little vertical integration. So like.

Caleb Newquist: [00:18:10] You right, you.

Greg Kyte: [00:18:12] Don't have because again, to a dummy who's on the outside, I'd go, Yeah, why don't you just do all that? But apparently and I'm not sure why there's not more vertical integration, but there's not you specialize in one of those types of operations, and that's kind of what you do.

Caleb Newquist: [00:18:27] Yeah, I think you could, you know, again, I'm again not someone who is can't farm or ranch a lick. I'm only speculating here. Right. But something tells me that it would be to to do that at scale. When you think about like there's literally thousands, millions of cattle in a state like Nebraska or. Yeah, even like the Easter days you said. I don't remember. I don't think you mentioned how many head of cattle they had, but like they have hundreds, certainly hundreds of thousands. Yeah, right. Like there's more cows in Nebraska. There's more cows than people. Right. And so.

Greg Kyte: [00:19:02] And again, it doesn't seem it's not a shocking fact to me for some.

Caleb Newquist: [00:19:05] Reason. I'm like, yeah, okay. Of course. Yeah. But to, to, to, to, to address your point, I think to vertically integrate those three steps in the supply chain by one operation would be incredible. I think that be incredibly difficult to do. Okay. Like, do you think about the land you would need to think about like the different operation, like just to run one of those businesses, how complicated that would be. But then to do all three along the supply chain. Yeah, I just don't think I don't think it would it would be really difficult to operate it.

Greg Kyte: [00:19:38] Yeah. It also it also seems like it'd be really difficult to operate a cow calf operation where all they do is make baby cows in a state that has abstinence only sex education. I.

Caleb Newquist: [00:19:52] It's a it's a it's a fine point that you're making.

Greg Kyte: [00:19:55] Yeah.

Caleb Newquist: [00:19:55] So anyway, so these finishing operations, they buy the cattle and they fattened them up for the last 4 to 6 months before the steers and heifers are shipped off to the slaughterhouse where they get the no country for old men treatment. Right.

Greg Kyte: [00:20:13] Because that little that little machine he used that was that, that was to put a like a spike into the brain of a cow.

Caleb Newquist: [00:20:22] Right. It's not even it's not even a spike. It's just a little pin.

Greg Kyte: [00:20:25] Oh, really? Mm hmm. But you can still blow out a doorknob and with a with one of those.

Caleb Newquist: [00:20:32] And apparently human brains also.

Greg Kyte: [00:20:34] Yeah. I've learned more about ranching from.

Caleb Newquist: [00:20:38] No Country.

Greg Kyte: [00:20:40] For Old Men.

Caleb Newquist: [00:20:41] Yeah.

Greg Kyte: [00:20:41] You learn anything else, really?

Caleb Newquist: [00:20:42] You learn it about a critical part of the process, right?

Greg Kyte: [00:20:44] Yeah, exactly.

Caleb Newquist: [00:20:46] Anyway, uh oh. And for the city folk, a steer is a male cow. Or it's. It's not really a cow, because the cow is a female, but a steer is a male bovine that has been castrated. Right. It will not become a bull, therefore.

Greg Kyte: [00:21:04] Oh, gotcha. Okay, so steer. Oh, okay. I get you. Yeah, Because bull and bulls. Bulls are what you need on them cow calf operations.

Caleb Newquist: [00:21:12] You got it, my friend. Okay. And a heifer again. For the city folk, a heifer is a cow that has not born a calf. Okay. Gotcha.

Greg Kyte: [00:21:21] Good lady. Bovine. That hasn't has no babies.

Caleb Newquist: [00:21:26] Correct, Amanda. Gotcha. Okay. All right. Interesting.

Greg Kyte: [00:21:30] Fun fact.

Caleb Newquist: [00:21:30] Yeah. So that's kind of like the the nuts and bolts of a cattle operation. But besides raising cattle, some big ranchers are also they're very sophisticated businesses, which is I would say that if you haven't been around ranches or haven't thought much about it, you would kind of think, oh, you have cows. And they get like, you probably think of it as being very simple, but it's actually a very sophisticated business. And one of the reasons or one of the things that make it a very sophisticated business is commodity, the commodity markets, right? Yeah, yeah, yeah. Easterday had put a lot of money into finishing the cattle and its profitability was kind of at the mercy of these markets. Right? If b if beef prices were too high, he would earn a nice profit. But if beef prices were too low, he could lose money, the farm would lose money or the ranch would lose money. And for operations of their size, they can hedge their bets through commodity markets.

Greg Kyte: [00:22:41] Yeah, exactly. And it is interesting to think about, like literal commodities where like, like beef is beef as beef. I mean, there's different cuts, there's different grades. But but basically, if you produce a certain grade of beef, that's that's the nobody's like, oh, is this, is this easterday beef?

Caleb Newquist: [00:23:03] No. Right.

