"OIG audits and investigations have shown that the individuals allowed into the United States under this program often lack the specialized skills necessary for meeting the requirements for H-1B visas.
"The OIG continues to identify fraud in the FLC programs, with the majority of cases involving the H-1B temporary work visa program. These cases involve fraudulent petitions that are filed with DOL on behalf of fictitious companies and corporations, individuals who file petitions using the names of legitimate companies and corporations without their knowledge or permission, and immigration attorneys and labor brokers who collect fees and file fraudulent applications on behalf of aliens.
"On March 7, 2001, Lakireddy Bali Reddy, a prominent Berkeley, California, restaurant owner and landlord, pled guilty to conspiracy to bring aliens into the United States illegally, transportation of a minor in foreign commerce for illegal sexual activity, and making a false statement on a tax return. The investigation revealed that Reddy, with the help of his son, devised a scheme to import young females from India for sexual services and cheap labor illegally.
"On March 5, 2001, Jayaprakash and Annapurna Lakireddy, Reddy’s brother and sister-inlaw, each pled guilty to conspiracy to bring aliens into the United States illegally. Jayaprakash Lakireddy employed six people who he knew were illegal immigrants at his construction company, while Annapurna Lakireddy filed fraudulent visa petitions for the aliens, who she falsely claimed were her relatives. This is a joint investigation with the Immigration and Naturalization Service (INS), the FBI, the IRS-Criminal Investigations Division, and the City of Berkeley Police Department. U.S. v. Reddy, et al. (N.D. California)
A Miami immigration attorney, Avi Carmel, disposed of his law practice and resigned from the Florida Bar Association following his January 17, 2001, sentencing to one year in prison and three years’ probation. Carmel pled guilty in September 2000 to conspiracy to commit fraud by falsifying employment-based visa petitions and directing attorneys and paralegals to misrepresent the work experience and background of alien petitioners on visa applications to DOL and the INS. The investigation found that Carmel falsified the ownership and corporate structure of sponsoring businesses through fabricated stock certificates. This investigation was conducted with the INS. U.S. v. Carmel (S.D. Florida)
On March 20, 2001, Heyn Naude, CEO of Brexicom, Inc., in Austin, Texas, was charged with making false statements and visa fraud. From July 2000 to March 2001, Naude allegedly filed 42 H-1B visa petitions with the INS and DOL on behalf of South African information technology professionals, claiming that Brexicom would hire the visa applicants as systems analysts earning $42,000 per year. The investigation revealed that Brexicom had no jobs available for applicants and that most were not paid any money while in the United States. It is alleged that once they arrived in the country, the applicants were instructed by Naude to find their own jobs through Internet web sites. Naude charged each applicant between $850 and $2,300 to process the H-1B visa application. This was a joint investigation with the INS. U.S. v. Naude (W.D. Texas)
"OIG audits and investigations have shown that the individuals allowed into the United States under this program often lack the specialized skills necessary for meeting the requirements for H-1B visas.
"The OIG continues to identify fraud in the foreign labor certification programs, with the majority of cases involving the H-1B temporary work visa program. These cases involve fraudulent petitions that are filed with DOL on behalf of fictitious companies and corporations, individuals who file petitions using the names of legitimate companies and corporations without their knowledge or permission, and immigration attorneys and labor brokers who collect fees and file fraudulent applications on behalf of aliens.
"On April 20, 2001, Matahom "Pearl" Scully, a former immigration consultant in San Francisco, California, was sentenced to a year in prison and was ordered to pay over $270,000 in restitution. The sentencing followed her guilty plea in connection with her involvement in a visa fraud scheme with Los Angeles attorney Mae Galvez-Lanton, who had previously been sentenced on June 19, 2001, to three years' probation and ordered to pay a $9,000 fine. In addition, on April 10, 2001, Scully's co-conspirator, Danny Reyes, controller of Golden State Health Care, a California firm specializing in convalescent care, was sentenced to two years' probation after cooperating with the investigation. Over a three-year period, Scully and Reyes filed hundreds of fraudulent petitions for Filipino aliens seeking admission to the United States through the H-1B visa program. The H-1B program is intended to bring in highly skilled foreign workers for jobs for which no Americans are available. Instead, Scully and Reyes placed the foreign workers in lowskilled, low-paying jobs, such as janitors, certified nursing assistants, and maintenance staff. This was a joint investigation with the INS and the Department of State. U.S. v. Scully, et al. (N.D. California)
"OIG audits and investigations have shown that the individuals allowed into the United States under this program often lack the specialized skills necessary for meeting the requirements for H-1B visas.
"The OIG continues to identify fraud in the foreign labor certification programs, with the majority of cases involving the H-1B temporary work visa program. These cases involve fraudulent labor condition applications that are filed with DOL on behalf of fictitious companies and corporations, individuals who file petitions using the names of legitimate companies and corporations without their knowledge or permission, and immigration attorneys and labor brokers who collect fees and file fraudulent applications on behalf of aliens.
