Immigration Raid Leads to Fraud Accusation, and Essential Lifetime Imprisonment for Kosher Meat Entrepreneur

William B. Anderson writes a detailed and impassioned second look at a federal fraud prosecution (with its roots in an immigration raid) and sees gross prosecutorial overreach. The high (low) points:

This week, Sholom Rubashkin, who was the vice-president of what was once the largest kosher meat processing supplier in the world [Agriprocessors], was sentenced to 27 years federal prison for "financial fraud." Prosecutors had asked for 25 years, and this is essentially a life sentence for Rubashkin, who is 51.

As Anderson tells it, Rubashkin had enemies among animal-treatment causes and unions (his operation was not unionized) and competitors, which lead to this:

The Forward ran a number of articles (sourced by the UFCW, of course) that claimed Rubashkin was hiring not only illegal immigrants, but also was exploiting child labor. At the same time, political conservatives such as Wesley Pruden of the Washington Times, were mounting a huge campaign against illegal immigration, and the Bush administration decided to make an example out of Agriprocessors and staged an extremely public raid on the facilities in 2008.

Keep in mind that the government went full-scale paramilitary on its raid, complete with a Blackhawk helicopter, and heavily-armed police carrying submachine guns and other weapons. The raid was no surprise; in fact, days earlier, Rubashkin knew the raid was coming and personally contacted the federal authorities and promised to cooperate with them.

Not surprisingly, the Bush administration did things its way, and its way was to be as brutal as possible. More than 300 workers were rounded up, denied legal representation, and forced to plead guilty to a number of charges. They were imprisoned for up to five months, and then deported. The feds then seized all of the company's records and went on a fishing expedition.

Ultimately, the government charged Rubashkin with financial fraud, claiming that the company had faked invoices and other financial documents in order to inflate its financial assets in order to qualify for larger loan amounts from First Bank of St. Louis…..

In the case of Agriprocessors, the loan was a revolving $35 million payout that enabled the company to keep a steady cash flow, meet payroll, and pay its bills. The firm was not arrears in payment, and all indications were that the company would be able to meet its obligations to the bank.

Because the federal courts have eviscerated the ancient doctrine of mens rea, which means that prosecutors needed to prove that a person chargedintended to commit a crime, intent to defraud no longer matters. In fact, one can argue that Agriprocessors did not "defraud" First Bank at all, and there are indications that the bank knew that Agriprocessors was overstating its revenues and underestimating its costs (something the federal government does every year, but never results in anyone's arrest), but did not care because its good customer paid its bills on time…..

That was not all, according to the feds. Apparently, certain suppliers of cattle and other things are required by a little-known (and almost never enforced) law from the 1920s to be paid within 24 hours. No one had complained about the late payments, to my knowledge; instead, it was yet another of those "legal technicalities" that federal prosecutors use when they want to convict someone on something.

An interesting wrinkle in how the feds treated Rubashkin (a Hasidic Jew) as a suspect, that should alarm any Jewish American:

After the feds originally charged Rubashkin with fraud charges, the prosecutors argued that he was a "flight risk" and should be imprisoned. Their reasoning? Rubashkin is a Jew and the nation of Israel grants expedited citizenship to Jews around the world. They further stretched the story by pointing out that Rubashkin kept about $20,000 in cash, as well as his passports and other documents in a lockbox in his home.

Anderson sums up what is alarming about this case, and federal prosecutions like it:

Fraud goes to intent. One defrauds someone else if one purposely charts a course of action that will negatively affect the other party, while promising to give that party positive results…..

However, Sholom Rubashkin intended to pay back his loans, as he always had done, and he intended his business to continue to provide kosher meat to people who wanted to buy it. He had no plans to abscond with the money he borrowed….

There was no fraud in the historic sense of the word. If there was misrepresentation of his funds, that was a civil and contractual matter between Agriprocessors and First Bank, and, let's face it, had the feds not invaded his plant and shut down the operation, Agriprocessors still would be in operation today and most of us never would have heard of Sholom Rubashkin.

See Anderson's April 2004 Reason magazine feature for more on how federal law makes criminals of us all. Dave Weigel blogged here about the original Agriprocessors raid's dire aftereffects on its Iowa hometown back in August 2008.