The following story is an excerpt from an article that appeared in the Village Voice on Dec. 3, 2008. The author is Elizabeth Dwoskin.

The Fall of the House of Rubashkin

As the nation’s largest kosher empire implodes, Brooklyn’s ultra-Orthodox Jews begin to break ranks

By Elizabeth Dwoskin

Tuesday, December 2nd 2008 at 2:16pm

Until three years ago, Miriam Shear and her husband were philanthropists who had given hundreds of thousands of dollars to Jewish charities, supporting schools in Boca Raton, Florida, Memphis, and Louisville. They say that the Rubashkins’ strong-arm business practices drove them into bankruptcy.

The Shears had grown wealthy selling alarm systems and life insurance. As members of a small community of Orthodox Jews living in Memphis, they ran a successful kosher-food bank that served a few hundred Jewish families. Incensed at what they say were astronomical prices for kosher food—a three-pound block of cheese at Kroeger’s, the only grocery in town, cost $25—the couple decided to open a rival store in 2003. They called their business the Kosher Case Club. Hoping to expand into meat and poultry, Shear met with Heshy Rubashkin at Lubinsky’s annual kosher-food show in New York. But Heshy, who was already doing a brisk business with Kroeger’s, refused to sell to her, she says.

Shear found another distributor in Atlanta and began selling meat processed by two of Rubashkin’s competitors, Empire Kosher and Alle Processing, and chicken shipped from Canada. Shear says she was able to significantly bring down the price of perishable items—she sold cheese blocks for $16, and skinless, boneless chicken that went for $18 at Kroegers she sold for $8. Shear says that she quickly learned how easy it was to profit by creating competition in a niche industry in which prices were being kept artificially high. After the Memphis Jewish Journal featured her store in an article, she was so successful that customers began driving from as far as New Orleans to shop there. Soon, she began to receive calls from Jews in other parts of the South who wanted her to open additional stores. In Tampa, where the only kosher meat for sale came from Agriprocessors, grocers told her that shipments sometimes contained meat so discolored that it had to be thrown away. But if you complained to the Rubashkins, they told her, the orders would simply stop coming. Members of the Lubavitch sect told Shear something that has been corroborated by others: Their rabbis told them that they should only buy meat from Agriprocessors—nothing else was considered pure enough.

In 2005, Shear met with the regional representative for her Atlanta distributor, Hudie Lipszyc. She says Lipszyc had driven six hours from Atlanta because he needed to tell her something. The distributor warned her to get out of the kosher-food business, telling her, she says, that if she didn’t, the Rubashkins would retaliate.

She says he actually used the words, “They are going to squash you,” which turned out to be the same phrase two other people later used to describe the Rubashkins. And when she told Lipszyc she had no plans to close her store, he told her that she was actually in danger.

(Lipszyc tells the Voice that he did, indeed, warn Shear that she should leave the business, but he denies warning her specifically about the Rubashkins. He says he may have used the word “squashed,” but if he did, it referred to competition generally. He denies that his warning referred to physical danger.)

Incensed, Shear told Lipszyc that not only was she going to ignore his advice, but she planned to open another store in Detroit.

Before she moved to Detroit, however, she consulted with the vaad, the local rabbinical council there. Detroit had only one kosher grocery store, One Stop Kosher, and the meat counter in the back was run by Shlomo Luss, a Rubashkin distributor, who serviced the entire region. In Detroit, Agriprocessors meat was also the main source in town. Shear wanted to obtain permission from the rabbis before opening up shop. As she was driving back to Memphis, she received a phone call from the vaad: They gave her the go-ahead and assured her that she wouldn’t be treading on anybody’s territory.

The Shears immediately turned the car around and drove back to Michigan. They purchased a home, renovated a warehouse, and bought thousands of dollars’ worth of cash registers, freezers, and other equipment necessary to run a store.

In September 2005, a few weeks before they were going to open the branch, Shear got another call from the vaad: The distributor was taking her to a rabbinical court. Shear called the distributor. Shear says Luss threatened to spread a rumor that the Canadian chicken looked so clean because it was bleached, and that the meat she was going to sell didn’t hold up to kosher standards. Once again, she says, she was told that the Rubashkins would “squash” her. Luss couldn’t be reached for comment.

Soon, Shear’s friends began to tell her about rumors spreading in the community: that her meat lacked kosher certification. Shear scrambled to get a certification letter from the Orthodox Union. She tacked the letter up in her store. But the rabbinical court made things difficult, issuing the decision that she could sell meat only by the caseload, which she says made it almost impossible to do business. (The vaad disputed this at the time.) She ignored the decision and went ahead. But a month after opening, some distributors that she had lined up to stock the store with products suddenly stopped selling to her. Shear says they didn’t return her calls.

