Rubashkin's Attorney Bernie Testifies Against Rubashkin

Rubashkin's former post-raid CEO Bernard Feldman says Rubashkin told him he was misusing the bank's money.

Witnesses testify Rubashkin knew about alleged fraud at slaughterhouse

Grant Schulte • Des Moines Register

Sholom Rubashkin knew about the alleged massive fraud at his former eastern Iowa slaughterhouse and misused money that was supposed to go to the plant’s lender, two government witnesses testified Wednesday.

Bernard Feldman, a New York lawyer who replaced Rubashkin as the top executive at Agriprocessors, Inc. after a May 2008 immigration raid, told jurors that he asked Rubashkin point-blank about customer payments that were supposed to go to the plant’s lender.

Rubashkin replied that “we needed the money to pay operating costs” in the wake of an enormous federal immigration raid, Feldman said.

Yomtov “Toby” Bensasson, a former plant controller, testified that he and Rubashkin approved bogus financial papers to scam the plant’s lender as farback as September 2007.

The testimony came during week two of Rubashkin’s 91-count financial fraud trial. Rubashkin has pleaded not guilty to bank, wire, and mail fraud charges, money laundering and failing to pay livestock providers in the time required by law.

UPDATE 8:15 pm CDT – Here is the AP story:

Ex-Manager Testifies in Slaughterhouse Trial
Former kosher slaughterhouse manager: Predecessor admitted diverting money meant for bank loan

SIOUX FALLS, S.D. (AP) – The man who replaced an Iowa kosher slaughterhouse manager accused of financial fraud testified Wednesday that his predecessor told him he intentionally diverted money meant to pay off a bank loan back into the plant's operating budget.

Bernard Feldman replaced Sholom Rubashkin at the Agriprocessors Inc., plant in Postville, Iowa. Feldman testified that Rubashkin told him that he needed the money at the plant after an immigration raid in May 2008, when 389 illegal immigrants were arrested.

Feldman said Rubashkin told him, "We needed the money to pay operating costs."

Rubashkin faces 91 financial fraud charges, including bank fraud, mail and wire fraud and money laundering. He has pleaded not guilty.

Prosecutors claim the company intentionally defrauded St. Louis-based First Bank on a revolving $35 million loan by faking invoices from meat dealers.

Rubashkin faces another trial on 72 immigration charges when the current trial concludes.

Rubashkin's father owned the Agriprocessors plant, but prosecutors have said Rubashkin was in charge of the plant's day-to-day operations, an allegation the defense disputes. The plant has since been sold.

Feldman was the third person called to testify who worked at the plant after the immigration raid. He echoed the theme of previous witnesses: The plant was in disarray, operating on a shoestring budget with sloppy accounting.

But Feldman went further, testifying that he asked Rubashkin directly about the allegedly faked invoices. His testimony indicated Rubashkin knew about the alleged fraud and diverted customer payments.

Feldman said Rubashkin told him, "We needed the money to pay operating costs."

Defense attorney Guy Cook questioned whether Feldman would have taken the job as Rubashkin's replacement if he believed the family to be corrupt.

"Absolutely not," Feldman said. "I can only tell you that, putting this incident aside, in many years with Sholom, I have never found him to be untruthful or devious in any manner."

A second witness, former Agriprocessors plant controller Toby Bensasson, testified that he and Rubashkin approved the fake invoices. Bensasson pleaded guilty in August to making false statements to a bank in connection with his work at Agriprocessors.

Bensasson said Rubashkin expressly forbid any plant employee from speaking with First Bank until they cleared it with Bensasson or accountant Mitch Meltzer.

UPDATE 9 pm CDT – Here's the full Des Moines Register report [Hat Tip: FGBA.]:

Witness: Rubashkin misused money intended for lender
GRANT SCHULTE • Des Moines Register

Sioux Falls, S.D. — Sholom Rubashkin knew about the alleged massive fraud at his former eastern Iowa slaughterhouse and misused money that was supposed to go to the plant’s lender, two government witnesses testified today.

Bernard Feldman, a New York lawyer who replaced Rubashkin as the top executive at Agriprocessors, Inc. after a May 2008 immigration raid, told jurors that he asked Rubashkin point-blank about customer payments that were supposed to go to the plant’s lender.

Rubashkin replied that “we needed the money to pay operating costs” in the wake of an enormous federal immigration raid, Feldman said.

Yomtov “Toby” Bensasson, a former plant controller, testified that he and Rubashkin approved bogus financial papers to scam the plant’s lender as far back as September 2007.

The testimony came during week two of Rubashkin’s 91-count financial fraud trial. Rubashkin has pleaded not guilty to bank, wire, and mail fraud charges, money laundering and failing to pay livestock providers in the time required by law.