"DOL collects a user fee on each H-1B application, which, in part, is used to finance H-1B technical skills training grants. These grants are awarded to provide technical skills training to American workers so that firms can lessen their dependence on high-skilled foreign workers. As of December 31, 2001, DOL had awarded 52 grants in four rounds totaling approximately $120 million.
"In the first round, The WorkPlace, Inc., received a two-year $1.5 million grant, beginning March 27, 2000. The OIG conducted a performance audit of the grant for the interim period March 27, 2000, through June 30, 2001. We found that The WorkPlace did not implement what it had proposed and agreed to do in the grant. Even though the National Skills Standards Board had not yet developed standards, The WorkPlace should have developed alternative standards that could be tracked and measured. Further, the training that was provided was either non-technical or contained company-specific, proprietary information that could not be shared with non-employees. We found that, contrary to the grant provisions, training was not limited to individuals in the geographic region covered by the grant. Moreover, training was provided only to incumbent workers of the participating companies, to the exclusion of unemployed and underemployed individuals.
"In our draft report, we questioned $332,687, including over $190,000 in administrative costs that were not authorized in the original grant. Based on an amendment to the governing statute, ETA retroactively modified all first-round grants to allow administrative costs; we therefore reduced our questioned costs to $140,000. In response to the report, the grantee indicated that corrective action had been taken to address some of our recommendations. (OA Report No. 02-02-207-03-390, issued March 26, 2002)
"On October 2, 2001, a Newark, New Jersey, woman who posed as an attorney and her business partner were charged with forging alien employment certifications filed with DOL. The investigation revealed that the two had allegedly charged more than 200 alien certification applicants between $4,500 and $8,000 for each certification, amounting to nearly $2 million in fees. This investigation with the Immigration and Naturalization Service (INS) is continuing.
"On February 14, 2002, a Washington, D.C., immigration attorney was indicted on charges of visa fraud and conspiracy. The investigation revealed that, over the past eight years, the attorney allegedly defrauded her clients by charging them substantial legal fees and submitting false documents that misrepresented the aliens’ work experience, education, prospective sponsors and employers, and current immigration status. For the nearly $350,000 in fees the attorney collected, she routinely forged the signatures of the aliens and the sponsors on government documents. Moreover, she employed some of the illegal aliens as personal servants. This is a joint effort with the INS and the FBI.
The Department’s foreign labor certification programs provide employers access to foreign labor. OIG investigations continue to identify fraud in these programs, particularly the H-1B program, which may result in economic harm to American workers and businesses, exploitation of foreign workers, and security risks associated with aliens who are admitted to this country by fraudulent means. The OIG believes that if the Department is to have a meaningful role in the labor certification process, it should have corresponding statutory authority, not currently available, to ensure the integrity of the process, including by verifying the accuracy of information provided on labor condition applications.
The H-1B Visa Specialty Workers program is intended to allow U.S. businesses to compete in a global market in order to respond to rapid advances in technology. It requires employers who intend to employ foreign specialty-occupation workers temporarily to file labor condition applications with the Department stating that the required wage rates will be paid and that other requirements will be followed. Proper worker documentation must accompany these applications before a visa is issued. Under current law, the Department is required to certify H-1B applications unless it determines that the applications are "incomplete or obviously inaccurate." OIG audits and investigations have shown that the individuals allowed into the United States under this program often lack the specialized skills necessary for meeting the requirements for H-1B visas.
In addition to the application certification process, the Department administers grants that are financed through a $1,000 user fee imposed on employers for every H-1B visa application filed. These grants, established by the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA), are intended to help both employed and unemployed U.S. workers acquire technical skills for occupations that are in demand and are currently being filled by foreign workers on H-1B visas. ACWIA established these grants to train and to place workers directly into highly skilled H-1B occupations and to create programs that would continue after the grants expired.
DOL has conducted three rounds of grant competition and awarded 43 technical skills training grants totaling approximately $96 million through 2000. We conducted performance audits of six of these grants, which totaled $15.4 million and were intended to serve nearly 3,000 participants. The overall audit objective was to evaluate whether grantees were meeting the intent of the H-1B Technical Skills Training Program and the requirements of their grants. The audits were designed to evaluate project implementation, outcome achievement, and fiscal accountability.
Overall, we found that training was implemented and target populations were served. However, none of the participants in two of the grants obtained employment or upgrades in occupations for which they were trained. Two other grantees did not track placements, and therefore employment outcomes were unknown. Further, just three of the six grantees demonstrated that their projects could continue to operate after the current grants ended, a requirement of the grants. In addition, we questioned over $1.6 million in costs, or 29% of reported Federal outlays to date. The following chart summarizes our findings for the six grantees we audited.
