In 1972, Aaron Rubashkin opened a modest kosher butcher store in Brooklyn, New York. The store not only supplied the Brooklyn community with kosher meats, it also supplied a Jewish restaurant and soup kitchen operated by Aaron’s wife, Mrs. Rifka Rubashkin. In addition to their entrepreneurial pursuits, Aaron and Rifka raised nine children in the Chassidic Jewish tradition.
In the mid-1980s, kosher meat was in short supply, because of innovations in the storage and shipping of meat. Cattle were now slaughtered close to the supply in the Midwest in high volume. This new method of production eliminated smaller packers, who were the predominate producers of kosher meats. The scant supply of kosher meat enacted a hardship on Orthodox Jews generally and Aaron Rubashkin’s butcher store specifically.
To remedy this religious and entrepreneurial hardship, Aaron envisioned operating his own slaughterhouse a slaughterhouse focused on Kosher products. Aaron learned of an aged, run-down, and vacant meatpacking site in Postville, Iowa. The plant was the structural remains of the Hy-Grade plant. After a brief visit to the premises in 1987, Aaron purchased the plant for a couple hundred thousand dollars and named the venture “Agriprocessors”. Over the years, the operation grew considerably, and by 2008 it employed approximately 1000 workers in numerous departments.
At its inception, Agriprocessors operated with approximately 70 employees, five rabbis to perform the kosher slaughter, and a small managerial staff, which included, among others, his son Heshy Rubashkin. The small managerial staff experienced some turnover until Aaron hired Donald Hunt. Hunt was famously hired on a handshake and reported directly to Aaron. Aaron remained Agriprocessors’ sole-shareholder and the ultimate authority on any decision affecting the company.
Aaron’s initial plan was for the Postville plant to simply produce enough meat to supply his butcher store needs and the needs of a couple other butcher stores in Brooklyn. To that end, Agriprocessors slaughtered approximately 100 cattle a day. The revenue from that plan was insufficient to sustain production costs and Agriprocessors was forced to increase the slaughter quantity.
For over a decade, Agriprocessors’ financial statements were prepared and kept in order by Yomtov Bensasson, known as Toby, and his brother-in-law, Mitchel Meltzer, who had been a certified public accountant. Meltzer was responsible for the general ledger, maintaining the balance sheets, reconciling accounts receivable, and preparing documentation for lenders. He reported to Toby, who was the controller of the company and managed the accounting division.
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Sholom Rubashkin was not involved with Agriprocessors in its infant stages. In the early 1980’s, he traveled and taught the tenets of Judaism in Argentina. When he returned to New York he was introduced to and married Leah. After their marriage, the couple completed a traditional Jewish education in New York.
Subsequently, Sholom helped his mother in her restaurant (which was more like a soup kitchen) and then helped his father in the butcher shop.
In 1988, Sholom decided to move his family to Atlanta, Georgia where a new Rabbi had started a new synagogue. The Rabbi was trying to build and organize a new Jewish community. Sholom assisted in this project: he taught classes in language and religion to children, gave lectures to college students, and lead Bar Mitzvas. This was the most fulfilling time of Sholom’s professional life.
By 1990, Aaron had repeatedly requested Sholom to get involved in Agriprocessors. Sholom resisted these requests because he was enjoying teaching, which he felt was his calling. Eventually Sholom acceded to his father’s request and joined the Agriprocessors team. Sholom had received only a limited secular education, graduating from eighth-grade.
Sholom understood his obligation to Agriprocessors as one of faith and special familial obligation, based on the Commandment to “Honor thy Father and thy Mother.” He believed he owed a duty to his father Aaron, the Patriarch of the Rubashkins. The Rubashkins also saw Agriprocessors as a religious mission. Making Kosher products available to a broader community was a religious calling. Eventually, and in a very short period of time, Agriprocessors became the face of Kosher all over the world.
At Agriprocessors, Sholom began performing manual work on various lines. Ultimately, Sholom was assigned no specific role at Agriprocessors. Sholom moved his family to Postville in June, 1993 and tried to establish a permanent Jewish community there.
Sholom has always been a “problem solver.” And so when Agriprocessors got into a serious financial crisis at the time he moved to Postville he subsequently became involved with monetary tasks in an attempt to save his father’s plant, despite the fact that he had no formal financial training.
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Postville grew to become a beautiful community, built on diverse people. Businesses were booming and the community had learned to love one another. In just a few years the population more than doubled.