Feldman recounted a September 2008 meeting that include Rubashkin; Rubashkin’s his father Aaron; and other family members.

Aaron Rubashkin “told me they wanted to have a new face at Agriprocessors to bring some credibility to the reputation that had been harmed,” Feldman told jurors.

Feldman said he accepted the executive job at a salary of $6,000 per week — $312,000 per year — and was allowed to continue his New York law practice. Sholom Rubashkin said little throughout the meeting, he testified.

The following month was filled with Jewish holidays in which Feldman did not work. In October, First Bank filed a lawsuit against the plant that pushed it into Chapter 11 bankruptcy. At that point, a bankruptcy judge appointed a trustee to oversee the plant.

The testimony offered new details about the plant’s financial situation before and after the raid:

• Plant executives were inflating their reported sales as far as back 1997, though on a much smaller scale in the earlier years, Bensasson testified.

• The plant’s cash flow plummeted “almost to zero” one week after the raid, Feldman said. Several months later, the plant’s earnings reached between 50 percent and 60 percent of the pre-raid numbers.

• Rubashkin set rules that forbid anyone at the plant from talking to First Bank officials unless they first cleared the request with Bensasson or Mitch Meltzer, Bensasson said. Other witnesses have testified that First Bank officials were free to inspect any financial records connected to their $35 million loan.

• Rubashkin had names for his big-dollar accounts. He allegedly referred to them as “his own s---, his own stuff, his 'tootsies,’” Bensasson testified.

Rubashkin leaned back in his chair, expressionless, as Feldman and Bensasson spoke. At times he jotted notes, whispered to his attorneys, and stroked his beard.
Defense lawyers did not get to cross-examine Bensasson. But when questioning Feldman, Rubashkin attorney Guy Cook emphasized Feldman’s relationship with the Rubashkin family.

“You wouldn’t have gotten involved with this if you thought they were a bunch of crooks, would you?” Cook asked.

“Absolutely not,” Feldman said.

Later, Feldman added: “I can only tell you that, putting this incident aside, in many years with Sholom, I have never found him to be untruthful or devious in any manner.”

Comments

[A. Nuran]

That does not look good for Mr. Rubashkin

[AGRI-vated Angel]

As I pause to reflect on what has transpired this passing year to SMR, I am reminded of a nursery rhyme ~

[Humpty Dumpty sat on a wall;
Humpty Dumpty had a great fall.
All the King's horses
And all the King's men
Couldn't put Humpty together again!]

:)

[Norm]

Shmyra-I'm confsued by your headline-Was Feldman Rabbi R's attorney? The story indicates i he is an attorney but not his.

[AGRI-vated Angel]

. . . or better, perhaps ~

[Humpty Dumpty sat on a wall;
Humpty Dumpty had a great fall.
Threescore men and threescore more,
Can't place Humpty Dumpty as he was before.]

:)

[steve]

He was his attorney in the Allou Healthcare fraud case:

http://failedmessiah.typepad.com/failed_messiahcom/2008/07/another-peg-in.html

[FirstGenerationBavarianAmerican]

Grant Schulte must still be writing up this story. Even more at the Register:
http://www.desmoinesregister.com/article/20091021/NEWS/91021034

Bernie was getting paid $6K a week. You never hear about Bernie around here.

[state of disgust]

How about asking Bernie about the Allou scandal and the money laundering that took place via Agri.
Amazing that the prosecution hasn't brought this up.

[seymour]

I love vin even this is not enough to put a small dent in kool aid drinkers

Their anger is against the witness since let see if one can guess

Mosser and they should burn in hell

[Shmarya]

How about asking Bernie about the Allou scandal and the money laundering that took place via Agri.
Amazing that the prosecution hasn't brought this up.

Bernie was Rubashkin's attorney. There's a problem with attorney client privilege.

[WoolSIlkCotton]

Seymour, I never cease to be amazed at the comments on VIN. From reading the comments there regularly, I have come to realize what ignorant, hate-consumed, backward, malicious people so many of the ultra-orthodox are.

[FirstGenerationBavarianAmerican]

Google news has a correction to the AP story updated here at 8:15 PM:
"(This version CORRECTS Corrects that Feldman testified that he asked Rubashkin about customer payments that were supposed to go to the plant's lender, not about the allegedly fraud invoices.)"

You can see that the 9 PM update was rewritten with the wording changed to "that he asked Rubashkin point-blank about customer payments that were supposed to go to the plant’s lender."

The last superceding indictment alleges false statements were sent to the bank on dates after Feldman was hired. Certainly Feldman has to clear his good name.

[lou]

wow-Toby said that he knew of----bogus financial papers to scam the plant’s lender as farback as September 2007.

well everyone else that worked there knew it was going on LONG before that!!!!

Middle-late 90's for sure when I seen it!!!