The Rise and Fall of Agriprocessors Is the Story of an Immigrant Family Gone Awry
By Nathaniel Popper
Thu. Dec 11, 2008
Shortly before the kosher meat company Agriprocessors declared bankruptcy this fall, Aaron Rubashkin, the 82-year-old owner of the company, stood under the fluorescent lights of his Brooklyn store and spoke about what it was like to watch the collapse of the company that he created in Boro Park and expanded first to Postville, Iowa, then to Nebraska and then beyond.
“I built my thing here for 54 years and in Postville for 24 years,” he told the Forward in his halting Yiddish cadence. “Brick by brick, day by day, night by night. And was destroyed in three hours. Everything was destroyed.”
The three hours to which Rubashkin was referring came May 12, when immigration agents raided his Iowa slaughterhouse and arrested 389 of the company’s workers, setting off a chain of events that led to the arrest of Rubashkin’s son on multiple criminal counts and to the company’s eventual declaration of bankruptcy.
The effect of this collapse has reached far beyond the Rubashkin family. Hundreds of undocumented immigrant workers have been arrested. The Iowa town in which Rubashkin built his major slaughter plant has been decimated. And thousands upon thousands of Americans have been forced to change their eating patterns, amid a contentious debate about theology and ritual that has divided the Jewish community.
This happened because Rubashkin and his tight-knit family had not created just any kosher food company; they set out to build a company that would change the way Jews eat meat in America, and they succeeded, netting some $250 million a year in sales, according to the best available figures.
Seth Mandel, head of meat supervision for the Orthodox Union, said: “Rubashkin sort of came into the market to say, ‘We are going to change the way things are done. We aren’t going to just open a slaughterhouse. We are going to be masters of our own destiny. We are going to make beef for everyone.’”
With the proceeds from this business, Rubashkin has done Jewish charitable work that has made him an almost saintly figure in the world of Chabad-Lubavitch, the ultra-Orthodox sect to which he and his family belong. He is often referred to as a tzaddik, or holy man, by Orthodox rabbis. But along the way, the company set the stage for a future disaster by relentlessly pursuing the bottom line. Family members antagonized workers and labor unions and used financial practices that have landed two of Rubashkin’s sons in jail.
Until very recently, Rubashkin, his nine children and their spouses were responsible for nearly every one of these developments. While one daughter ran the operations in Miami, a son and son-in-law oversaw the warehouse in Brooklyn and two other sons and a son-in-law ran Midwestern operations from Iowa. And then there was Aaron Rubashkin, with his wispy gray beard and meaty hands, overseeing it all like some Wizard of Oz from the second-floor office above the butcher shop in Brooklyn. Viewed from his perspective, it’s another improbable American immigrant story gone wrong.
“Listen, I’m a person like everybody else, even though I look to you with a beard — a white beard,” he said. “Mine English is poor. I haven’t got no college degree. I working since 14, 15. I don’t complain. I’m trying to survive.”
This immigrant story begins in the Russian town of Nevel, where Rubashkin grew up as the son of a wax maker, firmly ensconced in the shtetl life of Chabad-Hasidism. Nevel is famous in Chabad lore for its residents’ simple, earthy values; a 19th-century rebbe said that a butcher from Nevel was more valuable to him than a talmudist from another town. Rubashkin placed himself in that mold when he said repeatedly, “I’m no scholar.” He also said, just as tellingly, “I look stupid to you?”
The young Rubashkin and his family left Nevel when the Nazis invaded, and they lived out the war in the Central Asian town of Samarkand. After the war, Aaron and his new wife, Rivka, went through Vienna to Paris, where he became a butcher. Seven years later, the family moved to New York. Rubashkin opened a shop with one of his customers from Paris. When asked about the conditions at Agriprocessors’ slaughterhouses, the Rubashkins inevitably refer to the struggle Aaron went through upon arriving in America.
“He worked hard labor,” his second-youngest son, Sholom, said when he spoke to the Forward two years ago. “He worked 18 hours a day. He picked up the meat, he cut the meat; he sold the meat, he delivered the meat. Oh, did he work hard — six days a week.”
For decades, Rubashkin and his partner built the store into an institution in Boro Park. The gregarious Rubashkin was the face of the business. Menachem Lubinsky, who has been a longtime marketing whiz for the kosher industry and more recently a spokesman for the company, first knew the Rubashkins through his in-laws, who shopped at the 14th Avenue store.
“My mother-in-law thinks he’s the consummate gentleman,” Lubinsky told the Forward. “In those days, it was ‘How are ya?’ greeting everyone.”
