Convicted former Agriprocessors manager claims prosecutors’ misconduct cut sale price of Postville plant

A convicted former Agriprocessors vice president filed a motion this week, claiming prosecutors in his bank fraud and money laundering case interfered with the bankruptcy sale of the plant to cause the $27 million loss to banks and significantly increased his prison time to 27 years.

Sholom Rubashkin, former executive officer of the kosher meatpacking plant in Postville, in his federal post-conviction relief motion, claims prosecutors improperly used the threat of criminal forfeiture against potential buyers to get involved in Agriprocessors' bankruptcy case, so they could impose restrictions on the sale. Prosecutors also withheld information from a key cooperating witness regarding financial transactions they claimed as money laundering, according to the motion.

The motion also claims Agriprocessors' assets were worth more than $68 million in June 2008 but sold at auction for only $8.5 million because of the prosecutors' misconduct. The motion claims prosecutors knew a forfeiture would drive down the purchase price, and therefore, create a loss for the bank to help their financial fraud case and increase Rubashkin's prison term.

Rubashkin, 56, of Postville, was convicted in 2009 by jury on 86 federal counts of bank, mail and wire fraud, money laundering and failure to pay livestock providers in a timely manner. The charges stem from a May 2008 immigration raid at Agriprocessors. Nearly 400 illegal workers were charged. Rubashkin was sentenced in 2010 to 27 years in federal prison.

During trial, prosecutors presented evidence to show how Rubashkin fabricated fake collateral for loans, ordered employees to create false invoices and directed millions which were laundered through a 'secret bank account” – Torah Education – causing over $26 million in losses to banks.

Assistant U.S. Attorney Steve Young said Wednesday they were aware of the filing and are reviewing it now. Prosecutors will be filing a response, he added.

The the motion claims the newly discovered evidence, gathered after three years of investigation, shows how prosecutors presented 'false and misleading” testimony at sentencing and withheld information, including detailed notes from a meeting between prosecutors and a lawyer for the bankruptcy trustee.

The motion brief points out one potential buyer, Eli Soglowek, made a $40 million bid at one time but he was 'forced” to meet with prosecutors after making the bid and then decided to withdraw in February 2009. He was told no Rubashkin family member could be involved in ownership or management going forward.

The bankruptcy trustee didn't accept the $40 million bid because he thought it was too low in January 2009, but Rubashkin argues that if that bid had been accepted, it would have paid off the debt for First Bank Business Capital, the primary fraud victim, which would have eliminated the loss amount for the bank. If this had happened, Rubashkin's sentencing range could have been 30-37 months.

The brief lists several other potential or actual bidders who said they backed out after prosecutors warned them they couldn't have any Rubashkin family members, including Aaron Rubashkin, Sholom's father, involved in the business.