Late last year, federal prosecutors in Iowa offered to settle the government’s bank fraud case against Sholom Rubashkin for, at most, 15 years in prison. Rubashkin, a kosher-slaughterhouse manager accused of doctoring paperwork on a $35 million loan, said no.

Now, after winning conviction on 86 counts that included fraud and money laundering, the government is seeking life in prison for Rubashkin, who is scheduled to be sentenced this week.

Life sentences are rare in fraud cases and Rubashkin’s defense lawyers, along with a growing list of influential supporters, are questioning what they call the government’s “extreme” sentencing position. They say the case exemplifies prosecutorial overreaching and highlights disparities in white-collar sentencing. His lawyers, including Nathan Lewin of Washington’s Lewin & Lewin, say the Justice Department is treating Rubashkin as if he were a killer, a terrorist or a financier who duped investors out of billions of dollars.

“They are asking for a sentence that is off the chart,” said Grefe & Sidney partner Guy Cook, a lead trial attorney in Des Moines, Iowa, for Rubashkin. “The absurdities of the federal sentencing guideline provisions are on full display in this case.” Rubashkin’s lawyers said a six-year prison term, or less, is just punishment.

Rubashkin’s two-day sentencing hearing is set to begin April 28 in the U.S. District Court for the Northern District of Iowa in the courtroom of Chief Judge Linda Reade, a former federal prosecutor and state judge who’s been on the bench since 2002.

Among Rubashkin’s backers are two former attorneys general, Nicholas Katzenbach and Edwin Meese III, who wrote Reade on April 21 to “urge the court to note and consider the peculiarity and potentially severe injustice” of the proposed guideline sentence. The letter, which called the government’s sentencing position “troubling,” was also signed by former Deputy Attorney General Larry Thompson, now the general counsel of PepsiCo Inc., and eight former U.S. attorneys.

Prosecutors deny the government is treating Rubashkin any differently than other defendants. The prosecution is pursuing enhancements for, among other things, perjury and obstruction of justice to ramp up the sentence for bank fraud and money laundering. “This case is extraordinary in that uncommon means were used to cheat a bank and others out of a staggering amount of money — more than $26 million — and to commit a host of other criminal offenses,” prosecutors wrote in their sentencing papers.

Rubashkin, a devout Hasidic Jew, has garnered substantial support in the Jewish community, some of whose members have held press conferences and led fundraising drives and letter-writing campaigns. More than a thousand people have written to the court in support of Rubashkin, and more than $2 million has been raised — and spent — to pay legal bills, which continue to mount. A group of supporters is planning to attend the hearing; courthouse officials in Cedar Rapids are preparing an extra room for observers.

IMMIGRATION RAID

The case against Rubashkin began with a raid in May 2008, when hundreds of federal agents targeted the Rubashkin family-owned meatpacking plant, Agriprocessors Inc. in Postville, Iowa, arresting nearly 400 workers on immigration-related charges. Months later, Rubashkin, 51, was charged with immigration violations.

While the immigration allegations were pending, prosecutors built a bank fraud case against Rubashkin and charged him in a series of superseding indictments with 91 financial fraud and related counts. “The more rocks overturned, the more crimes uncovered,” the lead prosecutor, Assistant U.S. Attorney Peter Deegan Jr., said in court papers this month. (Deegan declined an interview request through a spokesman at the U.S. attorney’s office in Cedar Rapids.)

At the heart of the fraud case is a $35 million revolving loan agreement between First Bank Business Capital Inc. and Agriprocessors. Deegan said in court papers that Rubashkin devised “an intricate web of lies and fake documents” to inflate the amount of available collateral to obtain money from the bank to which he was not entitled. Prosecutors allege Rubashkin was the leader of a scheme in which tens of millions of dollars in fake sales were created.

Rubashkin’s lawyers maintain the bank was making money on the loan — more than $20 million in interest — and that Rubashkin never missed a payment. One Rubashkin lawyer, Alan Ellis, a solo practitioner in Mill Valley, Calif., called Agriprocessors a “dysfunctional” company that had no centralized control over finances. Rubashkin never intended any personal gain, his lawyers said.

In November, Rubashkin was convicted of 86 counts — including bank and wire fraud, money laundering and false statements — after a monthlong trial. Prosecutors then abandoned the immigration case, saying the public interest was “substantially served” because of the conviction in the bank fraud case.

Lewin, hired to handle appellate issues, unsuccessfully tried to convince the U.S. Court of Appeals for the 8th Circuit and the U.S. Supreme Court to reverse Reade’s order to keep Rubashkin — whom the government considered a flight risk — jailed pending sentencing.

More than 40 supporters were willing to put up their houses — worth more than $8 million — as security for his appearance, and Rubashkin agreed to 24-hour armed guard. “Sholom Rubashkin is not John Dillinger, although he has been treated as if he were,” Lewin wrote in the Supreme Court certiorari petition in March. The Court denied the petition on April 19.

CALLING ON DOJ

Rubashkin’s lawyers and a group of rabbis representing different denominations of Judaism have pressed the Justice Department to intervene to evaluate the fairness of the prosecution. “[T]he Rubashkin case has been marred by so many abuses and excesses that close scrutiny by the Department of Justice is required to avoid a result that will be a permanent stain on American Justice,” Lewin wrote on April 11 to Assistant Attorney General Lanny Breuer of the Criminal Division. In response, Breuer said he’s “very carefully” read the letters he’s received about the case. The department declined to get involved.

Still, Breuer has said publicly that the department is “especially concerned” about the increased disparity in white-collar sentencing. “Public trust and confidence are essential elements of an effective criminal justice system,” Breuer said in a Feb. 25 speech in Miami. “Our laws and their enforcement must not only be fair, they also must be perceived as fair.”

Counsel for Rubashkin said in court papers the proposed sentence “is more severe than that imposed on many defendants convicted of large-scale Ponzi schemes who defrauded vulnerable victims of their life savings.” The lawyers tick off notable defendants Bernard Ebbers, Jeffrey Skilling and Marc Dreier, who are each serving between 20 and 25 years for fraud.

One sentencing expert, Frank Bowman III, a professor at the University of Missouri-Columbia School of Law, said white-collar sentencing guidelines have grown increasingly tougher over the years in response to public outcry over financial fraud. In some cases, he said, the guideline sentences are “absolutely astronomical” and “effectively irrelevant.”

“The Department of Justice, as an institution, should have been under no illusion that if you keep asking for higher sentences, sooner or later you run out of room,” said Bowman, former special counsel to the U.S. Sentencing Commission who is not involved in the Rubashkin case. “And that’s essentially what has happened.”

Mike Scarcella can be contacted at mscarcella@alm.com.