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01/16/2009

Additional charges brought in Agriprocessors case

99-count indictment adds charges of money laundering and failure to pay for livestock

CEDAR RAPIDS, Iowa - Agriprocessors Inc., its former CEO, and several company managers were charged Friday with a raft of federal crimes in a 99-count superseding indictment filed in U.S. District Court. The charges were announced by U.S. Attorney Matt M. Dummermuth, Northern District of Iowa, and resulted from an investigation by U.S. Immigration and Customs Enforcement (ICE).

The indictment adds 14 counts of bank fraud, 42 counts of making false statements to a bank, 10 counts of money laundering, and 20 counts of willfully violating an order of the U.S. Secretary of Agriculture against Postville, Iowa, meatpacker Agriprocessors Inc., and its former CEO, Sholom Rubashkin, 49.

The indictment alleges that from September 2007 through October 2008, Rubashkin, on behalf of Agriprocessors, made false certifications to a lending bank. He certified that Agriprocessors was in compliance with the law despite knowing that the company was harboring illegal alien workers. The indictment also alleges that from January 2007 through September 2008, Rubashkin caused the diversion of about $26.4 million in customer payments that were part of the bank's collateral for a $35 million loan. Rubashkin allegedly caused Agriprocessors' books to inaccurately reflect that no such payments had been received in order to conceal the diversion of funds.

The indictment also alleges that Rubashkin, on behalf of Agriprocessors, caused proceeds of illegal activity to be used in financial transactions designed to promote and conceal that ongoing activity. It alleges that from August 2007 through May 2008, Rubashkin caused about $9.6 million to be transferred through a bank account for Torah Education of Northeast Iowa (an organization intended to fund Jewish education) to conceal the fraudulent scheme. The indictment also alleges that from August 2007 through March 2008, Rubashkin caused about $10.6 million to be transferred through a bank account for Kosher Community Grocery Inc., a small Postville grocery store, for the same purpose.

The indictment further alleges Agriprocessors Inc., and its agents and employees were subject to a March 7, 2002 cease-and-desist order that required them to timely pay for livestock as required by the Packers and Stockyards Act. It alleges Agriprocessors Inc. and Rubashkin willfully violated the order on 20 occasions between February and April 2008.

On each of the bank fraud and false statement to a bank charges, Agriprocessors faces a fine of the greater of $1 million or twice the loss caused. On each of the money laundering charges, it faces a fine of the greater of $500,000 or twice the value of the property involved. On each charge of violating the order of the U.S. Secretary of Agriculture, the company faces a fine of the greater of $500,000 or twice the pecuniary loss resulting from the offense.

On each of the charges regarding bank fraud and false statement to a bank, Rubashkin faces a possible sentence of 30 years in prison and a fine of the greater of $1 million or twice the loss caused. On each of the money laundering charges, he faces a possible maximum sentence of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved. On each charge of violating the order of the U.S. Secretary of Agriculture, he faces six months to five years in prison and a fine of the greater of $250,000 or twice the pecuniary loss resulting from the offense.

Rubashkin and Agriprocessors' operations manager Brent Beebe previously appeared in federal court. Beebe was released on conditions including electronic monitoring. Rubashkin has been ordered detained without bail until trial. Arraignments on the superseding indictment for Agriprocessors Inc., Rubashkin and Beebe have been scheduled for Jan. 23 at 11 a.m. Agriprocessors poultry managers Hosam Amara and Zeev Levi, who were also charged in the indictment, are fugitives.

As with any criminal case, a charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty.

The ICE investigation began in October 2007 and has continued since the execution of search warrants at Agriprocessors on May 12, 2008, that resulted in the arrest of 389 illegal aliens at the plant. The investigation is ongoing.

The case is being prosecuted by Assistant U.S. Attorneys Peter Deegan, C.J. Williams and Matthew Cole, Northern District of Iowa. The investigation has been led by ICE with assistance from the FBI. Prior assistance was provided by the U.S. Marshals Service, U.S. Postal Inspections Service, Iowa Department of Public Safety, Iowa Department of Transportation, Internal Revenue Service's Criminal Investigations, U.S. Department of Labor, Public Health Service, U.S. Department of Agriculture, U.S. Environmental Protection Agency, Iowa Department of Natural Resources, Drug Enforcement Administration, Waterloo Police Department, and Postville Police Department.