Postville, IA - Iowa’s Agriprocessors meatpacking plant agreed to pay $1.4 million last year to settle allegations that it participated in a fraudulent scheme to hide another company’s assets.

The allegations revolved around Allou Distributors, a pharmaceutical company that filed for bankruptcy in 2003.

The bankruptcy trustee in the Allou case accused executives of Allou exaggerating the company’s value, and that management was able to gain additional leverage to borrow money from lenders and convert company assets for their own personal use.

The trustee alleged that as part of the scheme, Allou made $3.2 million worth of payments to Agriprocessors and its affiliates between 1997 and 2001. The trustee alleged the Postville meat-packing plant provided Allou with no products or services in exchange for the money.

No Agriprocessors executives were criminally charged in the matter, and company officials have declined to answer questions about the case.

Court records indicate that Rubashkin said his Postville real estate company, Nevel Properties, gave Allou nothing in return for tens of thousands of dollars in cash - an admission that apparently caught his attorney off guard.

Rubashkin later testified that Allou’s payments to Agriprocessors were made in exchange for surplus meat products. But no one from Allou or Agriprocessors offered any explanation of why a pharmaceutical company would buy $3 million worth of kosher meat.

Rubashkin testified that the sole Agriprocessors executive who handled the Allou account died at his desk in 2003, taking with him all firsthand knowledge of Allou’s purchases. (god how conveinent)

Although the Rubashkins were not charged with any criminal wrongdoing, they agreed last year to settle the claims of the trustee by paying $1.4 million - less than half of what was allegedly received from Allou.

The money was used by the trustee to help satisfy the claims of Allou’s creditors.