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Judge Orders Rubashkins to Repay $2 Million

IOWA CITY, Iowa [AP] — A federal judge has ordered members of the family that owned a kosher slaughterhouse in Iowa to pay more than $2 million after defaulting on financial agreements with one of their former banks, which has since collapsed.

U.S. District Judge Edward McManus on Thursday entered a summary judgment in favor of the Federal Deposit Insurance Corp. and Value Recovery Group, L.P. and against brothers Sholom and Tzvi Rubashkin and their father, Aaron Rubashkin.

The family owned the Agriprocessors, Inc. meatpacking plant in Postville, which was the site of a 2008 raid in which 389 illegal immigrants were detained. The plant eventually filed for bankruptcy and was sold after the raid, which was the largest in U.S. history at the time.

Sholom Rubashkin, the company’s vice president, was later convicted on federal financial fraud charges, sentenced to 27 years in prison and ordered to pay $27 million in restitution. Prosecutors said he intentionally deceived the company’s lender and told employees to create fake invoices in order to show St. Louis-based First Bank the plant had more money flowing in than it did. He has appealed his conviction.

Georgia-based Omni National Bank sued the family last year after the Rubashkins stopped making payments on a $300,000 line of credit they received for a property rental company in Postville and on equipment they were renting from the bank. The equipment, including conveyor belts, labeling machines and computers, was used at the meatpacking plant.

Federal regulators shut down Omni days after it filed the lawsuit, saying it had engaged in “unsafe and unsound practices” after making bad real estate loans.

The FDIC was appointed Omni’s receiver and continued the lawsuit. Value Recovery Group, based in Ohio, bought the debt Aaron Rubashkin owed on the leases and joined the case.

Court records show the Rubashkins personally guaranteed the $300,000 line of credit for the rental company, Nevel Properties Corp., in 2007. McManus ruled the trio owes the FDIC nearly $290,000 for that loan plus interest. Nevel Properties rented out apartments and homes to many Agriprocessors employees.

McManus also ordered Aaron Rubashkin, who was president of Agriprocessors, to pay Value Recovery Group nearly $1.8 million for the equipment leases, which was the amount owed after equipment was sold during bankruptcy proceedings, plus interest.

G. Mark Rice, a Des Moines lawyer who represented FDIC and Value Recovery Group, declined comment on the ruling.

Michael Mallaney, a lawyer who represented the Rubashkins, did not return a phone message. He had asked the court for more time to file a motion opposing summary judgment after joining the case in September, but U.S. Magistrate Judge Jon Stuart Scoles rejected that request in October. Scoles said the defendants had failed to show cause for the extension.

“Here, defendants have made virtually no effort to actively defend this case,” he wrote.

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#1 Comment By Ad mosi On December 17, 2010 @ 8:44 pm

My goodness!!!!! MOShiAch NOW!!!!

#2 Comment By lets be serious just for one Shabbos On December 17, 2010 @ 8:38 pm

There’s nothing to say it is a sad day in history, when something so terrible like this can happen to such nice people. Lubavitch meaning city of love, so at least here in Lubavitch Crown Heights, we should have more love, towards one another. I know all the politics, doesn’t help the situation. But just for one Shabbos let’s be nice to one another. Back with regular comments after Shabbos.

#3 Comment By Akiva On December 19, 2010 @ 9:38 am

I guess I don’t understand modern finance. They gave a loan of $300,000, which was used to lease equipment. The company was seized, the equipment not returned to the leasors (by the authorities) but sold at auction (for a fraction of it’s value) and then the Rubashkin’s are billed for the cost of the equipment plus the lease plus interest? So $300,000 turns into $2,000,000 owed?

This is justice?

#4 Comment By NEW AGRI STAR On December 20, 2010 @ 5:47 am

You should never buy any meat from the new agri star. By buying the lubavitcher company for pennies – they had a large hand in this story.

#5 Comment By GOOD LUCK On December 20, 2010 @ 5:42 am

What could you do when elected federal judges plan and plot along with FBI how to close down the kosher company and imprison the Jewish owners.
Until this case, I used to think that only Yidishe B“D were corruped and courts had some legitimacy.
The problem with fraudulent judges is that its almost impossible to do anything about their biased rulings. Additionaly, they remain ”judges” for life no matter what they do, and if you dare to ask them why they fraudulently took money or life away – they just double the punishment, laugh at you and put you behind bars for life.

They must always be right since every single person in the US broke enough laws that add up to be behind bars for life. Even crossing a street against your light has legal backing to imprison you, and imagine you missed to file a 1 dollar sales tax on your tax return how many years you could legaly sit in prison. This gives judges the freedom of choice who to put in jail.