All language subtitles for American Greed s05e09 The Slaughterhouse.eng

In this episode of American Greed, the
Brooklyn family business

that saved an Iowa town.

There's money flowing into the
community.

But there are whispers of threats,
extortion, and shocking child labor

The only way to make that business work
was to exploit the workers.

Propping it all up, a massive $26
million financial fraud.

It's dizzying watching the money go
around. I mean, it's a very complicated

game. The man at the center of it all,
Shalom Robushkin.

Dutiful son or corporate crook?

May 12, 2008.

Sirens shatter the morning stillness as
federal and state agents swarm into the

tiny northeast Iowa town of Postville.

600 agents wearing the black riot -type
gear, some with automatic weapons, a

Blackhawk helicopter circling above, and
they arrest people at work and put them

in chains.

Soon, nearly 20 % of Postville's
population disappears, and agri

once the nation's largest kosher meat
supplier will spiral into bankruptcy.

And that's just the beginning.

It was like cleaning out a cesspool, and
when you get to the bottom, you think

you've reached the bottom, and you pull
the cover off, and there's another

cesspool underneath that, and another
one, and another one, and another one,

another one.

AgriProcessors begins 20 years earlier.

and over a thousand miles away in what
might as well be another world,

New York.

Sixty -year -old Russian immigrate Aaron
Rubashkin settles in the Orthodox

Jewish community of Borough Park and
grabs his piece of the American dream.

Over time, he buys a textile firm and
other businesses.

But it is the family's small kosher
grocery store that catapults them to

prominence.

They're known for their kindness in the
Orthodox community.

They have a very nice and generous
nature unless you're doing business with

them.

Rabashkin's biggest challenge is
providing affordable kosher meats to the

community.

The family was very committed to
providing kosher meat for American Jews.

I think that they really saw this as
part of their religious responsibility.

But there's a problem.

By 1988, his suppliers are too
unreliable and too expensive.

Rubashkin decides to eliminate the
middlemen.

They saw this as an opportunity to, you
know, become the major suppliers across

the country of kosher meat.

He scours the country before finding a
suitable slaughterhouse in the small

of Postville, Iowa.

Renamed agri -processors, it is the
beginning of what will become a kosher

dynasty. The idea was to produce

Kosher meat on a large scale, people
have likened it almost to the Walmart of

kosher meat because it was massive
amounts of kosher meat that were being

produced.

The impact on Postville is immediate.

There's money flowing into the
community.

I mean, all of a sudden the banks have
money to lend because there's money

flowing through the bank.

All of a sudden commerce is building up.
This place is green.

Brooklyn -based Aaron Raboshkin enlists
family to manage the Iowa plant. In

1992, he brings in his son, Shalom
Raboshkin, to become vice president and

day -to -day operations.

None of them had any business
background, other than hands -on

None of them had ever run an operation
like a slaughterhouse, had that many

employees, had to deal with U .S.
government regulations and all this

stuff. None of them had ever done that.

Each week, 1 ,300 cattle, 225 ,000
chickens, 700 lambs, and 4

,000 turkeys are trucked into the plant.

And each week, 1 .85 million pounds of
product ships out to supermarkets across

the country.

Agro -processors took a national
approach of distributing it almost to

single place where a person wanted to
buy it in the United States. It never

existed before then.

It's a niche market, but a very
lucrative one.

AgriProcessors' annual sales eventually
topped $300 million, and Shalom

Raboshkin is at the center of it all.

Frankly, he was in over his head. He
didn't have the professional skills that

one would expect of a business like
that.

To keep costs down, AgriProcessors does
whatever is necessary to survive.

AgriProcessors has...

developed almost from the outset, I
think, a reputation as being a place

corners got cut, where a lot of
regulations were ignored or people

other way.

They discourage unions and labor
organizers.

The management was very aggressive in
sort of tamping down the union efforts.

It was a battle that kept flaring up
from time to time.

But the first real hit of trouble
doesn't occur until 2003, when PETA,

for the Ethical Treatment of Animals,
releases a graphic undercover video

during slaughter.

We documented the worst abuse of animals
that any of us had ever seen.

They had their esophagi ripped out, and
then they were dumped onto the floor,

still conscious.

