Rubashkin case in jury's hands
BY GRANT SCHULTE • Des Moins Register
Sioux Falls, S.D. — Lawyers in the trial of Sholom Rubashkin closed their cases today with clashing portraits of the eastern Iowa meat plant executive.
Prosecutors painted Rubashkin as the ringleader of an enormous fraud and immigrant-harboring scheme that festered at the plant for years. Defense lawyers said the charges stemmed from over zealous prosecutors, who failed to prove the allegations.
A seven-woman, five-man jury must now decide whether the former Agriprocessors, Inc. vice president is guilty of 91 federal fraud crimes. Jurors received the case this afternoon, after several hours of raised voices and courtroom theatrics.
Assistant U.S. Attorney Peter Deegan Jr. said Rubashkin’s claim that he did not know about the crimes at Agriprocessors was “ridiculous,” and urged jurors to convict the former executive on all 91 financial fraud charges.
Rubashkin is charged with mail, bank and wire fraud, money laundering and ignoring an order to pay cattle providers in the time required by law. He has pleaded not guilty.
“This case is very much about control,” Deegan said. “The defendant’s control over money from customers. The defendant’s control over money for cattle providers . . . the defendant’s control over his workers. And finally, control over the bottom line.”
The allegations against Rubashkin came about five months after federal immigration agents raided Agriprocessors and arrested 389 illegal workers. The plant sought bankruptcy protection several months after the May 2008 raid, and now runs under new ownership as Agri Star.
Prosecutors allege that Rubashkin falsified sales records to mislead the plant’s St. Louis-based lender, so he could collect larger advances on a $35 million credit line. Rubashkin also allegedly diverted customer payments into the plant, and used some of the money to pay for jewelry, silver, and house renovations.
Rubashkin knew about hundreds of illegal immigrants who worked at the plant as far back as May 2005, Deegan said. Elizabeth Billmeyer, the plant’s human resources director, warned him in an e-mail that “someone could go to prison for this” but was ignored.
When Billmeyer refused to process any more fraudulent work papers, Rubashkin told two other human resource employees to hire the illegal workers at night and put them on a separate payroll, Deegan said.
Deegan scoffed at Rubashkin’s assertion that former plant controller Toby Bensasson ran the scam without his knowledge. Bensasson pleaded guilty to one conspiracy charge in August and testified against his former boss.
“It’s ridiculous,” Deegan said. “It’s a child’s excuse. He says: 'Toby made me do it, and I didn’t know it was illegal, and even if I did know it was wrong, I didn’t think the bank would care.’”
Government over-reached, defense lawyer say.
Rubashkin lawyer Guy Cook repeated the defense team’s assertions that Rubashkin did not oversee financial decisions.
He said Rubashkin’s alleged behavior did not constitute fraud, because the plant’s lender continued to send money despite repeated violations of their loan agreement and the hundreds of illegal workers exposed by the raid.
Bank officials acknowledged during trial that they collected at least $13.5 million in interest payments from the asset-based loan, which is riskier than most traditional business loans.
Defense lawyers argue that bank officials, as a result, did not care about the plant’s questionable business practices. Prosecutors counter that the bank stopped lending to Agriprocessors as soon as they learned about the alleged fraud.
The arrangement, Cook said, was similar to a man who falsely claims to be 7 feet tall on a dating Web site to attract women. But the woman — in this case, First Bank — continued to “date” Rubashkin even after discovering that he was much shorter, Cook said.
Cook said his client was an inexperienced businessman who tackled too much. He held up the plant’s loan contract with the plant, which looked to be at least 100 pages, and reminded jurors that Rubashkin never read it. To emphasize his point, he dropped it on the floor.
Cook also showed jurors a Power Point slide of Rubashkin with his wife and their 10 children.
“Would he put these people at risk?” Cook asked. “Does he have the criminal intent that the government assigns him?”
The jurors listened silently, their hands in their laps, as the attorneys closed their cases. Aaron Rubashkin, the plant’s founder and family patriarch, sat in the back of the courtroom clutching a broad-rimmed black fedora.
Rubashkin stared blankly ahead, one hand resting on his wrist. After the jurors left to begin deliberations, he turned and hugged his lawyers.
The former meat plant executive faces a maximum 1,280-year prison sentence if convicted of all the financial fraud charges. He also is expected to face 72 federal immigration charges at a second trial in December.
[Hat Tip: Neighbor Girl.]
Update 11:25 am 11-10-09 – Here is the Waterloo-Cedar Falls Courier's report:
UPDATE: Rubashkin case goes to jury
By JENS MANUEL KROGSTAD • Waterloo-Cedar Falls Courier
SIOUX FALLS, S.D. - In the trial of former Agriprocessors executive Sholom Rubashkin, the jury now must decide if he is guilty of a massive financial fraud and cover-up, or if he is simply a trained rabbi with an eighth-grade education who fell prey to overzealous government prosecutors.
After four weeks of sometimes heated arguments, the jury began deliberations Monday afternoon.
