27 years a tough, but not necessarily surprising, sentence for former slaughterhouse executive

Tuesday, June 22, 2010

Former slaughterhouse exec gets 27 years for fraud

CEDAR RAPIDS, Iowa — A former Iowa kosher slaughterhouse executive was sentenced Tuesday to 27 years in prison for financial fraud, a sentence legal experts called severe but not necessarily surprising as judges take tough stances on white-collar crime.

Sholom Rubashkin, a former vice president of Agriprocessors Inc., also was ordered to pay $27 million in restitution by Chief U.S. District Court Judge Linda R. Reade, who had released a memorandum outlining the sentence a day earlier.

A jury convicted Rubashkin last fall of 86 federal financial fraud charges. Defense attorney Guy Cook said he plans to appeal. About 100 supporters gathered outside the courthouse Tuesday, some holding signs reading “We want fair & equal justice.”

Prosecutors had sought a 25-year sentence, but called the slightly longer punishment “entirely appropriate.”

“It is a lengthy sentence, but he earned it by everything he did,” U.S attorney spokesman Bob Teig said.

Rubashkin oversaw the plant in Postville, Iowa, that gained attention in 2008 after a large-scale immigration raid in which authorities detained 389 illegal immigrants. The plant eventually filed for bankruptcy and was later sold.

After an investigation by a court-appointed trustee, prosecutors alleged Rubashkin intentionally deceived the company’s lender and directed employees to create fake invoices in order to show St. Louis-based First Bank the plant had more money flowing in than it did. Cook tried to portray Rubashkin as a bumbling businessman who never even read the loan agreement with First Bank.

Rubashkin also faced 72 charges for allegedly allowing illegal immigrants to work at the plant but Reade dismissed those charges and a jury acquitted Rubashkin of state child labor charges earlier this month.

Stanford University law professor Robert Weisberg called Rubashkin’s 27-year sentence “dubious” even though severe sentences are increasingly common in the wake of major fraud cases, such as that against Enron. The energy company’s 2001 collapse cost thousands of jobs and billions of dollars.

Weisberg contended Rubashkin’s case does not rise to such a level.

“I don’t understand why it was a longer sentence than what the prosecution asked for, especially when the prosecution asked for a sentence that was already pretty severe,” Weisberg said.

But Robert Rigg, a law professor at Drake University in Des Moines, said the slaughterhouse case is by no means small, “especially for Iowa.”

He said the raid’s economic impact and disruption the case caused in Postville likely factored into Reade’s sentencing.

“There is a lot of collateral damage here and you can understand why a judge would take the facts and the circumstances of the case as an aggravating factor,” Rigg said.

Defense attorneys argue Reade improperly considered other factors, such as the raid and immigration case, in sentencing for the fraud conviction. The judge did not specifically address her reasoning for the lengthy sentence, but her 52-page memorandum handed down Monday leaned heavily on documents submitted by prosecutors.

“Here, the record establishes Defendant committed an unprecedented amount of criminal conduct which has not entered into the determination of the advisory (sentencing) guidelines,” Reade said.

Teig agreed that information about illegal immigrants working at the slaughterhouse was an integral part of the fraud investigation.

“The jury found the defendant knew illegal immigrants were being harbored at the plant and lied to the bank about that, so clearly it was part of the fraud charges that the defendant was involved in the hiring of illegal immigrants,” Teig said.

Rigg, the Drake professor, said he had tried cases before Reade when she was a state court judge and called her a “stickler.” He said she is a “harsher sentencer than most,” but not the most harsh he’s seen.

“Does she take a bite out of your client? Yes,” Rigg said. “You better be prepared if you go in asking Judge Reade for leniency. I would not envy a lawyer who has to go in and argue a case before Judge Reade that has a vast impact.”

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