Sholom M. Rubashkin

Sholom M. Rubashkin

Sholom Rubashkin, former chief executive at the Agriprocessors kosher meatpacking plant in Postville, was arrested again this morning by federal authorities on a charge of multi-million dollar bank fraud.

The new complaint against Rubashkin alleges that he executed a scheme to defraud a bank on a $35 million line of credit. According to documents filed with the court, Rubashkin diverted millions of dollars in customers’ payments to Agriprocessors’ accounts receivable — payments that were part of the bank’s collateral on the line of the credit, and that were supposed to be sent directly to a depository account for the lending bank.

Federal prosecutors contend that under the direction of Rubashkin, the diverted payments were not posted to customers’ accounts in the meatpacking plant’s accounting system until a later date. As a result, the complaint alleges, the value of the accounts receivable appeared inflated on company books. This inflated number was used as a criterion that allowed the company to borrow additional funds from the bank.

Rubashkin is also alleged to have instructed an Agriprocessors employee to delete evidence of the scheme from company computers. The instructions, according to the complaint, came the day after Rubashkin was released on bail on charges of harboring undocumented immigrants for profit, document fraud and identity theft.

Rubashkin was once again arrested at his home in Postville without incident. He is scheduled to appear in federal court in Cedar Rapids at 11 a.m.

If convicted on the bank fraud charges, he faces a maximum sentence of 30 years in jail, a fine of the greater of $1 million or twice the caused loss, and five years of supervised release. Rubashkin already faces a possible 20 years in prison on earlier charges.

Rubashkin was previously arrested on Oct. 30 on a federal complaint that charged him with conspiring to harbor undocumented aliens for profit, aiding and abetting document fraud and aiding and abetting aggravated identity theft. He was subsequently released on conditions that he wear a tracking device, that he limit his travel to eastern Iowa and that he and his wife, Leah, surrender their passports. Rubashkin also had to provide a $1 million appearance bond with $500,000 secured.

A federal grand jury indicted Rubashkin yesterday on those charges. Also named in the indictment was Karina Freund, a former Agriprocessors human resources employee, who was charged by the grand jury with one count of harboring undocumented aliens for profit.

Update

At his intial appearance in court, Rubashkin retained F. Montgomery Brown as his attorney. At the request of Brown, attorney Webb Wassmer appeared on his behalf.

A preliminary and detention hearing have been set for Nov. 19 at 2 p.m. Rubashkin will be detained at least until that time.