To celebrate its diversity, every August the city would host “A Taste of Postville” – a celebration of all the nationalities of the city at which each community would present their culture’s music, food and entertainment.
Sholom put a lot of emphasis at building the Jewish community. Eventually the community boasted a Synagogue, boys and girls elementary school, boys high school, two mikvaot, a kosher grocery store and many community charities.
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In 1999, Agriprocessors entered into a loan agreement with First Bank Business Capital (FBBC) a subsidiary of St. Louis-based First Bank, for a revolving note amount of $22,000,000. FBBC conducted thorough due diligence before agreeing to become Agriprocessors’ asset-based lender.
Judy Meyer handled customer accounts until her death in the summer of 2007. She worked with Toby Bensasson who designed the practice of inflating accounts receivables. Sholom had little involvement in the inflation until Judy Meyer’s death. After her death, Sholom became Toby’s liaison with Darlis Hendry.
It is significant that the FBBC line of credit is considered to be a loan with higher risk and higher profit potential. These types of loans are commonly made to corporations in dire financial straits. Indeed, FBBC’s internal documents characterize such asset-based loans as evergreen loans meaning that the principal is never expected to be repaid in full. The anticipated end is either to sell the loan or default. FBBC’s loan to Agriprocessors was akin to sub-prime loans. FBBC’s asset based line of credit involved a revolving credit limit that fluctuated based on the actual accounts receivable and physical inventory balances that the company had.
Agriprocessors was always undercapitalized and FBBC was cognizant of this condition. Throughout the term of the loan, FBBC also knew that Agriprocessors was frequently out-of-covenant on the debt to net worth covenant. Over the term of the loan, Sholom had very little contact with FBBC. FBBC communicated nearly daily with Toby Bensasson.
Agriprocessors borrowed against the FBBC line of credit each business day. In the morning, Bensasson would sign and send to FBBC a statement showing the total value of inventory and accounts receivable and calculating what Agriprocessors could draw against the cap that day. FBBC would verify the statements and wire the requested funds to Agriprocessors’main account at Citizens State Bank. As Agriprocessors received payments from customers against accounts receivable, those payments were directed to a bank account known as the sweep or depository account, held at Decorah Bank in trust for FBBC. Agriprocessors paid interest on the draws it had made on the loan on a regular basis. They never missed an interest payment.
FBBC never demanded audited financial statements from Agriprocessors. Instead, its agents conducted periodic field examinations. At least twice each year, FBBC conducted field exams at Agriprocessors. During these exams, FBBC personnel were given access to whatever financial data they desired to look at. FBBC’s inspection of the financial data and accounting information was woefully inadequate by FBBC design. In fact, during these field exams, the actual physical inventory of product kept in warehouses was never audited for accuracy. At any given time during the term of the loan, Agriprocessors reported to FBBC and calculated for borrowing base purposes over $10,000,000 in inventory value. There were times that Agriprocessors learned that they actually had more inventory than they were reporting to FBBC. FBBC knew that a large percentage of this frozen inventory was aging, yet FBBC accepted the inventory value at all times through October of 2008. The filing of bankruptcy did not proximately cause any diminution of value of the pre-petition physical inventory.
In 2007 and 2008, FBBC told Agriprocessors to sell large blocks of its “inventory.†Heshy and Sholom solicited promises to supply large blocks of inventory from various customers. Some of the claimed “fake invoices†were documentation supporting promises to buy large block quantities in the future. The name for this type of transaction was bill and hold.
Other so-called fake invoices resulted from product being shipped without being scanned. Agriprocessors had the warehouse ship product directly to the customer and Darlis created a corresponding invoice. This practice created a gap between the Order and the Invoice.
FBBC also knew that Agriprocessors supplemented their daily financial needs and expansion projects by obtaining monies from outside private loans and investments. Prior to May 12, 2008, FBBC never directly asked to see such third-party loan information or nor did it inquire how Agriprocessors was accounting for and repaying such loans.
The company also survived on loans from the Jewish community. Outside monies came to Agriprocessors directly or through Aaron Rubashkin or Sholom. Even though the monies were intended for Agriprocessors, the providers of these monies may have considered the transactions to be between themselves and Aaron Rubashkin or Sholom. Some loans came from purchasers of Agriprocessors products, while other investors provided loans to Agriprocessors under terms of Heter Iska.