Greg Kyte: [00:23:04] No one no one cares at that point. You're not going to there's very you can't I mean, the definition of a commodity to market is you can't differentiate. So it's not like you can say, you know, you can build your brand as Easterday Farms and people are going to want your beef more. No, they're just going to go, What great is it cool? Here's how much it's that's selling for right now. Here's your money. Thanks for the beef.

Caleb Newquist: [00:23:24] And that's and you can and you can apply that as you as you mentioned you can apply that across all kinds of commodities. Right. Like gold is gold. Corn is corn is corn. Yeah. Orange oranges or oranges.

Greg Kyte: [00:23:37] Right. Right. Exactly. So so so so the risk that that the ranchers have is is mitigated through the commodity. So the through buying and selling of commodities, derivatives is what it is. So cattle ranchers like Cody Easterday and the Easterday family, they would go to the Chicago Mercantile Exchange, which is if you're not familiar with that, it is it's kind of I mean, Caleb, you were saying it's kind of like the New York Stock Exchange, but for commodities contracts.

Caleb Newquist: [00:24:13] If I'm not mistaken. Yeah, if I'm not mistaken, I mean, I suppose. But it is. If I understand it, if I, if I if I understand correctly, the Chicago the Chicago Mercantile Exchange is the largest commodity exchange in the world, right?

Greg Kyte: [00:24:32] Yeah. To the point where and again, I'm not I'm not big on commodities trading and commodity derivatives and things like that, but I know of the Chicago Mercantile Exchange. I don't know of any other commodity exchange at all. If if.

Caleb Newquist: [00:24:48] Well, there's certainly there's there's multiple exchanges. But the CME which is.

Greg Kyte: [00:24:53] Yeah, they don't I don't they don't have a that's.

Caleb Newquist: [00:24:55] The that's the big.

Greg Kyte: [00:24:56] No or two Mercantile Exchange. Certainly not so on at the Chicago Mercantile Exchange or the CME if you're if you're its friend you can call it that you can trade futures contracts and that was the big thing for the Easter days. And so and you can trade future contracts on anything. You can trade them on cattle, on hogs, on corn, on wheat, on oranges, several different kinds of oil, probably including salad oil. You can buy them on natural gas, copper, nickel, gold, silver, basically anything that that would count as a commodity. They've got futures contracts for those that you can purchase through the Chicago Mercantile Exchange and a futures contract. And again, Caleb, I mean, do you remember like in school, do you remember learning about accounting for derivative instruments?

Caleb Newquist: [00:25:48] Oh, my God, no, it was not. Yeah, I, I actually don't if I, it would have I don't know which class it would have been. I would have learned about accounting for derivatives. Mm hmm. But I know if I remember correctly, it was a very controversial thing around that time. Like they were just starting to, like, catch up. The A.P. was probably just starting to catch up to like, oh, this is we actually have to account for these and this is how we do.

Greg Kyte: [00:26:16] It, right? So so a futures contract and this is this is what a few if you don't remember, here's what a futures contract is. It's where someone is contractually obligated to buy beef from you at a certain point, at a certain date in the future. So so that's one side of the future, one side of the futures contract. They're there. They're contractually obligated to buy a certain amount of beef from you at a certain price. And so and so if you're on the other side of that, you have to sell the beef at that price, at that future date. And so the way that day and again, this is this is like in a very what would you say, like sanitized, pure, almost like the abstract version of of futures and we'll get into how they actually work in the real world. But the idea was that that Easterday could get into one of these future contracts where someone is saying, okay, in six months I'm going to pay you a buck 30 per pound for your for your, for your cattle. And and he goes, okay, that's great, because it only cost me a buck 25. You know, based on my experience and my expertise as a rancher, I believe that I can raise these cattle for a buck 25 a pound.

Greg Kyte: [00:27:33] So if you're going to guarantee me that you'll buy them for a buck 30 a pound in six months, then I know that I can make a five cent per pound profit, which if you're talking like we were saying, hundreds of thousands of cattle, you're making a good profit on that. And, and so the, the risk he would, he would be mitigating his risk because he'd basically reduce his risk to can he keep his costs where he thinks he can keep his costs. He doesn't have to worry about market fluctuations. So he's basically taken off one whole side and probably the most the most volatile side of the risk for him. Now, the the thing that he the downside for him, again, because commodities can be so volatile, is if he says, okay, you promised to pay me a buck 30 for this per pound for my for my cattle and then six months later cattle selling for a buck 50 a pound. He goes, Oh shit, I have to sell it for a buck 30 a pound. I could have made so much more money. But he's mitigated his risk and that's that's the that's where he has to land. Does that kind of make sense?

