Iowa Town Settles Orthodox Landlord's Discrimination Suit

Housed Undocumented Workers for Agriprocessors Kosher Slaughterhouse

By Josh Nathan-Kazis

Published September 09, 2011, issue of September 16, 2011.
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The city of Postville, Iowa, has settled a lawsuit charging it with discrimination against an Orthodox Jewish landlord who housed undocumented workers employed by the former Agriprocessors kosher slaughterhouse.

The city and several local officials have agreed to pay Gabay Menahem $450,000 and to hold a community workshop on diversity issues; however, they have not admitted to Menahem’s allegations of bias and civil rights violations against him. The settlement, approved by a federal court on August 25, concludes two suits Menahem, 38, filed concurrently in state and federal courts.

The majority of Menahem’s tenants left town in May 2008, when a massive federal immigration raid led to the arrest of hundreds of undocumented Agriprocessors employees. Menahem charged in his suit that city officials repeatedly refused to shut off the water to his apartments, which were left vacant after the raid, and eventually banks repossessed his properties.

Despite his apparent vindication, some members of the Postville Lubavitch Hasidic community that grew up around the Agriprocessors meatpacking plant were skeptical of the discrimination claims made by Menahem, who is a Lubavitcher.

“I have not felt overt anti-Semitism from this city,” said Aaron Goldsmith, a member of the Postville Lubavitch community and a former member of the Postville City Council. “I do believe there was confusion with Gabay’s extremely aggressive business practices, and it was very easy for the attorneys to turn it into anti-Semitism when he was a very complicated and difficult person to work with.”

The city of Postville was thrown into turmoil on May 12, 2008, when federal law enforcement agencies raided the Agriprocessors kosher slaughterhouse — the country’s largest — arresting 400 immigrant workers in what was then the biggest immigration raid in American history. Hundreds of town residents were jailed and later deported, and the meatpacking firm eventually filed for bankruptcy. Menahem’s tenants were suddenly gone. But despite his repeated requests, the municipality continued to provide his properties with water and continued to bill him.

“Given the notoriety surrounding him and the public nature of the dispute, and the fact he was going to the City Council all the time to complain about it…. you begin to think that there’s more to it than just accidental coincidence that it’s not getting fixed,” said David H. Goldman, one of Menahem’s attorneys.

Menahem’s suits do not allege widespread anti-Semitism throughout Postville’s city government. But the federal suit he filed argues that there was “a pocket of abuse, discrimination, and lack of understanding that caused direct harm to Menahem, his family, and his business.”

In a surreptitiously recorded video provided to the Forward by Menahem and cited in the complaints, Virginia Medberry, a member of the Postville City Council and a defendant in the case, advises a woman presenting herself as a prospective renter not to do business with Menahem, whom she calls a “shyster.”

Medberry could not be reached for comment.

The defendants in the case denied Menahem’s allegations. Defense attorney Cynthia Scherrman Sueppel emphasized that Postville denied liability, but would not comment further. Postville City Clerk Darcy Radloff wrote in an e-mail that she would be unavailable for comment, and Jeff Reinhardt, a former City Council member who was also named as a defendant, could not be reached.

A former Lubavitch shaliach, or emissary, in Nebraska, the Israeli-born Menahem moved to Postville following an accident that left him with a permanent limp. Sholom Rubashkin, the CEO of Agriprocessors, helped support him when he first arrived in town.

Rubashkin is currently serving a 27-year prison sentence after being convicted of bank fraud in connection with his operation of the Agriprocessors plant. He is the only senior Agriprocessors official to face jail time.

When Menahem began purchasing properties in the city in 2004, Rubashkin helped advise him. Menahem bought out a competitor in March 2008, and his firm, Gal Investments, became one of the two largest landlords in Postville. The only landlord of a comparable size was a firm controlled by Rubashkin.

By September 2008, Gal Investments owned 59 properties worth $5.2 million in the small Iowa town, according to a report published at the time in the Des Moines Register.

Menahem said that he lost 80% of his tenants in the aftermath of the raid. Faced with this crisis while carrying two hefty mortgages, he cut a deal with his creditors that allowed him to postpone all payments so long as he maintained the properties, kept them free of liens and paid all property taxes.

As Agriprocessors scrambled to replace the arrested workers, new residents arrived in town to fill the empty real estate. But Menahem came under scrutiny almost immediately. He made deals with staffing firms hired to bring replacement workers to the meatpacking plant, under which the staffing firms paid rents by garnishing employees’ wages.

The September 2008 Des Moines Register report described problems with Menahem’s upkeep of his properties. One of his apartments had a “large hole in the living-room wall,” according to the report.

Menahem said that he had purchased the properties with problems months earlier, that they were being refurbished and that the condition of the properties had received no publicity when his competitor owned them.

One of Menahem’s lenders repossessed a portion of his properties in June 2009, after liens were placed on the buildings because of Menahem’s failure to pay tens of thousands of dollars in water bills. The rest of his properties were repossessed in December 2009.

According to Menahem, the city officials were “trying to do everything in their power to make me look bad. Eventually the lenders stopped lending me money…. When somebody sabotages your relationship with your lenders, that’s what happens.”

Goldsmith, the local Lubavitcher, agreed with Menahem’s criticism of the statement made by Medberry, the city council member. But he blamed incompetence rather than anti-Semitism for the failure by town officials to shut off water to Menahem’s apartments, as he had requested.

“After the raid it was mass chaos,” Goldsmith said. “There were people abandoning properties right and left. I think they were incompetent in dealing with a lot of those challenges.”

Menahem is now planning a fresh start. He has moved to Florida, and said that he will use the settlement funds to launch a real estate firm there. “They’re more familiar with Jewish faces,” Menahem said of Floridians.

Contact Josh Nathan-Kazis at nathankazis@forward.com or on Twitter @joshnathankazis


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