On December 21, the U.S. Commodity Futures Trading Commission (CFTC) posted a Notice of Covered Action (NCA) relating to an enforcement action against Easterday Ranches in Washington. Earlier in December, Easterday Ranches was ordered to pay a combined $263 million in restitution and civil monetary penalty in connection with a phantom cattle fraud scheme. The NCA signals that the CFTC is now accepting whistleblower award applications in connection with the case.
The CFTC alleges that “from at least October 2016 to November 2020, Easterday Ranches submitted false invoices and reimbursement requests relating to more than 200,000 head of cattle that it never purchased or raised on the producer’s behalf.” Easterday allegedly received more than $233 million from the use of these fraudulent invoices and reimbursement requests. The CFTC further alleges that in 2017 and 2018, Easterday “reported false or misleading information concerning its cattle inventory, purchases, and sales to the Chicago Mercantile Exchange.” A judge from the U.S. District Court for the Eastern District of Washington ordered Easterday to pay $233,008,042 in restitution and a $30 million civil monetary penalty.
By posting a NCA for the case, the CFTC is signaling that whistleblowers who provided the agency with information related to the case should now submit a whistleblower award application. Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information which leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government in the action.
Whistleblowers must submit a Form WB-APP within 90 days of the NCA’s posting in order to qualify for an award. By posting an NCA, the CFTC is not making any determination that the relevant case was aided by a whistleblower tip. Rather, the CFTC posts an NCA for any enforcement action that results in monetary sanctions exceeding $1 million.
In October 2021, the CFTC issued a record $200 million whistleblower award. Other whistleblower awards issued by the agency in 2021 include a $3 million award from April and a $1 million award from November.
Notice of Covered Action No. 2021-027