The most graphic portions of this video
have been blurred, but these disturbing

images appear to be extreme violations
of Jewish kashrut laws, requiring kosher

animals be killed without suffering.

The Rubashkins sort of stuck their
fingers in their ears and screamed, no,

no, no, no, everything's fine.

The Rubashkins argue the slaughter is
humane and that it is impractical to

processing for alleged kosher
infractions.

Every time it stops, the whole, you
know, that's money flying out the window

the plant.

Agri -processors and Shalom Rabashkin
weather the bad press, and eventually

controversy dies.

Nobody was fired. Nobody was
meaningfully disciplined.

The report came out, and it said, boy,
this place was horrible.

We probably shouldn't do that again.

And it was over.

But the disturbing PETA video is only
the beginning.

Up next on American Greed, soon
investigators will uncover a stunning

million financial fraud and shocking
allegations of worker exploitation.

This company in Iowa has a large number
of undocumented workers, and those

workers are being terribly abused.

By 2004, Kosher Slaughterhouse Agri
-Processors has become the largest

in Postville, Iowa.

Agri -Processors grew leaps and bounds,
and they're employing well over 1 ,000

people. And for a town of 3 ,000, that's
extraordinary.

It was really a large provider of jobs
for the town, and the town came to rely

on it.

Overseeing the operation is Shalom
Roboshkin, son of Agri -Processors owner

sole shareholder Aaron Roboshkin.

Under his watch, AgriProcessors supplies
60 % of the nation's kosher meat and 40

% of its kosher poultry.

He was driven to keep the company going.
He had very grandiose dreams about

where this company was going to go.

As AgriProcessors thrives, so does
Shalom's stature in Postville.

When you talk to folks in town, it's,
you know, yeah, sure, they had a city

council, they had a mayor, but...

A lot of people really saw Shalom as the
most powerful man in town.

Slaughterhouses were closing up at an
accelerated rate through the 80s.

Shalom, seen in this PBS video with his
family and neighbors, lives on the

outskirts of town with his wife and 10
children.

Shalom didn't have any of the vestitures
of wealth, no jacuzzi, no jet plane.

He walked around in old clothes. His
cars were banged up.

But his family does enjoy the prestige
that running a small town's biggest

employer provides.

They had very nice homes. They lived a
very nice, although not flashy,

lifestyle.

And much nicer and much better than any
of their employees, obviously, were

going to be living.

Rabashkin helps build the necessary
infrastructure to make Orthodox Jewish

possible in a small town.

How do you attract people to come to
Postville, Iowa? Well, you have to have

school for the children. There has to be
a synagogue.

And there has to be someplace they can
get kosher food. And Robushkin provided

all of that.

But Shalom's generosity and his family's
lifestyle comes with a hidden price

tag.

Like many meatpacking companies,
AgriProcessors exists with a sort of

don't tell approach to labor hiring.

You're working with sharp knives, saws,
and bizarre contraptions that can do

extreme damage to a human body in a very
slippery, dirty, and often

unpredictable environment.

The work is ugly, bloody, and
monotonous. The pace is relentless, and

are common.

It's not a place you want to be if you
can be somewhere else.

The industry often relies on
undocumented workers to fill shifts and

dirty work.

Agri -processors is no exception.

For a business the size of agri
-processors, who needed close to a

workers, you can never get that many
locally.

Most of the labor force comes from
Mexico and Guatemala.

The attitude, I think, was whatever
we're doing for them is better than they

before.

Illegal workers need fake documents, and
evidence suggests Shalom Rabashkin does

not just turn a blind eye. He actively
encourages the practice.

He was involved intimately in the
obtaining of identification

cards for illegal immigrants who weren't
able to work.

But others argue Rabashkin can't be held
responsible for the hiring practices of

his subordinates.

Shalom Rabashkin was not the human
resources department at AgriProcessors,

so he was relying on people to screen
the applicants, and those people were

fooled by some very determined
applicants who wanted to get into the

get jobs there.

To meet payroll, AgriProcessors pays
some undocumented workers off the books

cash.

When Social Security complains about
discrepancies, Shalom Rabashkin

his HR department to get creative.

He is the one who decided to start
what's called the Hunt Payroll.

The hunt payroll is an under -the -table
accounting scheme that allows Rubashkin

to continue hiring and paying illegal
workers.

