Former Agriprocessors executive ‘lied at trial,’ pocketed $1.5 million in fraud; defense says sentence ‘overzealous.
A federal judge in Iowa said she plans to sentence Sholom Rubashkin, a former executive at the Agriprocessors meatpacking plant in Iowa, to 27 years in prison and to pay $31 million in restitution for bank fraud.
Judge Linda Reade, chief judge of the Northern District Court in Iowa, wrote in a 52-page sentencing memorandum that the sentence of 27 years is “sufficient, but not greater than necessary,” to comply with the law.
Rubashkin’s wife, Leah, 48, issued a statement saying that it was “heartbreaking to see the judge and the prosecution make an example out of Sholom Rubashkin at the expense of his family and his community. What has happened today is inconsistent with the idea of equal justice under the law. All we have asked is that he be treated the same as everyone else.”
Reade rejected the defense argument that Rubashkin “did not commit the offense for personal gain or out of a sense of greed, but rather ‘in order to continue what he viewed as the critical Lubavitch mission of providing kosher food to the Jewish community.’”
“No matter defendant’s motive,” she wrote, “he defrauded the victim banks out of millions of dollars. He unlawfully placed his family’s business’ interest above the victim bank’s interest. His family business and he personally benefited at the expense of all the victim banks’ innocent shareholders. The court finds that this is not a basis [for leniency] in his case.”
The prosecution presented evidence that Rubashkin in the two years prior to May 2008 had funneled $1.5 million into his personal account. Federal authorities raided his plant that month, arresting 387 plant workers suspected of being illegal immigrants.
Federal immigration charges were dropped in November after Rubashkin, 50, was convicted on 86 counts of fraud. Those charges grew out of the immigration investigation. Rubashkin was later acquitted of state immigration law charges.
Rubashkin’s defense team issued a statement Monday expressing “outrage” at the judge’s decision. “The sentence is greater than necessary; indeed, it is greater than what the government asked for,” said Guy Cook, a member of Rubashkin’s legal team, referring to the government’s request for a 25-year sentence.
Another member of the defense team, Bob Barr, said there would be an appeal of both the verdict and the sentence. And the defense team said they planned to continue asking for a Justice Department investigation into the “pattern of overzealous prosecution in the Rubashkin case.”
“This sentence is inconsistent with the overwhelming view of the legal community, including six former U.S. attorneys general, who have all said a first-time, non-violent offense does not warrant a multi-decade sentence,” Barr said.
Rubashkin’s attorneys had asked the court to impose a sentence up to six years, noting his positive history and character and his extraordinary family circumstances — he is the father of 10, including an autistic child. They contended that Rubashkin's conduct was not done for personal gain, that he did not intend any loss to the bank, and that a 72-month sentence would allow the Bureau of Prisons to place Rubashkin in a facility with experience in effectively and humanely incarcerating observant Jewish inmates.
But both the judge and prosecutors scoffed at the assertion that Rubashkin never profited from his crime. Prosecutors presented evidence that Rubashkin diverted from Agriprocessors $300,000 to pay his credit card bills, $200,000 to remodel his house, $76,000 to pay his state and federal income taxes, $41,000 to pay his mortgage, $25,000 for jewelry, $20,000 for sterling silver, $1,245-a-month for life insurance, and $365 for car payments.
Reade pointed out that Rubashkin’s “conduct kept the family business alive from which defendant withdrew a substantial salary and monetary payments for his personal expenses.”
When the prosecutor signaled his intention to request the stiff sentence, several legal scholars — including more than two-dozen former senior Justice Department officials — wrote to the judge to criticize the severity of the recommendation.
Rubashkin’s sentence is particularly harsh when compared to others convicted of similar crimes, his defense team pointed out.
They cited the case of Mark Turkcan, president of First Bank Mortgage of St. Louis, whose misapplication of $35 million in loans resulted in a loss of approximately $25 million but who was sentenced by a federal judge in Missouri to one year and one day in prison.
“The way this case was handled may go down in history as a permanent stain on American justice,” said Nathan Lewin, an attorney overseeing Rubashkin’s appeal. “Sholom Rubashkin has been targeted by prosecutors in Iowa from the very beginning, and has been treated unlike other similar defendants. We have asked, and continue to ask, the Justice Department to review the numerous instances of prosecutors stepping outside the bounds of standard and decent conduct in this case.”
In addition to what they called “the uncharacteristically severe sentence recommendation,” Rubashkin’s defense team maintained that their client was “subjected to numerous instances of harsh or disparate treatment by prosecutors and the government.”