Agriprocessors’ sole theoretical source of income was its accounts receivables monies paid to Agriprocessors from customers for its products. Under the terms of the loan agreement, Agriprocessors was required to remit to FBBC all accounts receivables for deposit into the account at the Decorah Bank. FBBC would then daily sweep monies from this account and apply the payments to the principal and interest on loan. Since customer payments were their only real source of income and the amounts borrowed daily were insufficient to cover daily costs, FBBC had to know that Agriprocessors was delaying deposit of AR into the sweep account.
Evidence at trial established that the total interest paid to FBBC on the loan during its life was at least $13.5 million, and may have been as much as $21 million. FBBC claims they are unable to calculate the amount of interest they received during the life of the loan period. But, FBBC likely received more money than it was entitled to, because Agriprocessors also paid interest on the inflated accounts receivables that it carried on its accounting books.
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The Hunt payroll was established so that Agriprocessors could perform necessary work during the weekend Sabbath period and other Jewish holidays. Under religious doctrine, Agriprocessors was prohibited from even asking non-Jews to work on the Sabbath and other holidays. Jewish law permits work if the work is performed by a legal entity owned by a non-Jew is separate from the Jewish employer. These requirements are necessary for the meat produced to be Kosher. Hunt payroll was established by Don Hunt to hire employees to perform Sabbath work. The need was for approximately 50-55 employees at any given time. Due to turnover, the employee list was never constant. Laura Althouse monitored the Hunt payroll. Sholom consulted with Rabbi Kohn, one of the lead supervising rabbis at the plant, on this matter. Rabbi Kohn recommended that instead of some employees working for Agriprocessors during the week and then for Hunt on the weekends, that they be made full-time Hunt employees.
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Agriprocessors lacked an adequate corporate structure to govern its expansion. Aaron installed his son Yossi to run Agriprocessors’ New York sales and distributions, and his daughter Gitel to run a distribution center in Florida. The additional distribution centers were financed by Agriprocessors Postville, but Sholom had no control over how Aaron, Yossi, or Gitel spent money. Moreover, Sholom exercised no control over Rabbinical rate or expense. AGRI Postville also had to pay independent contractor fees, travel bills and housing expense. In addition, Agriprocessors Postville provided money to NEVEL (real estate and apartments), and COTTONBALLS (chicken production), the Pines Motel, and the Torah Education Program. These unsupervised expenditures made it impossible for Postville to control its own financial obligations.
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At all times material hereto, Sholom M. Rubashkin did not possess direct or unilateral authority at Agriprocessors to fire any employee who was the subject of a no-match letter. He did not have the unilateral authority to close the plant. He did not control the hiring of employees.
Elizabeth Billmeyer was Agriprocessors’ Human Resources director. At all times material, she reported directly to Heshy Rubashkin. Production constantly demanded that she hire new employees, to cover expansion and turnover, although she knew that Sholom wanted to reduce staff.
Billmeyer was responsible for ensuring that Agriprocessors was in compliance with hiring rules and regulations. Sholom was not trained to examine immigration or social security documentation to determine their legitimacy. Sholom understood that Billmeyer had been trained to detect flaws in the foregoing documentation. Agriprocessors also employed numerous other persons in its Human Resources Department to ensure the company’s practices were administered appropriately, namely Laura Althouse, Karina Fruend, Shawn Meyer and Penny Hanson.
Agriprocessors hired new employees through bottom up activity. Latin American immigrants apparently provided Agriprocessors with hundreds of false identification cards. Upon acquiring a job, many employees then would help family members and friends to get jobs at Agriprocessors. Several U.S. citizens from Iowa who worked at Agriprocessors were married to illegal aliens who worked in the plant. Agriprocessors manager Nicole Miller was married to an illegal alien: she somehow infiltrated the HR department and is presumed to have helped more illegal aliens find employment at Agriprocessors.
In December, 2003, a fire destroyed a turkey plant adjacent to Agriprocessors. Subsequently, Hispanic employment at Agriprocessors increased dramatically. When the Turkey Plant burned, Ron Wahls from the Postville School District and State Senator Mark Zieman came to Agriprocessors and begged them to take the out-of-work Hispanic Employees from the Iowa Turkey Plant. The Hispanics employees prior ITP employment strongly suggested that their papers were legitimate and authentic.