When people came in that could not be e
-verified or could not meet the

requirements of being legally employed
by an employer in the United States,

would go then on to the hunt payroll.

On the surface, the arrangement works
well for all parties in Postman.

They were growing, and the economy was
growing, and houses' values were

Real estate was being bought up, and
there was businesses opening right and

left.

Nobody wanted to upset the apple cart.

So if there was something a little bit
wrong,

close your eyes to it. It's not that big
of a deal.

But there are rumors that things are not
what they seem inside the plant.

The presence of an undocumented worker
population is, to some degree, an

invitation to exploitation.

Worker pay is low, above minimum wage,
but below industry standards.

It's long hours. It's not high pay. And
I think that's just the truth.

But that's far from illegal, and that's
far from exploitive, and it's far from

unethical. It's just what it is.

The company avoids overtime by putting
workers on multiple payrolls.

People who are working 60 or 70 hours a
week and on their paycheck would have 40

hours from agri -processors and 30 hours
from a cleaning company so that there

wasn't the need to pay them overtime.

And there is no real way to complain
because there are always more desperate

illegal workers waiting to be hired.

These people were vulnerable.

They're undocumented.

Who were they going to complain to?

They're going to go to a government
official?

They're not going to go to anybody.

And they knew it.

But low pay and shorted hours are the
least of agri -processors' problems.

Next on American Greed, allegations of
sexual abuse, employee mistreatment, and

deplorable working conditions stun the
outside world.

The Jewish community was shocked.

out of its mind. People could not
believe that this was going on.

By 2006, AgriProcessors, the nation's
largest kosher slaughterhouse, is

thriving. But rumors suggest there are
serious problems that CEO Shalom

Nabashkin seems unwilling to fix.

The management was horrible.

Horrible decisions were being made. And
as things started to heat up, one would

think that you would surround yourself
with professionals who could bring you

out of this.

Unions at competing plants complain to
the Jewish Labor Committee about unfair

and dangerous labor practices.

They're being short on their paychecks.
There's physical abuse.

There's a very high accident rate.

And a scathing 2006 newspaper article
makes even rabbis, who previously

supported the Lubashkins, take note.

It was about a bad business plan gone
awry. And it was... A sense that

we could squeeze the margins so much
that the disregard for human beings, for

animals, for the earth was significant
enough that they didn't have any choices

anymore but to squeeze the margins as
much as they could.

A commission of inquiry composed of five
rabbis and Jewish labor activists

visits the plant to find the truth.

To save face, Rubashkin reluctantly
agrees to meet with them. But things get

to a rocky start.

We had asked Sholem Rubashkin to sign a
non -retribution agreement that would

allow us to talk to workers in the plant
without their being afraid that they

could be fired.

We handed them the letter, and Sholem
said, I won't sign anything.

Management denies there are problems,
and a tour of the plant offers little

insight. When we walked through the
agroprocessor plant, everybody was

at the ground.

Nobody looked at us. Nobody talked to
us. Nobody was smiling.

Later, we found out that they were told
not to say anything, not to talk to

them. If you did, you'd be fired.

The commission tries talking to workers
off -premise.

but soon realized just how long the
company's reach is.

We noticed that people were sitting out
in the parking lot taking pictures,

writing down numbers of cars, license
plate numbers.

You had the feeling that this was the
idea of a company town run by the

and the company goons watching you.

Over two days, they speak with nearly 60
current and former employees.

This wasn't the first time I've been
involved in that kind of a situation.

This was, however, probably the worst
situation I think I've ever seen.

Employees recount stories of being
forced to work in dangerous and

environments.

We met a young man who told us that he
gets headaches and he gets nosebleeds

cough.

I said, where do you work? He says, I
mix chemicals and I use chemicals to

the plant.

I said, do you have a breathing mask?

I don't have a breathing mask.

Horrible injuries, sometimes even
amputations, are common.

We heard about a terrible accident that
occurred a year before where a man lost

an arm in a meat grinder.

He was cleaning out the meat grinder and
somehow, mysteriously, the machine went

on and he...

Lost an arm.

There are also serious allegations that
many of the plant workers are underage.

The federal law is that you have to be
18 years old to work on a killing floor

in a meatpacking plant. We met with kids
who were 16 years old.

