Feds seek Rubashkin insurance policies
By JEFF REINITZ, Courier Staff Writer
CEDAR RAPIDS --- Federal authorities are going after two life insurance policies held by the owner of Agriprocessors.
Court records allege the troubled Postville meatpacking company has been paying thousands of dollars each month for premiums on two $3 million insurance policies on Abraham Aaron Rubashkin's wife.
The U.S. Attorney's Office for the Northern District of Iowa filed actions against the two New York Life universal life insurance policies in Cedar Rapids Tuesday.
The cases were unsealed Wednesday, and authorities allege the policies were derived from unlawful activity and subject to forfeiture.
The policies were taken out in the summer of 2002 and have cash values of $497,960 and $252,270 as of October.
Together, Agriprocessors has paid $1.06 million for the policies, court records state.
According to an affidavit filed by a special agent with the U.S. Bureau of Immigration and Customs Enforcement, monthly premiums of $8,333 and $5,675 are paid out of an account at Citizens State Bank in the name of Abraham Rubashkin Insurance Trust. That account is replenished by checks written on one of the Agriprocessors bank accounts, court records state.
"The source of the funds that are deposited into (the) bank account ? each month is ultimately Agriprocessors," the ICE agent's affidavit states.
Abraham Rubashkin lives in Brooklyn, N.Y., where he owns a butcher shop and sells Agriprocessors products. Records said he is the "100 percent sole stockholder" of Agriprocessors.
The Agriprocessors plant in Postville was the scene of a May raid where 389 workers were detained for immigration-related charges.
The company, CEO Sholom Rubashkin and other supervisors and human resources workers have been charged in criminal court in connection with the raid.
Since the raid, the company has had to pay a higher base wage for workers, court records state.
Before May, the average hourly wage was less than $8 an hour, compared to rival meatpacking plants that pay over $10 an hour for the same work.
Court records allege Agriprocessors workers were able to end up with more take-home pay by claiming nonexistent spouses and children --- sometimes six or more --- in their withholding status.
"A review of the evidence and interviews with former employees of Agriprocessors revealed that many of these undocumented employees were claiming this high number of dependants despite the fact that they were single and/or only supporting one or two children," court records state.
An Agriprocessors accounting employee has testified before a federal grand jury that unidentified accountants told workers to claim more dependants on their W-4 forms so little or no federal withholding would be taken from their paychecks.
That way, the take-home pay and net wages would be closer to what was paid by other meatpackers.
Then many of the undocumented workers wouldn't file income tax returns or pay tax they would have owed because they risked discovery, according to court records.
Court records also outlined a 2005 scheme where Sholom Rubashkin sought help to build structures on chicken farms near Postville. The farms were for birds that would ultimately be harvested at the Agriprocessors plant.
One person involved in the project, identified as RR, told a grand jury that Sholom Rubashkin paid workers with checks from a corporation named Cottonballs LLC.
Some of the checks were made out to Garnavillo Gospel, which is a church where RR was a signing official, records state.
Checks from Agriprocessors were deposited into the Cottonballs account, and the money was then used to pay illegal workers for unloading chicken barns from trucks, records state.
[Hat Tip: Neighbor Girl.]