Tzemach Atlas, a 48-year-old who blogs about the Chabad community, lived near the Rubashkins during the 1980s, just as they began to expand the business, and he would go to their house for the occasional Friday night dinner. Atlas said that the Rubashkins were known as “a family of means,” but neither Rubashkin nor his wife put on any airs.
“She saw poverty firsthand and was not shy about doing housework,” Atlas said. “There was something very romantic about their house — a harmony.”
But the family’s earthiness did not hide a gritty business sensibility. Lubinsky said that Aaron “has that toughness in him, which living under the tsar and the Russians and prisons and whatever else, and his rebbe being there — there’s always this defiant mood in him that he’s got to do the right thing and that’s it.”
For some of the Rubashkin kids, the toughness took on a more concrete form. Moshe, the second-oldest son, got in trouble in 1983 when he and a few other young Lubavitches beat up policemen outside the main Chabad synagogue. That would be the first of Moshe Rubashkin’s many run-ins with the law. He was recently sentenced to a prison term for illegally storing hazardous waste at a family-owned textile mill in Pennsylvania. People who know the family said that Moshe was seen as the wild child and was deliberately excluded from any involvement in Agriprocessors, a claim that Aaron denied.
The elder Rubashkin had been heavily invested in the textile industry, but he said he began divesting in the 1980s. “China took over,” he quipped.
The kosher meat industry, on the other hand, was in flux. Its customers had been an aging group of not particularly religious Jews who ate kosher meat out of a sense of tradition, industry insiders say. These folks were dying out, and the old slaughterhouses that had fed them were going under; in their place was a growing Orthodox community that was developing stricter kosher standards.
In 1987, Rubashkin bought the abandoned HyGrade slaughterhouse in Postville and began renovating. Looking back, many boosters see the Rubashkins’ push for expansion in the context of the Chabad-Lubavitch philosophy of helping Jews of all stripes have access to the trappings of a Jewish life, including kosher meat. Rubashkin says he consulted the Chabad rebbe before buying, but he is too wry to ascribe it only to that.
“We going because we are businesspeople,” he said. “Chabad philosophy, you are supposed to be very truthful. If I say to you, I did all the things with the intention to make people eat kosher only, that wouldn’t be truth.”
It was Aaron’s two youngest sons, Sholom and Heshey, who moved to the Midwest to grow the plant into more than just a beef slaughter facility. The brothers would work in Iowa during the week and commute to Minnesota, where there were synagogues and yeshivas for their children. During this time the Rubashkins earned the antagonism of one of their most unstinting critics. Shmarya Rosenberg, who now chronicles the Rubashkins’ every move on his blog, FailedMessiah, met the family in synagogue and would go over to Sholom’s house for Sabbath meals.
“There were always people there eating, and always people visiting at all hours, and the kids were wild as hell,” Rosenberg said. “It was a very Rubashkin household.”
During one of their meetings, Rosenberg says that Sholom prodded him to buy a struggling butcher store and offered him a good price on meat. Rosenberg decided to go for it. A few weeks after opening, though, none of the meat he ordered was arriving. He also noticed that another, bigger distributor in town had the meat he was supposed to get for lower prices.
“My personal experience was very good. They’re nice people, except when you get into business with them,” Rosenberg said.
For the residents of Postville, both sides of the Rubashkins were on display. John Hyman, mayor of Postville throughout the 1990s, said that his early interactions with the Rubashkins, during which Sholom would do all the talking and Heshey would sit quietly, were marked by tension. When it got particularly bad, Aaron flew in.
“It was kind of like, this is the true owner walking in; this is the gentleman with the money,” said Hyman, who is now an appliance installer in Postville.
“Aaron proceeded to give me a history lesson — a history of the persecution of the Jews,” Hyman remembered. “He said he had a background of persecution and he wasn’t about to let this persecution happen again in Postville.”
People who know the Rubashkins say that their outward posture in the 1990s and more recently has been conditioned by a deeply ingrained suspicion, born of both a history in Eastern Europe and a more recent history in the insular Orthodox world of Brooklyn. Rabbi Yossi Jacobson, who moved to Iowa to represent Chabad and watched the Rubashkins settle in, said there was a lot of baggage to overcome.
“In Crown Heights or in Boro Park or in Flatbush, it’s always the goyim and the yidden. That’s how it is, you know? We don’t do nothing with the goyim. We don’t even go to their schools. We don’t wave to them, because we don’t even know them, and they don’t want to know us.”