Caleb Newquist: [00:28:40] It does. And I mean, I think that the thing to remember is to kind of keep it as simple as possible is. As you point out, sometimes the prices of commodities can be volatile. And so this is just a way for people that are in these businesses, whether it's agriculture or whether it's precious metals or whether it's natural resources. It's just a way for those businesses to mitigate risk. Right. And protect themselves from big swings in prices.

Greg Kyte: [00:29:14] Right. And if if you're if you're a bit like let's say you're a big steakhouse like your, you know, Texas Roadhouse and you I mean, again and this again, this is in the this is in the like the way that I think in my mind, this is why futures contracts were originally created. Because if you're if you're a rancher, you like the futures contract because you go, okay, I've got a guaranteed price that I can sell this beef for. So I'm not going to get screwed on the price. But if you're on the other side and you need beef for your company, like, again, like a Texas roadhouse, you're going to say, Oh, if I can lock in a price for this meat at a buck 30 a pound, then if the price goes crazy, like to a buck 50, I can. I don't have to worry about that. I know that I'm getting my beef at a price that I can still turn around and, you know, grill it up and sell it to hungry people and still make a profit on my end, too. So that's again, that's that's how this stuff started. But you really get into this this quickly becomes speculation where you've got people who are like, oh, I can buy a futures contract at a buck 30 a pound, and I got some inside information or I have a hunch that beef's going to be worth way more than that.

Greg Kyte: [00:30:28] So I'm going to buy a bunch. I'm going to be able to buy a bunch of beef at a buck 30 and turn around and sell it immediately for a buck 50 a pound or something, that kind of thing. So it's nobody. It's somebody who doesn't have anything to do with farming and ranching, and they're just going, Oh, I think I, I think I can make a buck doing this, even though it's not I don't consume the beef. I don't make I don't raise the beef. I'm just going to go in and try to try to work it like you would the stock exchange. So so you can have someone like Cody Easterday, who has a very legitimate reason for hedging his his operations, using these kind of derivative instruments like futures. But then you can also go you can slip directly into that to to turning the Chicago Mercantile Exchange into a very slow, very boring, very high stakes slot machine. And that's and that's and even with that, the rancher can get on either side of the table at that point where they can they can say, okay, even if they've got cattle, that they just looking at their business, they're in the business of selling their finished cattle, but they could get on the other side of that and say, oh no, I'm actually going to try to buy some cattle.

Greg Kyte: [00:31:43] And that's, that's what. Yeah. So, so you can, like I said, it basically can quickly turn into gambling instead of a legitimate business tool. Right. Yeah, absolutely. So you can you can play that where you can and even you can. The way this works, if you really think through it, you can effectively like short the cattle commodities market where you where you're going to, you're assuming the price is going to drop. And so you can get on the side of it where you're where you're betting for the price to drop and you'll you'll make a profit that way. So so you can really you can really get into this either way. And and Cody, yesterday what we find out as as we've read through who he was and kind of how he was known around the community is the guy the guy hustled he was he was he was known for always trying to make a deal, always trying to get an edge, always trying to have a new angle on doing his business. Was that was that the impression that you got from the readings that we did?

Caleb Newquist: [00:32:55] Caleb Yeah, very much so. I mean, their operation was at the scale and scope where that other businesses in the area. We're highly dependent on them for their own business. Yeah. And they employed they employed a good number of folks and they had a lot of vendor relationships. And and so yeah, he was very much he was very much, I guess, you know, a wheeler dealer type. Yeah. And so that kind of and that kind of slipped over into kind of the high level operation operational stuff into into the futures trading.

Greg Kyte: [00:33:31] Right. And and again, I think he's going to think that he has expertise in that market, especially in the cattle's future kind of thing, because he is an expert. That's what he.

Caleb Newquist: [00:33:40] Does. They do all day long. That's all they do all day long.

Greg Kyte: [00:33:42] So yeah. So and and I think I mean, in my mind too, Caleb, tell me if this if this is where your brain went to. But I go, I don't think that a rancher really has a lot of need for a private jet and a hangar. And if you are a rancher with a private jet, you're a wheeler dealer rancher.

Caleb Newquist: [00:34:09] I mean, it seems like kind of an extravagant expense for.

Greg Kyte: [00:34:13] Yeah, for so. So here's where things start going sideways with Cody Easterday and Easterday Farms and Easterday Ranches is that he definitely went from using these futures contracts as a legitimate business tool to to where he was using them to gamble, to go, okay, I can actually make money above and beyond just my normal operations if I can hit these futures contracts. Right. And he was horrible. He sucked ass at gambling with futures contracts because what we see is over a ten year period, Cody Easterday incurred about $200 million in losses just on the Chicago Mercantile Exchange. He he lost. Did you hear that? $200 million. He basically in ten years, he lost almost the equivalent of one year's revenue top line revenue in doing these futures contract. He he was so shitty this stuff because it's not.

Caleb Newquist: [00:35:24] Good.

