25-year term sought in Iowa slaughterhouse fraud case

cedar rapids, iowa  |  The convicted ex-manager of the Agriprocessors slaughterhouse will spend virtually the rest of his life in prison if a federal judge follows the recommendation of prosecutors.

Sholom Rubashkin

Prosecutors asked that 50-year-old Sholom Rubashkin be sentenced to 25 years in prison, pointing out they could have requested a life sentence if all 86 counts of federal bank fraud were added together. U.S. District Court Judge Linda Reade says she’ll issue a ruling on May 27.

Rubashkin, who managed the kosher meatpacking plan, was convicted of 86 counts of financial fraud in November. Following the two-day sentencing hearing, which started on April 28, he gave a tearful, halting speech.

“I’m basically a conflicted and flawed human being,” Rubashkin said. “Conflicted in that I allowed myself to be drafted into my family’s business against my wishes and better judgment.

“I basically should have stayed in teaching and being an emissary [for Lubavitcher Judaism].”

But Assistant U.S. Attorney Pete Deegan said Rubashkin wasn’t some far-removed corporate officer who “sets [fraud] in motion,” but rather a hands-on executive who personally broke the law and directed others to do the same.

Deegan said there were many victims in the case: the banks that lost money to Rubashkin because of the fraud, the cattle sellers who had to take out loans to avoid closure, and the citizens of Postville, who watched their largest employer fall into bankruptcy and their town’s economy crumble.

At least 10 witnesses spoke on Rubashkin’s behalf, including a psychiatrist who interviewed him in jail. The psychiatrist said Rubashkin expressed regret for the harm he had caused himself and others.

Abe Roth, an accountant and longtime friend of Rubashkin, testified that prosecutors miscalculated the millions of dollars in losses suffered by Agriprocessors’ lender bank, First Bank Business Capital.

The amount lost by the bank could affect Rubashkin’s sentence. Roth countered prosecutors’ claims that the St. Louis–based bank lost $26 million because of Rubashkin’s fraud. But Roth said that doesn’t factor in the $4 million the bank made in interest from the loan, or how much of the loan came from fraudulently inflated invoices.

Prosecutors “made everyone believe that number of $26 million is God-given, and it isn’t,” Roth said.

Roth said only about $10 million was artificially inflated, and that the rest “was pristine, wasn’t influenced by any corrupted” accounts.

Rubashkin was convicted of creating phony invoices to show First Bank Business Capital that the slaughterhouse had more money flowing in than it did. After the Postville operation declared bankruptcy, the bank continued to pump cash into the plant to keep it running.

The cash infusions totaled about

$5 million, but Roth said the bank is to blame because it failed to do due diligence on the company. Roth said the $5 million should not be factored into the bank’s loss and Rubashkin’s sentence.

“He only has about 25 or 26 years left on this earth,” defense attorney Guy Cook said. “Twenty-five years is a life sentence.”

The possibility that Rubashkin could have been given a life sentence enraged some in the Jewish community and surprised legal scholars. Six former U.S. attorneys general signed a letter sent to Reade that said that the possibility of life in prison was excessive for a nonviolent offender without a criminal record.

Rubashkin’s problems began when federal immigration officers raided the Agriprocessors Postville plant in 2008, arresting nearly 400 illegal workers. The raid set the company on a slow slide toward bankruptcy.

Prosecutors dropped immigration charges against Rubashkin last November, just days after a jury convicted him of financial fraud.