Before closing arguments commenced, District Judge Linda Reade took about 90 minutes to read all 91 financial fraud charges, which carry a maximum penalty of 1,280 years in prison. Charges include bank, mail and wire fraud, money laundering and failing to pay livestock providers in a timely manner.
Sholom Rubashkin allegedly committed the crimes to inflate his company's assets so its bank would lend Agriprocessors millions of dollars it would otherwise not have been eligible for.
Prosecutors painted Rubashkin as the chief financial decision maker at the Northeast Iowa kosher meatpacking plant. They said he played a key role in the fraud - creating fake invoices, diverting customer payments, lying to bankers about being in compliance with the law - and in covering it all up through money laundering.
"The defendant, Sholom Rubashkin, was the boss of Agriprocessors," said assistant U.S. attorney Peter Deegan. "Whether inside or outside the plant, the people understood Sholom Rubashkin to be in charge of the plant."
But defense attorney Guy Cook described Rubashkin not as a keen businessman but as "some fella' who studies the Torah." He said the husband and father of 10 lacked the training and motivation to commit the crimes, and was guilty of nothing more than incompetent management.
"He was not in charge. He was in over his head. He was a well-intentioned, energetic, jump-on-the-spot fireman," he said. "You know those people. They think they can handle everything, and they can't."
For much of the day, Rubashkin sat still between his attorneys showing little emotion, while his father, Aaron Rubashkin, the owner of Agriprocessors, also sat stone-faced in the back of the courtroom.
Like they have throughout the trial, supporters showed up, many from Minneapolis and New York. The crowd, mostly men young and old, dressed in black like Rubashkin, read prayer books and filled the gallery more than usual.
Deegan reminded the jury of an old friend of Rubashkin's who owns a business in New York. He said the testimony served as a clear-cut case of creating fake invoices, because Agriprocessors' records indicate it sent meat to the friend's store, which was later revealed to only sell men's clothing.
The judge explained the government has to prove Rubashkin knowingly committed fraud, but not the exact dollar amount.
To that end, Deegan recollected several witnesses, including Darlis Hendry herself, who said Rubashkin regularly asked Hendry, a sales coordinator, to create false invoices.
Deegan said Rubashkin incriminated himself last week on the stand by admitting he visited Hendry about invoices. He dismissed Rubashkin's explanation that the company controller, Yomtov "Toby" Bensasson, told him to do it, and that he had no idea it was illegal or that the bank would even care.
Bensasson pleaded guilty to conspiracy in August and has agreed to testify against Rubashkin.
"It's a child's excuse: 'I didn't do anything wrong. Toby made me do it,'" Deegan said. "Even if Toby Bensasson is the mastermind and Rubashkin knows or helps, he's still guilty."
But Cook argued it did not matter if the invoices were false. He said to prove bank fraud, the government must also show Rubashkin schemed to cheat and rob Agriprocessor's lender, St. Louis-based First Bank Business Capital.
The reality, Cook said, is the bank made millions of dollars off of Agriprocessors, even after a May 2008 immigration raid and Rubashkin's subsequent resignation. He noted the bank did not conduct a detailed audit before issuing loans, and suggested it was because, as a bank officer testified, First Bank had made at least $13.5 million on asset-based loans that carried high interest rates.
Cook then showed the jury a copy of the bank's web page date from a few weeks ago, which touted the Agriprocessors loan as a success. He talked of bonuses for bankers that likely followed, and noted the bank filed a civil lawsuit last year that did not include allegations of fraud.
"You need to look behind the evidence. Be your own detective," he said. "The bank made money day after day, month after month."
Deegan also argued Rubahskin lied to the bank about being in compliance with the law by knowingly employing illegal immigrants. He said evidence, including e-mails and testimony, show Rubashkin knew about the problem for two years yet did nothing. Witness testimony showed Rubashkin even directed employees to create a separate payroll for illegal workers, he said.
"We're not talking about one or two no-match letters. We're talking about hundreds and hundreds and hundreds of employees working with bad documents," he said.
The government also alleges Rubashkin diverted money through several banks, the local kosher grocery store and Jewish schools to inflate sales and hide where money was coming from as he desperately tried to save the company from bankruptcy after the immigration raid.
Cook countered that to prove money laundering through the grocery store and schools, the government had to first show bank fraud occurred, because laundered money must come from an illegal activity.
He also argued laundered money moves in circles, never arriving at its legal source. But in this case, the money always ended up with First Bank, which is why it continued to lend to Agriprocessors, he said.
As to the undocumented workers, Cook argued the no-match letters from the government --- documents that list employees with Social Security numbers that don't match their identities --- specifically say the letters are not a statement of guilt, and that an employer can't fire someone based on the information.
Cook argued the government overreached in using 600 agents and a Black Hawk helicopter to conduct the raid --- then the largest in history --- and by ignoring a letter from Agriprocessors' lawyers that stated the company wanted to cooperate with the government.
"The letter didn't matter. They ignored it. They wanted the raid. And it was the raid that caused this to spiral out of control," he said.