Greg Kyte: [00:35:25] No in one of the one of the accounts that I read he between 2011 and 2018. So that's eight years he had seven losing years where he lost between $6,000,058 Million in the year for those seven and and the one winning year was 2015 and he he was up he was in the black only $7 million so he like lost and lost and lost and he was like, oh, hey, I am my my luck's turning around in 2015. And then immediately the next year he starts losing just shit tons of money again. So he, he, he owed the Chicago Mercantile Exchange over $200 million from his losses that he'd have over the years to the point where the Chicago Mercantile Exchange, they would need to see like financial statements to go. Because if you took a position, it's one of those things where it's like if you you know, it's like it's like if you're if my son comes up to me and says, Hey, dad, I'll bet you $1,000 that the Knicks are going to win tonight. And then it's like, dude, you don't have I know how much money you have. You have $20. So that's not a it's the same kind of thing.

Caleb Newquist: [00:36:41] Yeah, but. But if I win, you'll give it to me. Give me the money. And if I lose, it's fine.

Greg Kyte: [00:36:45] If I lose, I guess you'll just take it out of my allowance for, you know, 80 years. I don't know. So. But. So the same thing with the Chicago Mercantile Exchange. If you're making these big bets on these future contracts, they need to know that you that you can back that.

Caleb Newquist: [00:36:59] Shit up, that you're good for.

Greg Kyte: [00:37:01] It. Yeah. So you have to submit your your financial statements. You have to to that shows like your inventory, your your, your purchases, your sales, all this kind of stuff to go, okay, this, this person can sustain the kind of losses that he could be susceptible to by entering into these futures contracts. And Cody yesterday was so shitty at this stuff that he he got to the point where the only way and and it really is one of the because you know the the gambler's mindset it's like okay I'm in the hole but I just need one good hand and then I'm back in the I'm back I'm back at it. I'm, I'm better than ever. And so when you lose and lose and lose and lose, you need to just have that one big win. And so you got to keep convincing the the the pit boss that you're good, good for it. And that's what Cody Easterday has to do, had to do to the point where he started submitting fraudulent financials to the Chicago Mercantile. Just so that he can continue to trade on these futures contracts.

Caleb Newquist: [00:38:18] So in 2014, Cody Easterday, he landed a new big contract with two to a couple of companies, one of which was Tyson Foods, which they had done business with, right? Greg But yeah, they, but, but this was different in the sense that Tyson would give him an advance on the cost of buying and raising the cattle. Okay, This is 2014. So he's into he's in about year four of his of his nearly decade long streak of being real shitty at futures trading. Yeah. Yeah. And so he needs this, right, because he needs the liquidity in order to keep doing the futures trading, right.

Greg Kyte: [00:39:01] Yeah, yeah, yeah.

Caleb Newquist: [00:39:02] Well, okay.

Greg Kyte: [00:39:03] And well, so how, how does how do explain how these advances work.

Caleb Newquist: [00:39:07] Sure. Once the cattle were raised, slaughtered and sold at market price, Easterday Ranches would then repay the costs that Tyson had advanced to them. Right. Plus, they would pay them some interest and certain other costs. And. If by the time when they paid all that stuff back, they just kept the difference, right, from what they were advanced in the first place? Does that.

Greg Kyte: [00:39:36] Make sense? Yeah. So. So when you when you say when we talk about advances, the first thing that comes to my mind is like a book advance. And I and I see this being a similarity to that where, I mean, it's not a publisher, but if you have a book advance, the publisher says, Hey, here's I'm going to give you this much money to write this book, but I'm not giving you the money, We're going to take it out of your royalties later. So it's kind of the same thing where Tyson might tell me if you think this is a good if that's a good analogy, because Tyson is kind of saying, hey, here's a bunch of money to go buy the cattle and raise the cattle and take care of your expenses. We're going to buy that cattle from you later for market price. And so you're going to have to pay all that back to us when we when we buy it from you. Yeah, but but here's the money up front so you can just so you can get so you can get the shit rolling because we know it's a cash demanding proposition.

Caleb Newquist: [00:40:30] To it is, it is like so to, to, to raise the cattle is very, very expensive. Right. Yeah. And so Easterday may not have like if they say hey we've got X number of calves that are or it's a finishing operation. So they're not calves probably they're they're, they're the teenagers.

Greg Kyte: [00:40:52] So like to the like teen cows.

Caleb Newquist: [00:40:54] Yeah. They're entering enter in their formative years. Yeah. But anyway and then they get murdered. But anyway but yeah so, so Tyson fronts them the money so that they can like finish that job. Yeah. So and then they, they sell the cows. Tyson gets their money back and each trade keeps the difference. If there is a difference, if there's an upside. Yeah, yeah, yeah.