Between January and May of 2007, letters were sent to various employees to resolve their no-match problem. AGRI also consulted with its lawyers on the no-match situation. Sholom understood that Elizabeth Billmeyer was supposed to be doing the following: determine which of the listed employees was still working at AGRI; check AGRI’s records for those workers still employed to determine if any error had been made; notify the employees that a no-match letter had been received; request that the employee advise AGRI whether their documentation information was correct; if the employee said the documentation was correct, then the employee needed to resolve the situation with the SSA; and if the employee said the information was not correct, then the employee had to provide correct information to AGRI. Billmeyer also had direct access to and contact with Agriprocessors attorneys for any of her questions.
Sholom believed this records analysis took a long time. In approximately May 2007, in an attempt to comply with yet proposed DHS safe-harbor regulations, AGRI attached notices to paychecks of affected no-match letter employees requiring the employees to resolve the discrepancy with the SSA and report back to AGRI on or before July 19, 2007. Ron Wahls was listed as a community person who would help the affected employees.
On or about the first week of May, 2007, between 100-200 employees staged a walkout and/or assembled at AGRI to protest the letters. The walkout was engendered by the no-match letters issued by AGRI to the relevant employees and by misinformation spread by a Union plant, Virdania Nunez. The Union spread the rumor that Agriprocessors had reported the employees to the government so that they would be fired, lose their vacation pay, and be rehired only with new paperwork and at a loss of previous benefits.
These rumors were false and in reality, Sholom obtained a raise for employees and was working with Ron Wahls in Postville to provide no-match employees with legitimate consultation on their immigration problems.
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Evidence at trial established that ICE had twice unsuccessfully attempted to have an undercover agent – Agent 007 – obtain employment at Agriprocessors using false documents. He was rejected first because he had no Social Security card. He returned with false Social Security and permanent-resident cards, both provided by ICE. Agriprocessors rejected him again because his documents were false. ICE then provided him with legally valid documents, and he was finally employed. Evidence at trial also established that Agriprocessors frequently turned away applicants for employment on the ground that their proffered paperwork was false. An ICE agent testified at trial that the quality of false documents in the black market is constantly improving, and the agency struggles to prevent fraud.
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On May 12, 2008, and Immigrations and Customs Enforcement detained 389 illegal immigrants on Agriprocessors’ premises. Rumors of the raid had been circulating prior to that date. Agriprocessors retained the law firm of Baker & McKenzie, that had negotiated with ICE and with the United States Attorney in the Eastern District of Texas to avoid a raid on another meat-packing plant. The Baker attorney proposed in a letter that Agriprocessors would cooperate with the authorities in terminating the employment of undocumented aliens, as the intended target of the Texas raid had done. Neither ICE nor the United States Attorney did anything to respond to that letter. ICE dispatched approximately 600 agents, accompanied by two Blackhawk helicopters, to raid the plant.
The ICE raid devastated the Postville plant. Operations never again were close to their pre-raid levels. FBBC nonetheless continued to lend money to Agriprocessors under its line of credit. This arrangement followed a meeting during which Sholom Rubashkin basically said that the company had complied with the law. FBBC had known before the raid that Agriprocessors had received no-match letters, but it did not conduct any investigation or even ask what responsive action Agriprocessors had taken.
Several months later, in late October 2008, FBBC called the loan after learning that Agriprocessors had not promptly deposited all customer payments into the sweep account. On October 30, 2008, FBBC filed a civil suit against Agriprocessors and against Aaron and Sholom Rubashkin for their personal guaranties on the bank loan. The bank’s losses were alleged to be approximately $21 million. Appellant subsequently provided an asset that settled FBBC’s claim on his guaranty. On November 4, 2008, Agriprocessors filed for bankruptcy protection, and a trustee was thereafter appointed.
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On May 20 2008, Sholom received a target letter regarding immigration charges and on May 21, 2008 he received a target letter regarding bank fraud charges. Subsequently he hired counsel. Sholom left Agriprocessors for about a week (late May-early June) and his resignation was announced. Agripriocessors’ public relations publicized the announcement, misidentifying him as the CEO, which position he never held. Subsequently, Heshy and Aaron begged Sholom to come back to work at Agriprocessors and he agreed.
In this period of time, Sholom traveled several times to New York for meeting with potential investors, including on July 6-9, 2008 and August 24-September 5, 2008. On September 9, 2008, the State Complaint was filed. On September 10, 2008, Phil Lykens from FBBC called Sholom and was upset about the risk that Agriprocessors would lose its OU Certification and the State complaint. On September 18, 2008, Bernie Feldman was hired as CEO, and Sholom moved out of his office. Subsequently, Sholom worked with Bernie Feldman to find monies to pay for vendors and expenses, including feed for live chickens worth over a million dollars.