We had one night supervisor who
testified that it was like walking into

high school gymnasium when he went to
work each night.

These children routinely work with harsh
chemicals, solvents, and sharp knives.

Some as young as, I think, 15, 16, who
were working with poisonous chemicals,

with dangerous machinery, things that
are really designed for adults.

But just how they got their jobs and how
much Roboskin knows about them is

debatable.

The witnesses were unanimous in saying
that they had all lied to agri

-processors about how old they were when
they got the jobs, and they all got

phony identification documents, phony
green cards, that showed them as being

older than 18 at the time that they
applied for the jobs.

Workers of all ages tell of a hostile
environment.

The attitude towards workers were that
they were disposable.

that could be just thrown away.

There'll be others.

There'll be more. There are always more
illegal, undocumented workers trying to

get in.

Postville seems to have become a company
town in the worst sense.

And the Rubashkin family controls what
happens outside agri -processors almost

as completely as what happens within.

Like any good company town, one of the
things you need is housing for the

who are going to come and work for you,
most of whom cannot buy a house.

because they don't have the established
credit and they don't have the income in

order to buy it.

Aaron Rubashkin, Shalom's father and
actual owner of AgriProcessors, also

company that manages employee housing
around Postville.

While Shalom's family lives in one of
the largest houses in town, his

face a different reality.

The apartments themselves were often
substandard.

Sometimes the plumbing didn't work, the
heating didn't work.

The Rubashkins are the town's largest
employer and landowner.

Now they've become one of its biggest
landlords as well.

That gave the Rubashkin family and agri
-processors a tremendous amount of

control over workers' lives.

After two days of disturbing interviews,
the Commission of Inquiry has heard

enough. They offer Rubashkin
recommendations to begin cleaning up

-processors. John Rubashkin said your
concerns...

resonate with our concerns, but we've
addressed these in our own way. We've

decided to handle it internally.

Thank you very much.

Perhaps there's a reason why Rubashkin
isn't worried about worker problems.

Once you're under the gaze of the
government, you're in big trouble.

Next on American Green, while his
employees are barely scraping by...

Shalom Rabashkin's been playing fast and
loose with the accounting books and

conducting a $26 million game of musical
chairs.

It was an onion of many layers, and I
can't imagine how he was able to keep it

all straight.

Agri -Processors is the largest kosher
meat packing plant in the U .S., with

revenues of $300 million annually.

And CEO Shalom Rabashkin is living the
good life. But the reality is the

is actually teetering on the brink of
insolvency.

It's mind -boggling. It's untenable for
a long period of time.

To survive, they have relied on a $35
million revolving loan with First Bank

Business Capital of St. Louis.

A substantial amount of capital is
necessary to keep a business like this

running. That capital, a large part of
it, came from this operating loan of $35

million, which they had never missed a
payment on, which they had honored 100%.

The loan amount is determined by
accounts receivables and inventory on

hand. But AgriProcessors has been
routinely lying to FBBC about just how

valuable the company's assets really
are.

At the direction of Shalom Rabashkin, a
member of the agri -processor staff

would create a fake invoice.

They would then submit that to the bank
and be able to borrow more because of

that invoice.

To support these fake invoices,
Rabashkin also creates fake bills of

trucks leaving agri -processors.

In other words, yes.

There's this invoice, but look, there's
a bill of lading that says that a truck

went out with it. So how could it be
fake?

The more collateral, real or imagined,
the more agri -processors can borrow.

It created the appearance to the bank,
at least, that the plant was owed this

money from customers who just hadn't
paid yet. That debt from customers to

plant could be used to secure advances
on the credit line.

To perpetuate the scam, agri -processors
must somehow pay off these fake

outstanding invoices within 60 days.

They would have to collect that
fraudulent receivable, or else it would

ineligible and the bank would say, well
now you don't have as much receivables

to borrow, you need to pay me back some
money.

One way to do that is to take money from
legitimate receivables and apply that

to the fraudulent invoices.

But then pretty soon, now that other
customer who paid you for those

now his invoices are never going to get
paid and they're going to age out

slowly. So they have to take cash from
somewhere else and pay that.

And it just kept building on itself and
building on itself.

Dubashkin also begins funneling large
sums of cash through two local

to hide AgriProcessor's money.