Greg Kyte: [00:41:18] So, so it's almost like I mean I see it as almost like a kind of a financing operation where it's like, yeah, it's not, it's, it's because I mean, especially because like, like we see they, Tyson required them to pay interest on the advance. So when I look at that, I go, Oh yeah, they're basically it's a loan. They just gave them a loan, right? To say, okay, here's this money, go buy the go buy the, the, the cattle and do your job and then we'll buy them from you later and, and yeah, it's just financing.

Caleb Newquist: [00:41:48] Yep. Right, right. Cool. So from 2016 to 2020, Easterday submitted. Ready?

Greg Kyte: [00:41:56] Yep.

Caleb Newquist: [00:41:57] False invoices to buy and raise over 265,000 head of cattle. They were never purchased and didn't actually exist.

Greg Kyte: [00:42:09] So. And so this dude and so. Okay.

Caleb Newquist: [00:42:14] Okay, sure. I'll answer questions.

Greg Kyte: [00:42:15] Now. Yeah, it seems. Yeah, I get it. He's like, So he's like, I need this money because the Chicago Mercantile Exchange is going to break my kneecaps.

Caleb Newquist: [00:42:25] Is ringing me up. Yes, exactly. So.

Greg Kyte: [00:42:27] So. Hey, so hey, Tyson. Crazy thing. I just bought 265,000 cows, so I need that advance right now because. Because I got to pay for these these cows then. But he didn't do it. It's like, hey, Chicago Mercantile Exchange, here's your money. Am I good? And they're like, Yeah, you're good. You can live. You can live to buy another futures contract.

Caleb Newquist: [00:42:47] I mean, that is a very vivid interpretation.

Greg Kyte: [00:42:49] That's that's a very good Goodfellas kind of interpretation.

Caleb Newquist: [00:42:53] Very much so. Very much. Yeah. It didn't quite work that way because it happened over the course of four years. But yes, effectively. Yes. Right. Yes. What you're describing is accurate. Yeah. Yeah. Because he needed the money. Right. So if he's getting margin calls, if he's getting margin calls from the CME. Yeah. Like he has to have the money. Right. Right. He's like, dude, you're losing lots of money. You're upside down on this thing. Yeah. So we need some more money. And he's like, Great, I'll call you back, you know? And then he's like, Hi, Tyson Foods. Yeah, we need to buy 15,000 head pronto and. All right, great. Here's here's here are the terms. This is what you're going to give us back later is like, yeah, sure, no problem. And just give me the money.

Greg Kyte: [00:43:34] And this is what you're going to do with the money. Because that's an interesting thing that that I was not aware of until I got into the position that I currently hold at work, because we we get I have what, between between both of my campuses because I help manage a group of medical office buildings and between both of my campuses, we have a round we have between 20 and $30 million worth of loans between those two buildings. And and and it's not like you can just go to the bank and say, hey, we need it. You know, we've got these we've got these buildings. Will you give us a loan against those buildings? And they just go, Yeah, here's your money. Cool. They're like, No, here's you can only use this money for certain things. And it's it's spelled out how you can use the money. And and with this, it was very clear that the way you're supposed to use the money is to buy the fucking cattle.

Caleb Newquist: [00:44:32] To buy.

Greg Kyte: [00:44:32] To raise the cattle, because we need because in this case they very much needed the cattle.

Caleb Newquist: [00:44:36] Because, because then Tyson's going to buy them. Yeah.

Greg Kyte: [00:44:39] They're going to buy them and they, and they've got demands for selling that cattle. So. So Cody Easterday was basically using Tyson Foods as a, as a cash machine, as an ATM machine. Yeah. To, to pull money out. And, and obviously it was very it had to have been very clearly very explicit what he was to use the money for. And clearly he was not doing that. And I, I wanted this, this whole buildup with Cody Easterday and Tyson Foods in the Chicago Mercantile Exchange is so interesting to me that I feel like it's incredibly anticlimactic how this house of cards crumbled, because what happened is Tyson Foods, they were like, Hey, Cody Easterday, we're ready for all that cattle. And Cody yesterday was like, Yeah, so about, about that and, and like that. Was it like a guy, a representative from Tyson Foods came to inspect yesterday's herd and they were like, So, hey, we're we need all those cows, my man. And, and, and he was like, Yeah, so I don't have those cows, my man. And so then he was like, Oh, well, that's a problem. And so the next time it was three corporate goons who showed up to be like, Yeah, so you have our cows, right? And he's like, Yeah, no, I don't have I.

Caleb Newquist: [00:46:11] Don't have them.

Greg Kyte: [00:46:12] And this is what this is. What he said is very interesting. He's they were like, What's up with our cows? And he says, Where are the man? Where are.

Caleb Newquist: [00:46:20] The cows?