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Sholom Rubashkin was arrested for the first time on October 30, 2008, on a complaint charging him with immigration-related crimes. He was released on severe bail conditions that, to our knowledge, have never been demanded of an employer charged with an immigration violation a $1 million bond and an ankle bracelet with electronic monitoring.
On November 14, 2008, Appellant was arrested again, this time on bank-fraud charges. The new charges alleged that he had inflated the value of the collateral for the FBBC loan and falsely certified to the bank that Agriprocessors was complying with all laws even though the company was employing undocumented aliens.
The prosecutors opposed release on bail and claimed that since Appellant was Jewish there was a risk he would flee to Israel and could not be brought back because of Israel’s Law of Return. Indeed, the magistrate judge denied Mr. Rubashkin bail.
Subsequently, the American Defamation League (ADL), American Jewish Congress (AJC) and Agudath Israel of America sent letters to the US Attorney General, Michael Mukasey, protesting this insulting position, which in essence is saying that all Jews are a flight risk. Additionally, a number of distinguished rabbis convened at the Dubuque County Jail to decry this position. They were Rabbi David Zwiebel, Agudath Israel of America; Rabbi Pesach Lerner, National Council of Young Israel; Rabbi Yaakov Wasser, Rabbinical Council of America; Rabbi Gershon Tannenbaum, Rabbinical Alliance of America, Igud Horabbonim; Rabbi Moshe Elefant, Orthodox Union and Rabbi Shimon Hecht, National Committee for Furtherance of Jewish Education. It was extremely rare that so many high profile Jewish leaders convene in one place for a cause.
Sholom remained in jail for 76 days until the district judge reversed that decision. In reversing the magistrate judge, the district court emphasized that Mr. Rubashkin’s involvement in the community extends beyond Agriprocessors, Inc. to local religious and educational institutions,†many of which he had personally founded. The court also cited Appellant’s history of leadership and charity and observed that the community’s support for him which included offers by individuals to pledge their home equity as security for his release was “unprecedented.”
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On June 25, 2009, the district judge severed the immigration law charges from the financial charges. The court explained that severance is necessary to preserve the rights of Defendants Rubashkin and Agriprocessors to a fair trial. Notwithstanding a strong presumption in the law in favor of joinder and against severance, the court concluded that trying the immigration and financial counts in a single proceeding would prevent a jury from making a reliable judgment about the guilt or innocence of the accused. On July 6, 2009, over defense objection that evidence of immigration law violations would taint the bank-fraud trial if it were held first, the judge granted the prosecutors’ request that the financial charges be tried first.
Substantial local publicity and media attention surrounded this prosecution, which was initially brought in Cedar Rapids, Iowa, which is in the same part of the state as the Agriprocessors plant. The district court initially denied a motion for a change of venue on account of prejudicial publicity, but after the judge reviewed jury questionnaires she determined that prejudice from pretrial publicity in this action is so extensive and corrupting that it may presume unfairness of a constitutional magnitude. The completed jury questionnaires demonstrated that the prodigious amount of negative pretrial publicity has caused the vast majority of potential jurors to develop and maintain a pervasive, strong bias against Mr. Rubashkin and Agriprocessors. The court therefore ordered that the trial be moved to Sioux Falls, South Dakota.
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Mr. Rubashkin was tried before a jury between October 13 and November 12, 2009. The heart of the prosecution’s financial case was that Agriprocessors had misrepresented the value of the collateral for the FBBC loans (in order to be able to make larger draws within its line of credit) in two ways: (1) by creating invoices that did not reflect actual sales, and (2) by channeling some customer payments toward its own cash needs and not depositing them immediately into the sweep account. The diverted funds ultimately were transferred from Agriprocessors to the sweep account, sometimes directly from Agriprocessors accounts and sometimes by being routed through bank accounts of a kosher grocery store in Postville (Kosher Community Grocery or KCG) and a Postville school providing Jewish education (‘Torah Education or TE). These two methods of inflating Agriprocessors’ accounts receivable were the basis for all the bank-fraud, wire-fraud, and mail-fraud counts, and all but one of the false-statement counts. The ultimate transfer of the diverted funds back to the First Bank sweep account designed to repay the bank loans formed the basis for the money laundering counts.
