Slaughterhouse owner convicted of fraud, sentenced to 27 years

By MATEUSZ PERKOWSKI

Capital Press

The head of a kosher meatpacking company has failed to convince a federal appeals court to reverse his 27-year prison sentence for bank fraud.

The 8th U.S. Circuit Court of Appeals has refused to order a new trial for Sholom Rubashkin, owner of the bankrupt Agriprocessors slaughterhouse in Postville, Iowa.

Rubashkin was sentenced in April 2010 after a jury had found him guilty of 86 counts of fraud, money laundering and making false statements, thus causing about $27 million in losses to First Bank Business Capital.

"The district court's rulings and statements to the jury reveal no evidence of bias toward Rubashkin," according to the unanimous decision by a three-judge panel of the 8th Circuit.

The slaughterhouse owned by Rubashkin was raided in 2008 by federal immigration enforcement officials, who arrested about 400 undocumented workers at the plant.

Rubashkin was arrested several months later on charges of violating immigration laws, with the federal government soon adding financial charges to the allegations against him. The company filed for bankruptcy around the same time.

In 1999, Agriprocessors had established a revolving loan agreement with the bank with a debt cap of $35 million. The company was able to borrow money from the bank based on collateral, such as its inventory and accounts receivable.

The government contended that Agriprocessors created fraudulent invoices and engaged in other practices to inflate the value of its collateral, thus allowing the packing plant to borrow more money.

The company also laundered money it had borrowed from the bank through a grocery store and school under Rubashkin's control, to appear as if those funds came from real customers, the government claimed.

That money was then repaid to the bank in order to keep the balance beneath the $35 million cap, the government claimed.

The jury found Rubashkin guilty of most of the financial charges in late 2009. The government then dropped the immigration charges.

Rubashkin appealed the decision earlier this year, alleging that a Freedom of Information Act request had revealed new evidence that should prompt a retrial.

Internal government memos indicated that the presiding trial judge in the case, Chief Judge Linda Reade of the Northern District of Iowa, "had been meeting and communicating" with federal immigration officials for a half-year before the raid, Rubashkin said in a court document. This was never revealed to Rubashkin's attorneys, the document said.

Rubashkin's attorneys claimed these events indicated bias on the part of the judge and misconduct by the prosecutor, which would warrant a new trial.

However, the 8th Circuit ruled Rubashkin failed to prove the jury would reach a different verdict under another judge.

The appellate court also rejected his other claims that the bank's financial loss was miscalculated, that the money laundering charges were improper and that the prison sentence was excessive.

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