Greg Kyte: [00:46:21] And he's like, Cody, then I totally fucking screwed up, man. I'm just a screw up. I pissed away all that money on the Merc, and that was that was it. And so he, he, he had the balls at this point even to, to he didn't want to label it that he had stolen the money though. Still, he absolutely.

Caleb Newquist: [00:46:43] Stole the money. Not fraud. It's not fraud.

Greg Kyte: [00:46:45] It's not fraud. He said he said what it is, is I was just there was it's forward billing and and that's what he decided to call it. And I was like, what the fuck is forward billing? What does that even mean? It's like, Oh, I'm billing you for yeah, four cows that I want to buy later after I hit it big on the Merc. And it's like, yeah, that's that's not how business works. Cody. This episode of Oh My Fraud is sponsored by Patriot. Patriot Software creates accounting and payroll software that radically simplifies the day to day complexities that American businesses and their accountants face. Patriot is seamlessly integrated under one login. Easy to use and affordable, and they rank number one for ease of use, customer support, features and value for the money by users. Patriots accounting software is a cloud based full featured accounting general ledger that gives your clients the simplicity they need but the power you require. Patriot has patented dual ledger accounting so you can quickly switch between cash basis, modified cash basis or accrual accounting and a chart of accounts that can have unlimited subaccounts and nest up to eight accounts. Deep Patriots payroll software lets you run payroll in three easy steps. Offers free two day direct deposit and their full service payroll offers a tax filing guarantee. Accounting professionals can partner with Patriot and receive discounted pricing that increases as you add more clients support located in the USA. Free co-branding and free accounting and payroll for your firm. Join thousands of accounting professionals who trust Patriot with their clients, accounting and payroll and get a 30 day free trial. Head on over to oh my fraud promo slash patriot. That's oh my fraud dot promo Forward slash patriot.

Caleb Newquist: [00:49:00] Shortly after yesterday's fraud was uncovered, Easterday Ranches and Easterday Farms filed for bankruptcy. What's wrong? Yeah. I mean. You sure? Yeah. Right. Yesterday's assets were liquidated, including large amounts of real property, heavy farm equipment. And that. That private aircraft. Yeah. Through the bankruptcy proceedings, the victim companies were able to recover approximately $65 million. The new owner of Easterday Ranches is Farmland Reserve, which is a for profit company wholly owned by the Mormon Church.

Greg Kyte: [00:49:40] That's my guys that's out here. That's where I live. We don't we that's the that's where the.

Caleb Newquist: [00:49:48] Mormon.

Greg Kyte: [00:49:48] Diet Coke and crumble cookies comes from.

Caleb Newquist: [00:49:52] Yesterday entered a guilty plea for wire fraud in March 2021, and in October 22, he was sentenced to 11 years in prison in order to pay $245 in restitution.

Greg Kyte: [00:50:04] Which I'm sure he'll be able to make by gambling on futures, contract.

Caleb Newquist: [00:50:09] Trade and futures.

Greg Kyte: [00:50:10] Do it, Cody. You're your pro you. He had to have learned something from all those years of of losing.

Caleb Newquist: [00:50:17] So, Greg. What did we learn? Did we learn anything?

Greg Kyte: [00:50:21] We did. I mean, there's I. I love this case because that's.

Caleb Newquist: [00:50:28] I. Have you said that before?

Greg Kyte: [00:50:30] I think I do. Well, we don't talk about cases that we hate. True, But but this one, this one, I think, really outlined a lot of it. And just I mean, for top, top line for why I love this case is it's it's a very rare case where we see both financial statement fraud and and embezzling embezzlement. It's not really embezzlement because he's not he's not stealing it from his own company. But but basically, you know, asset misappropriation would maybe be a better way of saying what he was doing.

Caleb Newquist: [00:51:07] I mean, so not really, though, right, Because. So let's just let's just puzzle this out, shall we?

Greg Kyte: [00:51:12] Okay.

Caleb Newquist: [00:51:12] Okay. Because you're talking about so, like he's losing money in futures trades. Yeah. Yeah. Right. Yeah. So it's, it's and you need leverage, i.e. you need, you need, you need the ability to borrow. Right. He has to borrow the money to trade futures. Okay. Yes. Yeah, right. So in a way. He's not he's not technically misappropriating Easter day assets when he's doing that because they can trade futures. Right. Right. But and then he is. But he is what's the technical term? He is making false representations to Tyson in order to get money.

Greg Kyte: [00:51:55] With an intent to defraud. Yeah, because he knew that he wasn't going to be buying those those cows.

Caleb Newquist: [00:52:00] Right. So. Maybe. Maybe someone that's smarter than us would would quibble with me in terms of like what actually is going on. I mean, he's definitely he's definitely lying to Tyson, right? Yeah. Yeah. He's losing all this money to the Merc, and the Merc doesn't care. They're just like, Dude, you're you're losing. So we need the money, right? We don't care. I mean, you just got to. Yes, pay the money. And the Merc probably doesn't want to take stolen money, right? The Merc doesn't want to take stolen money.