There's a little kosher grocery store in
Postville that received about $10

million. And you can buy and sell that
place about 30 times over for $10

million.

Other money is dumped into the local
Jewish school where agri -processors'

rabbis send their kids.

I think it was just a shell game, as
best I can tell. You know, we've got $80

,000, let's put it somewhere. And when
we need it, we'll get it back.

When the Raboshkins need money, they
have these and other companies write

rounding checks, large, even numbered
deposits that won't attract attention.

They had companies in the local area
that they controlled.

They would write a check to them, then
immediately turn around and write a

back from them. And they would deposit
the check back from the company into

their depository account.

It's a $35 million version of an old con
called check -kiting.

That is, taking advantage of the float
or the time it takes a check to clear

when there are insufficient funds.

You know, it takes a check a day or two
to clear.

That's how they were paying off these
fraudulent receivables with their own

money. Most of the diverted money is
actually used to pay for agri

operational expenses and to keep the
company afloat.

The money went in a circle.

It didn't go in a straight line.

It was loaned by the bank, it was used
to operate the plant, and it went back

the bank. It didn't go anywhere, but
either back into agri -processors or

to the bank.

From January 2007 through September of
2008, Rubashkin directs subordinates to

divert nearly $25 million in customers'
checks.

It's dizzying watching the money go
around.

He pulled it from a million places. The
world, it seemed, or at least northern

Iowa, was Shalom Rabashkin's piggy bank.

You can't keep up a scheme like that for
very long. You just run out of money.

Using bogus accounting, AgriProcessors
borrows on average over $1 million a

month between November 2007 and October
2008.

I can't comprehend how he could keep
track of it.

quite frankly, because it's been a two
-year journey for us to attempt to get

our arms around it.

During the life of the fraud,
AgriProcessors continues to pay interest

$35 million loan.

In fact, over 10 years, they have paid
nearly $22 million in interest alone.

The bank was loaning money, taking the
interest.

Loaning money, taking the interest.

As long as their loan was being paid,
they were happy to...

Make the loan.

Agri -processors might be tricking the
bank, but not everyone is fooled.

Coming up, agri -processors finds itself
the focus of several converging federal

and state investigations.

I don't think they had any concept of
how much trouble they could be in.

And at the center of it all is Shalom
Rabushkin. For some, he's the savior of

community. To others, he's the devil in
disguise.

By 2008, Shalom Raboshkin is at the
center of a massive deceit to keep

AgriProcessors, his father's kosher meat
processing company, solvent.

He's dug himself in deep by hiring
illegal workers to operate his

slaughterhouse.

You're responsible as CEO for everything
that happens in that company.

You have to know what's going on. You
have to be there. You have to be aware.

That's what you're paid to do, not being
aware.

is very problematic.

Rubashkin and his accountants have also
engaged in a massive and confusing

financial fraud.

Most of the money keeps agri -processors
running, but some simply disappears.

Family, friends, and Jewish charities
seem to benefit from mysterious outgoing

agri -processors' checks.

Everybody wanted a piece of this pie.
Everybody in the family wanted a piece

this pie.

And Shalom Rabashkin himself benefits as
well.

During a two -year period beginning in
2006, the government alleges Rabashkin

funnels about $1 .5 million from agri
-processors into his personal accounts.

He was also pumping it into a number of
personal expenses, jewelry, coins,

things that had some significance to his
religion as an Orthodox Chabad

Lubavitch Jew.

He paid personal credit card bills with
it.

Paid health insurance with it. He did
all these other things with the money.

How you can say this is not about greed,
I don't know.

It was certainly about greed.

It's just that it was greed that was
mixed with religion.

But this fraud is behind the scenes.

It's the labor violations that are
drawing more public attention.

And other allegations in the plant are
more disturbing.

There are reports of sexual harassment
and even rape.

But just like the immigration and child
labor violations, management turns a

blind eye.

It was systematic to the culture. And
there were also, yes, one or two

supervisors intensely engaged in sexual
harassment of female workers and engaged

in perpetrating sexual assaults, actual
rapes upon these same workers.

In exchange for better shifts or higher
pay, some women are allegedly forced to

provide sexual favors for supervisors.