The prosecution also presented an alternative fraud theory: The loan agreement contained boilerplate certifications that Agriprocessors was not in violation of any law, statute, regulation, ordinance, judgment, order, or decree applicable to [the] borrower which violation would in any respect materially and adversely affect the collateral, . . . or such borrower’s property, business, operations, or condition, financial or otherwise. These certifications were allegedly false because Appellant knew that Agriprocessors was violating federal laws against harboring illegal aliens.
Over repeated defense objections and requests for a mistrial, the prosecution presented almost three trial days of evidence and witnesses to support the immigration-based fraud theory. This evidence included testimony about a covert meeting, near a barn on the Agriprocessors premises, between Mr. Rubashkin and the manager of the beef-kill division of Agriprocessors during the week before the raid. Although none of the prosecution’s witnesses actually heard this conversation, the prosecution argued to the jury that it concerned a scheme to pay for the purchase of fraudulent documents in anticipation of the ICE raid.
In order to satisfy the jury that Appellant had not believed Agriprocessors was violating the law against harboring illegal aliens, the defense sought to present testimony that attorneys had been advising Agriprocessors and the Appellant on immigration issues, including one lawyer who was an expert on immigration documentation and was actually present at the plant on the day of the raid in order to review the authenticity of employees’ documentation. The attorney-client privilege, assertedly held and not waived at the time of trial by Agriprocessors’ bankruptcy trustee, protected the content of the lawyers’ advice. But the district court declared that all testimony by the attorneys was irrelevant and excluded it even though it breached no privilege. Hence, the expert who had been present in Postville to review employees’ documentation was not allowed to testify that he was present even though proof of his presence would not have divulged any client confidences.
The prosecution also presented evidence that Agriprocessors had occasionally paid cattle suppliers after the strict time limits established by the Packers and Stockyards Act (PSA), which had been incorporated into a consent order between Agriprocessors and the Secretary of Agriculture. Violation of such an order is a criminal offense under the literal terms of the PSA. It was undisputed that all cattle suppliers had been paid by Agriprocessors; the company’s only error was paying late. The longest delay in payment was eleven days.
The jury acquitted Appellant on five counts of willfully violating an order of the Secretary of Agriculture, and convicted on the rest of the charges. In interrogatories relating to the money laundering counts, the jury found that the predicate transactions did not involve profits of any criminal activities.
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In September 2008 Mr. Rubashkin was charged by the Iowa Attorney General with 9,311 counts for hiring underage workers. The State did so notwithstanding the fact that the investigating agency, the Iowa Division of Criminal Investigation, did not complete its initial report in the case until January 2009. Moreover, the State’s investigation continued after January 2009; it was only the initial report that was completed in that month.
The hasty nature of the State’s prosecution decision became apparent later in the case. First, the State dismissed the charges against Aaron Rubashkin entirely without any quid pro quo or concession from Aaron.
Further, the State on the eve of trial amended its complaint to reduce the number of charges against Sholom from 9,311 to 83. This was an implicit recognition that a complaint with 9,311 charges was so unwieldy as to make a fair and efficient jury trial impossible.
Moreover, the State’s amended complaint containing 83 counts included 16 counts based upon the employment of five alleged minors whom the State knew would never testify in court. In fact, those five minors were not even listed on the State’s final witness list submitted to the court before trial. For this reason, following closing arguments, the judge allowed only 67 counts to be presented to the jury.
The State presented no evidence at trial of extortion, sexual abuse, forced labor, or other similar allegations. Any claim by the State that it has evidence of such things has not been aired in a public courtroom, much less has it been the subject of any civil or criminal charge.
Witnesses who had experience in meat packing plants other than Agriprocessors testified that the working conditions, cleanliness, and makeup of the workforce at Agriprocessors were either typical or above average for meat packing plants in general. There was no evidence to suggest that Agriprocessors was different or worse than other plants in these areas.
In the end, the jury found Sholom innocent of all charges related to the employment of underage workers at Agriprocessor’ Postville kosher meatpacking plant. The jury’s verdict vindicated Mr. Rubashkin’s assertion that he had no knowledge of underage workers at the plant.
The verdict also raised serious questions about the validity of the federal bank fraud conviction. Following the not-guilty verdict, Mr. Rubashkin’s trial attorney, Guy Cook, said, “Sholom Rubashkin was irrefutably harmed during the federal trial by being falsely portrayed as responsible for the employment of illegal workers. We believe this had a profound impact on the jury, and tainted the federal trial. If the federal jury had been permitted to hear both sides of the issue, they would probably have found that Sholom Rubashkin was not responsible for the employment of illegal workers.”