Greg Kyte: [00:52:26] No, Nobody wants to take stole money because that could get clawed back. Which. Right. Yeah.

Caleb Newquist: [00:52:31] Right. And so but in yesterday's case, the only way he knew how to make this real bad boo boo he has with the with the CME. The easiest way to get the liquidity was to get from Tyson, which is like a huge company. Right? Right. That has lots and lots of money. Right. Right. So there's clearly an intent to defraud there. But he's not it's not like he's misappropriating Easter assets, but he is using Easter Day's own business like leverage because they make if they have annual revenues of 250 million. And that's a lot of money. Right? Yeah, they can use he can use that to be like, yeah, that's why I'm trading futures because we make 250 million a year, right. So like, I don't know, I'm quibbling with you on, on the misappropriation bit, which maybe is like just mental masturbation but I don't know.

Greg Kyte: [00:53:24] Okay. Well, and it might, it might just be because I'm I don't have I mean, he I want to say something more specific than he defrauded Tyson out of me. He misappropriated Tyson's assets.

Caleb Newquist: [00:53:39] Yes.

Greg Kyte: [00:53:40] And that's that was the misappropriation. And I do think it's interesting because the Chicago Mercantile Exchange, they could have gotten screwed big time because if he's going, oh, I've got all these sales and I got all this inventory and I can totally cover this stuff, if the if the contract from Tyson didn't come along, then the Chicago Mercantile Exchange would have been the one holding the bag.

Caleb Newquist: [00:54:01] Well, they just would have they just would have closed him out. Right. Like they wouldn't they just would have they would just they wouldn't have let him trade anymore.

Greg Kyte: [00:54:08] That's right.

Caleb Newquist: [00:54:09] But it wouldn't have got to the two it wouldn't have got to the 200 million point because if he started if he I don't remember the timing of when he started doing the false invoices to to to Tyson.

Greg Kyte: [00:54:23] Okay. Yeah. Good. But I guess that that wasn't delineated when those when those began. That's that's a good point. But so you mean that. Yeah. You're saying that he that the Merc probably wouldn't, wouldn't have sustained the losses anyways because you.

Caleb Newquist: [00:54:36] Know like if you, if you get a margin call and you don't have the money, they're just like, okay, well you owe us the money and you can't trade anymore.

Greg Kyte: [00:54:43] Right. But then if they but, but that's what I'm saying, if Easterday was always like, oh and I never am going to have the money, then the Chicago Mercantile Exchange would.

Caleb Newquist: [00:54:51] Have.

Greg Kyte: [00:54:52] Screwed and they would have been left holding the bag.

Caleb Newquist: [00:54:54] Well, they probably would have went after they probably be like, Look, you owe us this money. So.

Greg Kyte: [00:54:57] Right, right. But that's the same thing that Tyson Foods is going after. And yes, and we did get in. We saw a little bit of it. We I didn't really, you know, luxuriate in the numbers, but I know that they sold the farm for far less than the 244 million of restitution that was owed.

Caleb Newquist: [00:55:16] Oh, yeah.

Greg Kyte: [00:55:16] To Tyson And so Tyson. So same thing could have happen with the Chicago Mercantile Exchange if they were like, hey, we got the margin is called. And he goes, I don't have the money to pay it. And they go, okay, we need to sell all your assets. And he goes, Yeah, it's not worth as much as I owe. Then they're like, Oh shit, okay, because you gave us false financial statements. So yeah. So I still I will always say on this case, Caleb, whenever we talk about it, that the Chicago Mercantile Exchange just got lucky that they didn't get screwed for more than what they did. And, and I've, I've seen this, you know, and I know there's some there's some fraud that I saw firsthand at a company that I that I've worked for, where it's the same thing where the unfortunately, a bank ended up loaning the fraudster a bunch of money and the fraudster used that money to pay back the money that he misappropriated from his company that I happened to be working for. But then the bank ended up just losing all the money, the loan that they gave. So the bank ended up losing money. And so the company that got all the money stolen from them and that was just a friggin lucky bounce for the company that I worked for, that it that they lost as little money as they did.

Caleb Newquist: [00:56:34] So let me ask you something. Yes. Talk to me a bit about why. Like, why did why did this even happen in the first place?

Greg Kyte: [00:56:45] Why did this fraud happen? Yes. Okay. The reason why this fraud happened and again, this is.

Caleb Newquist: [00:56:53] Because we haven't because we haven't touched on it yet.

Greg Kyte: [00:56:56] About why it happened. Yeah, because, well, a lot of it is because you've got these. It's the factory farm, the big agribusiness thing that we talked about before, where you've got this. These agriculture's being consolidated into these huge, mammoth companies that have very few of them that run the whole deal, and they're able to leverage the power that they have to really squeeze the profits out of the out of the little guys. And it is compared to Tyson yesterday, even.