There were supervisors forcing girls
into this, having sex in the plant,

in the supervisor's office, which is
unbelievable.

Because investigators have limited
access to victims, it's impossible to

how many women were abused.

Personally, I was able to establish two
different instances where I sat one -on

-one with female workers, undocumented
workers who had been

victims of sexual assault while employed
at agri -processors.

And Sholem Rabashkin, of course, had no
idea that this was going on, he'll tell

you, none, none whatsoever.

In March 2008, OSHA cites agri
-processors for 39 worker safety

Then, the Iowa Department of Labor
subpoenas agri -processors, naming

underage workers and requesting
personnel files.

He was amply put on notice time and time
and time again that there were kids

working in that plant.

And at some point, it was no longer
reasonable for Mr. Braboshka not to

investigate those allegations.

Agri -Processors also begins regularly
receiving no -match letters from the

government. A no -match letter is
essentially a letter from the United

government and immigration saying,
listen, we have these payroll reports

you. And the social security number
listed does not match the name of the

you're alleging you're paying.

With so many troubling questions,
government action becomes inevitable.

You had to be deaf, dumb, and blind not
to see a raid coming.

Everybody knew it.

When you wave a red flag at a bull, you
can't be surprised when he charges.

And that's what happened.

On May 12th, federal and state law
enforcement agents swarm into Postville.

Enforcement agents surrounded the plant,
blocked off all exits to the town of

Postville, and entered the plant to
conduct the workforce operation, the

The morning's stillness is shattered as
hundreds of agents under the direction

of Immigration and Customs Enforcement
descend on agri -processors.

There was a lot of confusion taking
place on the ground at the time. There

helicopter circling overhead.

You had police cruisers and squad cars
come screeching into the parking lot.

It is the largest single -site
immigration raid in U .S. history.

Workers were rounded up inside the
plant. A number of them tried to hide,

agents spent the next several hours
hunting through the plant, finding the

illegal immigrants.

processing them into buses.

On the day of the raid, more than two
-thirds of the workers at AgriProcesses

are illegal and undocumented.

389 are arrested, placed in buses and
hauled away.

Evidence suggests there is little doubt
managers were aware of widespread labor

violations. In the raid, they found
basically a cache of identifications all

made by the same machine.

false identifications in the human
resources office of the company.

The raid is devastating for Shalom
Rabashkin and agri -processors.

In a matter of three hours, what his
father had built with his bare hands and

had operated for 20 years from nothing
to a $300 million -a -year business was

destroyed.

The raid, arrests, and subsequent
deportations cut Postville's population

more than 20%. The day of the raid was
like a huge forest fire.

Fires that just raged and burned and
scorched everything in sight.

After the raid, the fires died down, and
the company tried to survive, but they

couldn't because they lost their
workforce.

What happens next is a classic domino
effect.

One thing fell after another after
another. The city got in trouble. The

businesses got in trouble. The local
suppliers got in trouble.

Agri ran out of cash.

They couldn't pay their vendors.

On October 23, 2008, First Bank finally
calls in AgriProcessor's $35

million loan.

Once that loan was called, it all came
crashing down.

AgriProcessor declares bankruptcy a week
later, leaving millions of dollars

unaccounted for.

The bankruptcy is not the reason that
the bank lost money.

The fraud is the reason the bank lost
money.

When bankruptcy trustees try to collect
outstanding receivables, they quickly

realize there is a serious problem.

Customs were telling us that, well, this
invoice was paid already, or that's not

a real invoice, or I don't know what
that is. I've already paid you.

We would call people who on the books
owed $60 ,000, and they would say, we

$60 ,000.

And it turned out that money went to pay
off on the books a fake invoice.

Investigators soon learned just how fast
and loose AgriProcessors has been with

its financials. There were all of these
different things going on with the hunt

payroll, with the immigration, with the
fake invoices, the bills elating, the

inflating, you know, the numbers to the
bank.

It was a multifaceted scheme.

At that point in time, we notified the U
.S. attorney in the bank that we had

found the fraud.

Up next, investigators begin sifting
through the rubble of agri -processors,

trying to make sense of Shalom
Rabashkin's scheme.

We all began looking and trying to find
the money.

It was dizzying to try and determine
where money was going, why it was going

there, and how we could get it back.