In July 2006, nine months after opening, the Shears shut the doors of their Detroit store. They were almost bankrupt. Their house went into foreclosure. They say they could barely afford to pay their children’s health insurance. They packed up 12 suitcases and moved to Israel, where Shear is working two part-time jobs to pay the bills. “We went from being very wealthy people to being totally financially devastated. And from something that started as a mitzvah,” she says, using the Hebrew word for “good deed.” “We went from being people who gave in the six figures of tzedakah [charity] to being totally wiped out. This has been a total nightmare.”

The Shears’ ordeal was well known in Detroit’s Jewish community and sparked an internal battle within the vaad itself. In September 2006, the Shears received a settlement of $160,000 from the distributor and the vaad. The settlement was just enough, she says, to make up for the salary she had lost during the year. In 2006, the Justice Department began an antitrust investigation into the entire kosher-meat industry.

Shear isn’t the only person who says the Rubashkins don’t always play fair. Simon Fields owns a kosher supermarket in South Florida. He says that when he stopped selling Rubashkin products five years ago, the local Lubavitch rabbi told his congregants to stop buying meat from his store because it was no longer kosher, even though he had a valid Orthodox Union certification.

Men in long black coats and women wearing stiff wigs crowd the benches of the courtroom at the Federal Building in Philadelphia. The room is packed, so the men remaining outside wait to take turns with the ones indoors.

Early on the morning of Monday, November 3, dozens of people had taken a charter bus from Crown Heights, the center of New York’s Lubavitch Jewish community. Even more had carpooled. They had come for the sentencing of Moshe Rubashkin, chairman of the Crown Heights Jewish Community Council (a powerful nonprofit) and former owner of Montex Textiles in Allentown, Pennsylvania.

When a still-unidentified arsonist started a blaze at the Montex plant in 2005, it burned down with 300 drums of hazardous chemical waste inside. Rubashkin subsequently pleaded guilty to illegally storing the waste, which had been transported from a textile factory his family owned in New Jersey. But the city says he refused to pay the $450,000 in cleanup until the EPA forced him to do so. Allentown’s city solicitor, Martin Danks, says the Rubashkins still owe millions of dollars in unpaid taxes.

Inside the courtroom, Rubashkin, an excitable 51-year-old man—his defense lawyer had claimed he was suffering from attention deficit disorder—listens in silence as a prosecutor blames him for endangering the people of Allentown with his carelessness. But when it comes time for him to speak, Rubashkin launches into a stream-of-consciousness oration—not about Montex or Allentown, but about the history of the Jewish community in Crown Heights, and about Menachem Mendel Schneerson, who is known as “the rebbe” to Lubavitch Jews, a revered rabbi who died in 1994

The next day—Election Day—Moshe Rubashkin is sentenced to 16 months in federal prison for illegally storing the hazardous waste.

It’s not his first felony conviction. In 2002, he was sentenced to 15 months in prison after writing $325,000 in bad checks from an empty Montex account. A few months after being released from prison, thousands elected him to lead the community council, where one of his most important jobs is helping to select the rabbis who certify the kosher standards for meat that comes into the neighborhood. And while Moshe had practically no hand in running Agriprocessors, his role in the community council makes his the face of the Rubashkins in Crown Heights.

They hire high-powered lawyers—a former Iowa U.S. attorney was handpicked as the Postville plant’s chief compliance officer after the raid. Representing Aaron Rubashkin on and off since the 2004 animal-cruelty scandal is the celebrated constitutional lawyer Nathan Lewin, who defended former president Richard Nixon in one of the 27 cases he has argued before the U.S. Supreme Court. Earlier this year, Lewin petitioned the Supreme Court to hear the Rubashkins’ contention that immigrants at the Agriprocessors distribution center in Sunset Park don’t have a right to unionize, because they are undocumented. Lewin’s argument involves overturning a national labor-relations board position and a prior Supreme Court decision affirming that right. (Earlier this month, the Supreme Court declined to hear the case.)

The Rubashkins also have a slick PR team. In May, the Rubashkins hired Ronn Torossian of fancy Manhattan firm 5WPR, whose client list has included Joe Francis of Girls Gone Wild fame as well as Paris Hilton.

(Please read the whole story on the website of the Village Voice…there are so many other victims)

Post Script:
In a community where it is practically taboo to speak out against the Rubashkins, dissent is finding an outlet on the Internet. On the most popular blogs in Crown Heights (such as CrownHeights.info or Vosizneis.com), every news item about the Rubashkins is heavily debated, sometimes receiving hundreds of responses. The Agriprocessors crisis has exploded long-lingering conflicts about how an intensely religious person, who follows a code of “divine” law, should regard the rules of the larger society.

Some argue that the Rubashkins have a greater obligation to the people of Crown Heights than they do the laws of the United States.