Postville’s resident Catholic priest, the Rev. Paul Ouderkirk, says that he saw the suspicion that characterized the family during one of his first interactions with Sholom Rubashkin. The local Lutheran minister at the time had asked Ouderkirk to meet with Rubashkin over some tensions in town. Rather than meeting in Postville’s plant, Rubashkin asked the priest to meet him in a parking lot on the edge of town at night. Ouderkirk says that Rubashkin showed up with a chauffeur and had Ouderkirk sit in the backseat of the car during their conversation.
“He was very angry. He was talking about, ‘Oh, antisemitism, and they’re trying to drive us out,’” Ouderkirk said. “It reminded me of some of the black noir films where the guys would meet and discuss important items but always in alleys.”
The fullest account of the Rubashkins’ early years in Postville is contained in Stephen Bloom’s 2000 book, “Postville: A Clash of Cultures In Heartland America,” which uncovered, in nascent form, many of the problems that later would cause the company such legal problems.
One day, Bloom says, Sholom told him: “We have stayed on this planet longer than anyone else because we believe our way is the right way. You start slipping, making changes here and there, and then you have nothing. We live by our own rules here, and they’ve got to understand that.”
But eventually, the family members learned to get along with their neighbors in Postville. One reason for this was campaign donations. Rubashkin family members have given to most of the elected representatives in Iowa who have been involved with Agriprocessors’ operations. But they also took a more personal tack: They would invite Postville town council members to New York for weddings and Chabad celebrations. And in 2003, Aaron Rubashkin took the mayor and two town council members to England and Italy to see cutting-edge meat-rendering plants. The group would stay together in hotels, and after the stop in Italy, the five travelers went on a gondola ride through the Venetian canals.
As they tamed Postville, the Rubashkins were also, with few people noticing it, taming the kosher industry. In the 1980s, before the Postville plant had opened, almost all fresh kosher meat had been sold through local butchers. It came in raw quarters from slaughterhouses that were rented out by rabbis, and it rarely made it beyond major cities on the coasts. Hebrew National had made processed kosher meat — like hot dogs — more widely available, and Empire, a Pennsylvania company, was just starting to get kosher chicken into supermarkets, but the reach was limited.
The Rubashkins changed that model entirely. The key, according to Mandel, the OU meat supervision chief, was to create a “vertically integrated” company that had control of all levels of production, from owning the real estate in Postville to marketing the product.
The Rubashkins created a world in which it was possible to buy fresh kosher beef and poultry in ordinary supermarkets across the country, even in places that had few Jews. Lubinsky said that the changes brought about by the Rubashkins did something more than expand the reach of kosher meat. They brought an entirely new customer base to kosher food: the secular Jews and even non-Jews who never would have stopped at a butcher shop. The expansion also allowed Orthodox communities in places that had never had them.
“That’s why when you talk to me, I’m so passionate about it. It has nothing to do with the personalities,” Lubinsky said. “I saw from a Jewish point of view — I saw a great deal of unity in it. For once, there was an opportunity for Jews to unite behind something, which was food.”
The innovations that allowed this to happen were twofold. One part was technological. Kosher meat had not reached supermarkets previously, in large part because the Jewish customer base is small and, as a result, the meat sat for longer than non-kosher meat and turned brown. The Rubashkins played with vacuum sealing and shrink-wrapping and chemical inserts, and before long the meat was remaining red.
The Rubashkins also hired their own marketing team, which used more old-fashioned techniques in expanding the company’s reach. In smaller cities, they supplanted the old butchers and kosher markets with lower prices. In bigger cities, they undercut other meat distributors. Haim Reaboi saw the family’s strategy when he worked at Agriprocessors’ Miami distribution center, which is run by Rubashkin’s oldest daughter, Gittel Goldman. Reaboi says Goldman realized that while kosher beef was a rare commodity, poultry was more common, so she would tell kosher stores that they would not get beef unless they exclusively sold her chicken.
“The stores couldn’t afford to refuse,” Reaboi said.
The company could push down prices because of the cost cutting in Iowa. Unlike older unionized kosher plants, Agriprocessors did not offer employees health-care benefits or paid vacation. This led to separate lawsuits involving workers at nearly every Agriprocessors’ facility, including the Iowa slaughterhouse and both the Brooklyn and Miami warehouses.