Agri -processors is left reeling after
the 2008 immigration raid exposes

systematic layers of financial fraud and
employee abuse.

What prosecutors did was work their way
up from the lowest level workers to the

mid -level managers, and then from the
mid -level managers they use as leverage

to strike at the highest level managers,
such as Shalom Rabashkin.

50 -year -old Shalom Rabashkin.

A CEO with no prior business experience
has a lot to answer for in his running

of a failed $300 million company.

You like to think that if someone
doesn't know what they're doing in that

company, they surround themselves with
professionals who do.

That didn't happen here.

Shalom Rabashkin took it upon himself
and made some very poor and some illegal

decisions.

In September, the Iowa Attorney
General's Office charges Shalom

company owner Aaron Roboshkin with 9
,311 labor violations involving 29

children under the age of 18.

We didn't allege that he personally
hired any of these people. He supervised

HR department, and we felt that the
evidence would support a clear inference

that he directed the hiring practices
that occurred in the HR department.

Under Iowa code, the violations are
considered misdemeanors. The penalties

cumulative on top of each other, so that
if Shalom had been convicted of all 9

,311 counts, he would have faced over
760 years in prison.

Weeks later, Shalom Rabashkin is
arrested and charged in federal court

conspiracy to harbor undocumented aliens
and document fraud.

as well as overseeing a $26 million bank
fraud.

All told, he's charged with 161 separate
federal criminal counts, including

pocketing nearly $1 .5 million.

Among the government's allegations, $300
,000 for credit card bills, $200 ,000

for remodeling, $76 ,000 for his state
and federal income tax.

and even more for jewelry, mortgages,
insurance, and car payments.

What was the real, true purpose of the
money?

Prosecutors were saying he was using it
for his own personal expenses.

What the defense lawyers countered was,
okay, yes, sometimes that money was

borrowed, but the money was used for
business expenses that happened to look

personal.

Shalom Roboshkin is convicted on
November 12, 2009.

of 86 counts of bank fraud for his
mishandling of the first bank business

capital loan.

Prosecutors asserted and the judge
agreed that he was very much in control,

he actually was the mastermind of the
whole thing and he was running the

corrupt operation.

Satisfied, prosecutors declined to
pursue the 72 federal counts of labor

violations.

They dropped the immigration -related
charges with the provision that we can

bring them again if we need to, meaning
if somehow his other conviction would be

overturned or new evidence surfaced that
led them to want to prosecute him

further for other reasons.

But advocates for the workers are
bitterly disappointed.

The message to employers, again, is
don't mess with the bank.

Do whatever you want to the workers.

Meanwhile, agri -processors plead guilty
to state child labor violations, and

now Shalom Rabashkin himself faces
similar charges.

What our evidence showed was that Shalom
Rabashkin had the information that

kids were working in the plant, and he
had the authority to do something about

it. The defense countered that the
children who had applied had misled the

managers, and so as a result, you know,
the managers couldn't have known.

In June 2010, an Iowa jury acquits
Shalom Rabashkin on all counts of child

violations. He was completely exonerated
of everything that he was charged with

in state court. But he is still guilty
of the federal charges.

On June 22, 2010, Shalom Rabashkin is
sentenced to 27 years in prison for his

role in AgriProcessor's financial fraud.

He's also ordered to pay $27 million in
restitution.

Barring appeals, Rubashkin will be 75
years old when he's released in 2033.

No reasonable person looking at this
case would conclude that a man who

more money than his father's business
was entitled to borrow should receive a

life sentence.

Most of the murderers that I prosecuted
got less time in prison than Shalom

Rubashkin is sentenced to right now.

80 -year -old Aaron Rubashkin,
AgriProcessor's owner and sole

not convicted of any crimes.

Shalom Rubashkin serves his time in
Otisville, New York.

Awaiting appeals, he leaves a legacy as
tangled and confusing as the company he

once ran.

Did Shalom Rubashkin make mistakes?

You bet he did.

Was he in over his head?

Yes, he was.

Did he ever intend to rob, steal, or
cheat anyone? No.

It was unnecessary.

It didn't have to happen.

It was something that was avoidable.

Here's the bottom line. You cannot
afford not to know what's going on in

company, top to bottom. You are
responsible.

You're the CEO. You're responsible.

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