Former Agriprocessors c.e.o. arrested for bank fraud
November 17, 2008
by Bryan Salvage
CEDAR RAPIDS, IOWA -- Sholom Rubashkin, former chief executive officer of Agriprocessors Inc., Postville, Iowa, was arrested Nov. 14 at his home in Postville by U.S. Immigration and Customs Enforcement agents and Deputy U.S. Marshals on a charge of bank fraud, according to U.S. Attorney Matt M. Dummermuth. The charge was contained in a complaint filed in U.S. District Court in Cedar Rapids, said the U.S. Department of Justice.
Mr. Rubashkin also was arrested on Oct. 30 on a federal complaint charging him with conspiracy to harbor undocumented aliens for profit; aiding and abetting document fraud; and aiding and abetting aggravated identity theft, according to the D.O.J. He had been released on bail following the Oct. 30 charges.
The Nov. 14 complaint alleges Mr. Rubashkin executed a plan to defraud a bank carrying Agriprocessors’ $35,000,000 line of credit. He allegedly diverted millions of dollars in customer payments on Agriprocessors’ accounts receivable. According to the complaint, the customer payments were part of the bank's collateral on the line of credit and were supposed to be sent directly to a depository account for the lending bank. Allegedly, at the direction of Mr. Rubashkin, the diverted customer payments were not posted to the customers’ accounts in Agriprocessors’ accounting system until a later date.
The complaint alleges that as a result, the value of the accounts receivable appeared inflated on Agriprocessors’ books, and because the amount Agriprocessors was allowed to borrow was tied directly to the value of its accounts receivable, the scheme gave Agriprocessors the ability to borrow additional funds from the bank without proper collateralization.
The complaint also alleges Mr. Rubashkin instructed an Agriprocessors employee to delete evidence of the plan from Agriprocessors’ computers. The instructions allegedly came the day after Mr. Rubashkin was released on bond on the original harboring, document fraud and identity theft charges.
If convicted on the bank fraud charge, Mr. Rubashkin faces a possible maximum sentence of 30 years' imprisonment and a fine of the greater of $1,000,000 or twice the loss caused. On the document fraud charge, he faces 10 years’ imprisonment and a possible fine of $250,000.