Sholom Rubashkin was arrested at his home in Postville, also home to the Agriprocessors plant where he once worked, and driven to Cedar Rapids for his appearance in U.S. District Court.
Rubashkin, former chief executive officer at Agriprocessors and the son of company owner Abraham Aaron Rubashkin, shuffled into court Friday morning shackled at the ankles, waist and wrists.
Magistrate Jon Scoles ordered him held until a hearing Wednesday after a federal prosecutor argued that he was a flight risk. A telephone call to Rubashkin's attorney, F. Montgomery Brown, wasn't returned Friday.
This is the second time in less than a month that Sholom Rubashkin has been arrested on federal charges related to his operation of the plant, site of a May 12 immigration raid in which 389 people were arrested.
In the months following the raid, the company has faced state and federal allegations that it violated child labor laws, wage regulations and safety rules. The arrest Friday was related to the depositing of checks from customers and the alleged diversion of money.
Court records said that under a loan agreement with St. Louis-based First Bank, Rubashkin was supposed to deposit customer payments into an account at Decorah Bank & Trust as collateral on a loan.
Records show that Rubashkin instead diverted millions of dollars in customer payments into an Agriprocessors account at a different bank. The payments would then not be posted on the customers' Agriprocessors accounts until later.
That resulted in the inflation of the value of accounts receivable in Agriprocessors' books, allowing the company to borrow additional funds from the bank without proper collateral.
Rubashkin also is accused of telling an Agriprocessors employee to erase evidence of the scheme from company computers. The instructions allegedly began the day after Rubashkin was released after an Oct. 30 hearing in federal court, where he is facing charges of harboring illegal immigrants, document fraud and identity theft.
After the Oct. 30 hearing, Rubashkin was released on his own recognizance on the condition that he put up a $500,000 bond and wear a tracking device on his ankle.
Last week, Agriprocessors filed for bankruptcy protection as it faced allegations of making inaccurate and misleading statements to First Bank. The slaughterhouse owes First Bank at least $33 million.