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A sentencing hearing took place on April 28 and 29, 2010. Prosecutors had received only a single victim-impact form, despite having mailed them out to many other individuals. Only two victim-impact statements were presented in court, both from representatives of the cattle-supply cooperative that claimed it had lost interest of less than $4000 by being paid late.
Numerous witnesses testified in support of a lenient sentence for Mr. Rubashkin, attesting to his honesty, his charity and generosity, his relationship with his ten children, and his importance to his community. Hundreds of letters were sent to the court by those whose lives had been enhanced by Mr. Rubashkin even including competitors in the kosher meat industry.
When it appeared from the prosecution’s initial recommendation that it was suggesting life imprisonment, six former United States Attorneys General and seventeen high-ranking former federal prosecutors and high-ranking Department of Justice officials signed an unprecedented letter to the court declaring that they “cannot fathom how truly sound and sensible sentencing rules could call for a life sentence or anything close to it for Mr. Rubashkin, a 51-year-old, first-time, non-violent offender whose case involves many mitigating factors and whose personal history and extraordinary family circumstances suggest that a sentence of a modest number of years could and would be more than sufficient to serve any and all applicable sentencing purposes.”
The prosecution ultimately recommended a sentence of 25 years’ imprisonment. The defense suggested a prison term of not more than 6 years. The district court ordered that Sholom Rubashkin be imprisoned for 27 years, two years more than the prosecutors had requested. The judge agreed with the prosecution that the actual loss was approximately $27 million, including the full sum the bank said it lost on the loan. The prosecution represented that the bank had lost $27 million even though the bank itself had claimed in its civil lawsuit that its loss was only about $21 million. The court determined the sentence entirely on the basis of the United States Sentencing Guidelines, making no post-Guideline adjustment based on the sentencing factors enumerated in 18 U.S.C. § 3553(a).
Specifically, the judge refused to modify the Guidelines calculation even though Appellant had acted not out of greed but to keep his family’s business afloat and to save the jobs of the plant’s employees. The court explicitly imposed its sentence “no matter [Rubashkin’s] motive. The court also ignored the defense contention that a lengthy prison term would create drastic unwarranted sentencing disparities with similarly situated defendants, and it rejected defense requests for downward departures or variances to account for Mr. Rubashkin’s renowned charity or his special relationship with his autistic son.
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On August 5, 2010, Mr. Rubashkin’s counsel filed a motion for a new trial pursuant to Rule 33(b)(1) of the Federal Rules of Criminal Procedure. The motion was based on newly discovered evidence, obtained through an earlier-filed lawsuit under the Freedom of Information Act (FOIA), showing that the presiding trial judge had been meeting and communicating ex parte with ICE and the United States Attorney’s Office for at least six months prior to the May 2008 raid.
Internal government memoranda reported that ex parte communications began as early as October 10, 2007, on which date prosecutors gave Judge Reade a “briefing regarding the number of criminal prosecutions that they intend[ed] to pursue relative to this investigation.” Later that month, the prosecutors discussed with Judge Reade possible dates for the raid, to see what would “meet her scheduling needs.” Ultimately, a date for the operation was set by the availability of the courts.
ICE memoranda and emails reported additional pre-raid meetings between Judge Reade and the United States Attorney’s office. At one meeting attended at the judge’s request by other law-enforcement personnel, the judge stated that she was “willing to support the operation in any way possible, to include staffing and scheduling.” During a meeting attended by Judge Reade held on March 17, 2008, the participants discussed “an overview of charging strategies, numbers of anticipated arrests and prosecutions, logistics, the movement of detainees, and other issues related to the CVJ investigation and operation.” Approximately five weeks before the raid the judge “requested a briefing on how the operation will be conducted” and directed the United States Attorney to provide her with a “final gameplan” by a certain deadline. One ICE e-mail even describes Judge Reade as a “stakeholder” in the raid.
Neither Judge Reade nor the prosecutors notified Mr. Rubashkin’s trial counsel of the judge’s extensive pre-raid meetings with the United States Attorney’s Office. At least 12 such meetings have thus far been discovered.
Two nationally respected experts in judicial and legal ethics Mark Harrison and Professor Stephen Gillers submitted affidavits concluding that the conduct described in the ICE memoranda constituted serious ethical misconduct on the part of the judge and the prosecution team. The defense requested discovery in the event that the new documents were not themselves sufficient to warrant a new trial. The defense also requested that Judge Reade transfer the new-trial motion to a disinterested judge for resolution. The prosecution resisted the motion and the defense’s ancillary requests.