They cited what they claimed as a “military style raid” on the Agriprocessors meatpacking plant in Postville, Iowa, in May 2008, and the arrest of nearly 400 workers immigration charges. The raid, they said, “had disastrous effects on the Postville community and could have been avoided if Immigrations and Customs
Enforcement had agreed to the plant's offer to cooperate.”
After the raid, they pointed out, Rubashkin was “subjected to seven superseding indictments and denied bail before trial because of claims by prosecutors that he could flee to Israel because he is Jewish.” Although eventually released on bail, Rubashkin was denied bail after his conviction because the government claimed he was a “flight risk.”
Although the immigration charges were severed from this trail, “Iowa prosecutors presented more than two days of highly inflammatory testimony regarding the immigration allegations during the bank-fraud trial,” the defense team pointed out, adding that Rubashkin was found not guilty of those crimes in state court.
In her memorandum, Reade detailed the crimes for which Rubashkin was found guilty on 86 out of 91 fraud charges. She rejected the defense contention that Rubashkin did no more than submit false invoices to the bank. Rather, she said, he engaged in a “complex series of fraudulent transactions,” including falsifying years of federal tax records, supporting federal tax documents, bank statements, and profit and loss statements.
“Over a period of many years, defendant created numerous false invoices, bills of lading and collateral certificates,” the judge found. “Many of these documents contained forgeries. For instance, defendant created false bills of lading to accompany the false invoices. In an effort to make the bills of lading look as legitimate as possible, defendant directed that an Agriprocessors employee forge the signature of a truck driver likely to be assigned the route indicated on the false bill of lading.
“In another effort to appear legitimate, defendant went to great lengths to manipulate records in Agriprocessors’ computer-based accounting system to reflect the number of false sales created by falsifying invoices and bills of lading so that the fraud would not be detected during routine audits. Defendant falsified the invoices and other documents and manipulated the accounting system in order to hide Agriprocessors’ actual financial situation from First Bank Business Capital. Accordingly, the court finds that defendant committed bank fraud using sophisticated means.”
Although Rubashkin was not the owner of Agriprocessors, Reade found that he was the person in charge of operations and “exercised significant decision-making authority in the hatching and execution of the fraudulent scheme. He directed subordinate employees on the manner and means of committing bank fraud, money laundering and harboring. … He himself rarely, if ever, drafted the false documents necessary to commit and conceal the bank fraud. These tasks were left to lower-level employees.
"Similarly, he directed [employees] to maintain Agriprocessors’ harboring of undocumented workers. The evidence shows that defendant made it a point to remove himself from the details of the harboring scheme. Defendant also had sufficient control to direct his subordinate employees to adjusted their behavior over time to continue concealing and perpetrating the fraud and harboring as it snowballed into a larger and more complicated scheme. … Defendant’s degree of control and authority was close to absolute. He told his employees when, where and how to commit the various crimes. In light of the foregoing analysis, the court finds that defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.”
An attorney for Rubashkin, Alyza Lewin, said her client was "never given a full and fair opportunity to address and defend himself against the immigration allegations in the federal case. The judge refused to allow testimony he wished to present that would have enabled the jury to hear the full story. In a subsequent state case that dealt with employment issues, he was given the opportunity to present his full case and was acquitted by the jury."
Reade wrote also that Rubashkin “lied at trial under oath” and that his “lies were willful … [and] material because they related directly to the nature of his involvement in the offenses of conviction.”
For instance, she said he lied when he claimed never to have asked an employee to create bills of lading to match false invoices – directly contradicting the testimony of the employee and the fake invoices and bills of lading introduced into evidence.
“The defendant’s testimony on this matter is incredible,” the judge wrote. “By perjuring himself at trial, defendant willfully obstructed or impeded … the administration of justice.”
“The defendant’s obstructive conduct in the instant action was more excessive than that involved in a typical financial crime case …,” Reade said.
And she rejected the pleas of Rubashkins’ lawyers who said his charitable and civic work, as well as the fact that he has an autistic 16-year-old son, should be mitigating factors.
“Like most human beings, defendant’s character includes good traits and bad traits,” she wrote. “In light of defendant’s character as a whole, the court finds that his charitable and civic nature does not warrant [leniency]. Additionally, it is entirely possible that a number of defendant’s charitable deeds were funded with proceeds from his crimes. It is far easier to be generous with someone else’s money instead of one’s own.”
Regarding his autistic son, Reade said the child is fortunate to have a “loving and competent mother as well as an extremely tight-knit, supportive extended family, all of whom are obviously devoted to him and accustomed to working with him.”
The judge also rejected the defense claims that Rubashkin suffered from depression that “impaired his judgment,” saying the assertion was “unsupported by any credible and independent physician.”
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