Caleb Newquist: [00:57:31] Today, he's a little guy.

Greg Kyte: [00:57:32] He's a little guy 100%. He's a humongous little guy.

Caleb Newquist: [00:57:37] Right. Right.

Greg Kyte: [00:57:38] So yesterday's finishing operations, they they they basically they had about one half of 1% of all the beef that was going through that sold in the US. They saw about one half of 1%. That was their contribution to the steaks that we all eat and that and because of that it put Easter eggs in a kind of a shitty position because being a really, really big but still a very, very little player in in the in this in this game that again like we said is all about these commodities because he doesn't get to call hardly any of the shots. Right. His whole business I mean we talk about gambling on this stuff. His whole business is kind of a gamble because he goes, I got to put in a bunch of money in to make it to finishing these steers and heifers for slaughter, and I could just get screwed if the price of beef goes in the toilet. And which that's a gamble. But but profit comes from risk. That's what business is. And so the whole idea of profits is you're going to have more good years than you do have bad years. But with agriculture being squeezed by these big companies that they get these contracts with and even these companies that are so big they can actually buy in of themselves affect the price of the beef that they're going to buy. Back from you at Mart.

Greg Kyte: [00:59:09] You know what I'm saying? They can sway what market price is and they promise to pay you market price. So they're holding all the cards and and that puts him at a huge disadvantage to where he is going to just to run his business. He's going to have to hustle, like we said he did, which then led him to these futures contracts that led him to to not just using them legitimately, but using them speculatively. And then he he sort of gets himself. Basically what happened is he got to the point, you know, in the movies where the where the manager of the company has all the money for payroll and he goes, but I'm going to drive to Las Vegas and I'm going to put it all on red. And he doesn't. Then he loses all the payroll for the company. That's kind of what happened, you know, because they were behind on their numbers and that was the only way that the business was going to win. That's sort of what happened with Cody yesterday, is he just kept he kept getting chiseled away and chiseled away. He started making worse and worse bets because he had to make those bets to make ends meet. And and he was also feeling like like you had mentioned, he was such a big he was a big fish in his little pond of eastern Washington.

Caleb Newquist: [01:00:24] Yep.

Greg Kyte: [01:00:24] That there was some there was a lot of people that depended on him, like his downstream suppliers and vendors. They so he was probably feeling the pressure not just to make sure that he and his family and this empire that his grandfather had grown continues. But also he felt the pressure of going. There's a lot of people that depend on me to be profitable so that they can feed their families and put shoes on their kids feet as well. So that's I think that's that's where the problem started. And if we're looking at the fraud triangle, it's the pressure side of stuff is he's just under intense pressure because he's in an industry that more and more becomes a losing game for the people who are in it. That's it for this episode. And remember, ghost cows. Don't say boo. If anything, they say moo.

Caleb Newquist: [01:01:28] And also, remember, if you grew up in rural America, you might need birth control. That isn't abstinence.

Greg Kyte: [01:01:35] If you want to drop us a line, send us an email to, Oh, my fraud at earmarks CPE. And Caleb, if people want to reach out to you directly to find other non abstinence forms of birth control, how can they get ahold of you?

Caleb Newquist: [01:01:49] I'm still on Twitter at C Nyquist and on LinkedIn backslash Caleb Nyquist. Greg, are you still on Twitter?

Greg Kyte: [01:01:56] I still am at Greg Kite. I'm on LinkedIn. Greg Kite, CPA. I'm on Instagram at exposure drafts. That's my cartoon series. That's that's fun. If you like cartoons.

Caleb Newquist: [01:02:11] Who doesn't?

Greg Kyte: [01:02:13] Everyone likes.

Caleb Newquist: [01:02:14] Cartoons. Oh, My Fraud is written by Greg Kyte and myself. Our producer is Frank. If you like the show, leave us a review or share it with a friend. Rating the show helps people find it. So. Five stars.

Greg Kyte: [01:02:27] Five stars.

Caleb Newquist: [01:02:28] Five stars. And write something nice. It's so easy. Great. Greg needs.

Greg Kyte: [01:02:33] It. Leave a fraud. Leave a fraudulent review. Even if you didn't like the podcast.

Caleb Newquist: [01:02:39] Also, be sure to subscribe on Apple Podcasts, Stitcher, Spotify, or wherever you listen. And for the accountants out there, if you listen on earmark, you get free CPE. Nothing speculative about that.

Greg Kyte: [01:02:51] It's so easy.

Caleb Newquist: [01:02:52] Join us next time for more advice. Swindlers and scams from stories that will make you say.

Greg Kyte: [01:02:57] Oh, my fraud. Nice. You were fast that way. I liked that.