On October 27, 2010, Judge Reade denied the motion for a new trial, along with the requests to transfer it for decision to another judge and for discovery. The denial rested on the papers; no oral argument or evidentiary hearing was held.
The appeal from that denial was subsequently consolidated by the 8th Circuit Court of Appeals with the initial appeal from the judgment of conviction.
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On January 3, 2011, lawyers for Rubashkin filed an appeal for a new trial with the 8th Circuit Court of Appeals in St. Louis. In the brief, four arguments for a new trial were made. According to the brief, government documents that surfaced after Rubashkin’s conviction and not made available to the defense showed that Reade was involved in the planning for the federal immigration raid of the Postville plant in May 2008, which it sees as collusion with the prosecution. Reade’s excessive coziness with prosecutors planning the raid raised doubts about her impartiality in the case, the brief claims, and states that as a result Reade should have recused herself, and that Rubashkin is entitled to a new trial or, at a minimum, an evidentiary hearing.
Following the filing of this appeal, the American Civil Liberties Union (ACLU), National Association of Criminal Defense Lawyers (NACDL) and Washington Legal Foundation (WLF) filed amicus briefs supporting Rubashkin’s appeal for a new trial. What has united the three groups is the involvement of the judge in the case with the prosecution, as argued by Rubashkin’s defense team, which, according to ACLU’s Iowa legal director Randall Wilson, “immediately gave the appearance of unfairness.” The ACLU brief says: “Mr. Rubashkin’s conviction should be vacated and he should get his day in court, with a tribunal that is not an arm of the prosecution. Due Process demands it. The Separation of Powers Doctrine demands it.”
Subsequent to the filing of the appeal brief, in a rare move, the government not only denied consent to the filing of the three amicus briefs, they filed a Resistance with the Eight Circuit, effectively attempting to block the court from accepting the brief. Shortly following a law review published in Bloomberg Law Reports, the government filed a brief to withdraw their opposition to the amicus briefs.
Oral arguments before the 8th Circuit Court of Appeals took place on June 15, 2011. (Click here to hear the oral arguments.)
On September 16, 2011, the Court of Appeals in the 8th Circuit denied Mr. Rubashin’s appeal.
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On April 2, 2012, attorneys Paul Clement and Nathan Lewin filed a cert petition to the U.S. Supreme Court asking them to take the case.
Six Amicus Briefs were filed with the Supreme Court supporting Sholom’s petition asking the Court to hear the case.
Amici included 86 former federal judges and DOJ officials (27 federal judges, 2 Attorneys General, 1 Inspector General, 2 FBI Directors, 4 Deputy Attorneys General and 1 Solicitor General), National Association of Criminal Defense Lawyers, Washington Legal Foundation, 40 legal ethics professors, Association of Professional Responsibility Lawyers, and Justice Fellowship.
The amicus brief signed by the 86 former DOJ officials and judges stated: “In this case, the district judge’s numerous ex parte contacts and personal involvement with the prosecution prior to the raid, together with the judge’s failure to disclose the extent of that collaboration, seriously undermined that appearance of impartiality. The FOIA documents suggest that the district judge was intimately involved with the planning of the Agriprocessors raid.”
It further made the argument that: “In imposing a 27-year sentence on Mr. Rubashkin— a 51-year-old, first-time, nonviolent offender—the district court failed to consider the appropriate sentencing factors, even though the need to do so was acute. The guidelines range in Mr. Rubashkin’s case was absurdly inflated due to the increased loss calculations and over-lapping enhancements that can often arise in financial fraud cases.”
The government will give its response by July 25th after which the Supreme Court will decide if it takes the case.
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Fifty one Congressmen have thus far written to Attorney General Eric Holder to investigate this case for alleged prosecutorial and judicial misconduct, as well as the fairness of Rubashkin’s 27-year sentence.
On May 3, 2011, at a once-a-year House Oversight Hearing of the Judiciary Committee at which Attorney General Eric Holder testified, two members of Congress (Debbie Wasserman Schultz D-FL and Sheila Jackson Lee D-TX) publicly mentioned the case of Sholom Rubashkin to the Attorney General.
In July of 2011, seventy-five law professors and US Attorneys sent a letter to Attorney General Holder urging an investigation into prosecutorial misconduct.
* The information here was mostly collected from Trial Transcripts and the Appeal Brief.