[see Deficiencies 2002B (pdf*)]In general, training was implemented and target populations were served in accordance with the grant conditions. However, while grantees implemented training utilizing local educational institutions, innovative training methods (the unique aspect of the grants) were not fully developed, and in one case were not established at all. We also found that some targeted groups, such as unemployed and underemployed individuals, were being excluded and therefore not being served as specified. Finally, we found that the program’s sustainability was an issue for half of the grantees audited. This was mainly due to problems with the innovative aspects of the projects, such as partnerships with industry, which severely diminished over time.
Outcome AchievementWe found that training either failed to achieve employment outcomes or had unknown outcomes. The following chart shows the participant placement or upgrade rates for the six audited grantees.
[see Deficiencies 2002B (pdf*)]We questioned over $1.6 million because the costs were not allocable, allowable, or reasonable. Future costs may be questioned if matching requirements (grantees have to match 25% of the Federal outlays using non-Federal funds) are not satisfied. Most of the questioned costs could have been avoided had detailed subcontractor program and budget information been provided and evaluated by both ETA and the grantees prior to the grant award. Some examples of questioned costs include:
• $140,000 spent on "soft skill" training not associated with a technical skill curriculum; • $154,025 for curriculum development that was unnecessary and unallowable since a comparable curriculum already existed; and • $915,985 for computer labs using an inappropriate cost basis that included an element of profit and duplicative costs, rather than actual lab costs.
We recommended that ETA recover the $1.6 million in questioned costs and take steps to ensure that grantees operate their projects in accordance with the intent and requirements of their grants. The grantees generally responded that they were operating as intended under their grant agreements and that progress has been made in accomplishing grant goals since our audits. (OA Report No. 02-02-207- 03-390, issued March 26, 2002; OA Report No. 02-02-211-03-390, issued September 30, 2002; OA Report No. 02-02-212-03-390, issued September 26, 2002; OA Report No. 02-02-213-03-390, issued September 30, 2002; OA Report No. 02-02-214-03-390, issued September 30, 2002; OA Report No. 02-02-215-03-390, issued September 30, 2002)
The OIG continues to identify fraud in the foreign labor certification programs. These cases involve fraudulent applications that are filed with DOL on behalf of fictitious companies and corporations, individuals who file petitions using the names of legitimate companies and corporations without their knowledge or permission, and immigration attorneys and labor brokers who collect fees and file fraudulent applications on behalf of aliens. ETA has provided significant assistance in these types of cases.
On August 20, 2002, Ronald Bogardus, a former State Department engineer, pled guilty to one count each of conspiracy, labor certification fraud, money laundering, immigration fraud, and extortion. Soon after the close of the reporting period, on October 18, 2002, Bogardus was sentenced to over eight years in prison and, per his plea agreement, will forfeit over $4 million in cash, real property, and other property. The investigation revealed that Bogardus was involved in preparing fraudulent applications for alien employment certification that an attorney (who is a co-defendant in this case) later presented to DOL.
Bogardus went to restaurants and obtained managers’ names and signatures, which he later used on the applications without the managers’ knowledge. The extortion count of his guilty plea concerned written threats that Bogardus made to an immigrant in an attempt to persuade the immigrant to withdraw a lawsuit against the attorney and others. This investigation is being conducted with the Department of State, the IRS, the Immigration and Naturalization Service (INS), and the Fairfax County Police Department. U.S. v. Bogardus (E.D. Virginia)
On August 2, 2002, immigration attorney S. Anita Ryan was sentenced to six years’ imprisonment and four years’ supervised release and was ordered to pay nearly $400,000 in restitution to her clients. Over the past eight years, Ryan defrauded clients who were seeking work visas and permanent resident status of more than $350,000. Ryan sold approved labor certifications and work visas without notifying the original applicants. She continued to bill and collect fees from the original applicants even though their approved documents had been sold or their cases terminated without their knowledge. U.S. v. Ryan (E.D. Virginia)
On July 12, 2002, Choudhry Tariq Bashir, the owner of Star Grocery and Halal Meat, was sentenced to 13 months’ incarceration and 2 years’ supervised release after pleading guilty to visa fraud. Since 1999, Bashir filed 36 labor certification applications for Halal meat cutters. The investigation revealed that the majority of these applications were fraudulent and that undocumented workers had paid Bashir as much as $14,000 to file on their behalf. In a related case, on May 21, 2002, Abdul Hameed, an associate of Bashir, pled guilty to conspiracy and tampering with a witness. The OIG was assisted in this case by the U.S. Postal Inspection Service, the Fairfax County Police Department, and the Herndon Police Department. U.S. v. Bashir, U.S. v. Hameed (E.D. Virginia)