In 2004, a crew of union organizers from the United Food and Commercial Workers showed up in Postville and began talking to the workers. The very first day, one of the organizers, Dana Powell, said he was distributing pamphlets outside the plant when he saw a van driving toward him, piloted by a person he later identified as Heshey Rubashkin. Powell said the van came within 6 inches of hitting him, and as it did, Rubashkin leaned out, grabbed a pamphlet, crumpled it up and yelled, “Make it softer next time, so we can wipe our asses with it.”
Powell said that he called the police. Sholom Rubashkin said it was he who called the police during that first run-in.
The late 1990s were boom times for the Rubashkins. According to numbers that the Rubashkins gave Cattle Buyers Weekly, their sales rose in 2002 to $180 million — from $80 million in 1997. In 2002, Agriprocessors entered the list of the 30 largest beef-packing plants in America. And then there were the poultry operations. They were expanding in every direction, from South America, where they slaughtered beef, to Gordon, Neb., where they bought a new slaughterhouse for bison, lamb and cattle.
Back in Boro Park, Aaron Rubashkin was doing so much expansion on his house in the 1990s that he ended up in a legal battle with his neighbors, the relatives of the rebbe of another Hasidic sect. Today, the Rubashkins’ massive brick house on 15th Avenue is the most impressive for blocks, with a two-sided winding staircase to the front door and two separate patios on the street side.
Family largesse also went to charity. Everyone in Postville mentions the $20,000 that the family gave to the local day care facility. Chabad rabbis say that the Rubashkins also give millions to their primary Jewish charity, Colel Chabad, which cares for the needy in Israel. The director of the organization, Rabbi Sholom Duchman, said that the Rubashkins were always defined less by big gifts than by their personal touch.
“The Rubashkins’ involvement is in terms of their open home. That’s where they are unique,” Duchman said. “Their home is actually an institution. It’s like a soup kitchen. They help private people, so it’s hard to put a number on it.”
The family’s most talked about charitable work is the restaurant run by Aaron’s wife, Rivka, which is always described as more of a soup kitchen than a business. The prices at Crown Deli certainly are not priced to profit; the bologna sandwich with coleslaw and a pickle is $3.99. On a recent Monday at dinnertime, the only people in the restaurant were a group of handicapped children who had taken over the back tables for arts and crafts projects.
The Rubashkins have been very private about both their charitable giving and their overall wealth. Most media reports put Agriprocessors’ annual sales at $80 million, but those figures are significantly off. The company opened up its books to Nebraska officials to apply for state grants. A report written for the state said that Agriprocessors’ yearly sales amounted to $250 million, but even these authorities were left a little uncertain.
“There seems to be an expectation that the money is there when needed, and I may not have all the information about the depth of the family finances,” the financial packager for the state’s department of economic development wrote.
The murkiness of the company’s finances came up when Sholom Rubashkin was arrested on bank fraud charges this year, but they were long apparent to many observers. Hyman said that when he was mayor, “we knew the workers were getting paid, but we never saw them cash the checks. We concluded that somebody was operating a business here on a cash basis — and someone is getting cheated out of Social Security and that sort of thing.”
The questionable way in which the company dealt with its workers was detailed in a 2006 report in the Forward about working conditions at Agriprocessors. What has happened since then has been well documented: First, there was an investigation by numerous rabbinical groups, then the immigration raid took place and then the entire company collapsed.
There have been arguments about where the blame should fall in all this, but those who know the business well say that at the very least, the family suffered from sloppiness.
“They’re just kids from Brooklyn who were suddenly running a big meat plant,” Mandel said. “They didn’t realize that they had to hire professionals to take care of things.”
Eventually, the company did make some outward changes, bringing in a new CEO to take over the Iowa operations, but Aaron Rubashkin’s instincts were actually to ramp up, rather than scale back, the family involvement. He said that more than a dozen grandchildren went to the plant after the raid to help out. One grandson took to the blogs, defending the family against criticism. A politically connected son-in-law, Milton Balkany, was brought in to deal with religious critics. And Rubashkin himself was as involved as ever in the finest details. While he was speaking in the store, a woman approached him to ask if the store had any chicken bottoms with the skin still on. Rubashkin said no, but as she began to walk away he stopped her and tried to convince her to return.
“We cannot put on the skin now,” he told her wryly. “Tomorrow morning we have. It’s too hard for you? Come over, we like it.”
When she explained that she lived far away and needed the skin to make stuffed chicken, he pushed at the meat through the shrink-wrap, trying to illustrate how she could stuff the skinless chicken. She still resisted, and so he gave one last try.
“Rewrite your recipe,” he told her, grinning.
It was a prescription that had worked for Rubashkin, but the woman did not buy it.