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Visa fraud in US tech industry relies on falsified job letters

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Visa letters

Letters from an employer needing a foreign worker are valuable currency in the shadow world of tech staffing firms known as “body shops.”

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Six years ago, the U.S. Department of Justice trumpeted its indictment of a Massachusetts state worker as part of a nationwide crackdown on corruption in the H1-B temporary work visa program.

Richard Schwartz was convicted after signing fake letters on Massachusetts Department of Workforce Development letterhead promising jobs awaited workers – a required step in securing the visas. But today, as Schwartz appeals a new probation violation sentence related to his role in that case, phony paperwork continues to be a mainstay of visa fraud.

Despite government efforts to make an example of Schwartz, insiders say visa fraud schemes remain commonplace in the information technology staffing industry.

“It’s quite obvious there are multiple layers of the gray market, resulting in workers being underpaid,” Rajiv Dabhadkar, founder of India’s National Organization for Software and Technology Professionals, said in a telephone interview from Mumbai. “The root is the client letter.”

Letters from an employer needing a foreign worker are valuable currency in the shadow world of tech staffing firms known as “body shops.” Through Indian affiliates, these job brokers advertise that they have expertise in obtaining visas – for a price.

U.S. law prohibits selling visas. “However, many times they do, and they call it ‘fees,’ ” said Harshal Vaidya, founder of Goolti.com, an India-based online complaint board for body shop employees. To avoid detection, the firms require workers to make payments to a subsidiary in India, he said, or to one of the company owner’s Indian relatives.

Once workers reach the U.S., they may have to wait for the broker to find them work, or they may be left to look for their own jobs. Regardless, the body shops take a slice of whatever paycheck results.

Jump-starting this scheme requires proof of a waiting job, which comes in the form of a “client letter.” Such letters can be issued by a corporation that’s actually an empty shell, a real company selling letters to staffing firms or someone creating pure forgeries like the ones Schwartz helped produce.

“You need documents to show there is a real job to go to,” Dabhadkar said. “And this happens to be one of the core areas and loopholes that can be manipulated by body shops.”

Visa candidates present the letters during an interview with U.S. immigration officials at overseas consulates. In 2009, following audits and other reports of widespread fraud, U.S. Citizenship and Immigration Services launched a worksite-visit program to verify claims on visa applications from workers already in this country.

Congress created the H-1B visa program in 1990 so U.S. companies could hire foreigners with special skills. Technology firms file about half of the approved visa applications. The top applicants are Indian-owned staffing firms that contract out workers for programming and other tech jobs in the U.S.

An investigation by The Center for Investigative Reporting chronicled abuse in the body shop industry. Among those profiled was an IT worker who said he paid $3,500 for expenses that included a phony client letter.

Court cases, Labor Department investigations and other official files, and interviews with IT workers all suggest that visa documents, including letters, often describe phony U.S. jobs. Some examples:

  • An office manager at the Iowa firm Worldwide Software Services told an FBI investigator in 2009 that there never had been a job waiting for a visa holder, despite the firm’s hundreds of H-1B visa applications. The owners made frequent trips overseas to recruit people willing to pay for a visa and arranged for a U.S. citizen to back a sister company, New Age Technology, that could be cited as an employer on visa applications. The paperwork was “false and fraudulent,” FBI agent Elizabeth Baren wrote in support of a criminal asset seizure action. Fazal Awan, company president at the time, did not respond to a request for comment.
  • The Virginia firm Global IT also was accused of recruiting workers in India, charging them for visa applications that cited phony U.S. jobs, according to an ex-employee who sued the company. “H-1B employees who accept positions with Global IT later learn a stark reality: Global IT has no pre-existing job or work available,” according to the worker’s class-action lawsuit, which was settled out of court in October 2012. Global IT did not respond to requests for comment.
  • On tech job boards such as Benchfolks.com, Indian workers advertise that they already are in the U.S. on H-1B visas and available for new work at a moment’s notice – even though visa rules require that applications describe a specific job that’s been lined up ahead of time. “They are willing to relocate anywhere in the U.S. immediately,” said a Benchfolks.com representative who identified himself as Anthony Josef. “Some of them belong to contractors; others will do projects on their own.”

“I am surprised at the scale and visibility,” said Ron Hira, an associate public policy professor at Howard University and an expert on offshore labor and skilled-worker immigration.

As far back as 2007, U.S. consular officials in India were aware of rampant document fraud. They tackled it by demanding proof that visa applicants were heading to real jobs and not falling into the hands of a visa broker. Proof that an actual job existed in the United States could come in the form of a work order, service agreement or, best of all, a letter from a company or agency describing the waiting position.

At the time, Indian immigrant Venkat Naidu was president of a Boston-area staffing firm called XpertTech. In U.S. immigration officials’ stringent policy, Naidu found opportunity.

Naidu’s friend, the president of another staffing firm, was willing to pay for high-quality forged letters, according to court filings. Sridhar Reddy of Cambridge Resource Group already had experience stretching the rules of the H-1B visa program.

In 2008, the U.S. Department of Labor was pursuing a yearlong investigation into allegations that Reddy had failed to pay workers. Labor officials temporarily debarred his company from the H-1B program because it was the second time he had defrauded H-1B workers, according to Labor Department records obtained under the Freedom of Information Act.

In response, attorney Keshab Raj Seadie boasted that Reddy would sidestep regulators, according to Labor Department files.

“The firm will appeal the findings to ‘buy some time’ to reorganize and possibly start up under a different corporation,” a federal investigator quoted Seadie as saying. At the time, Reddy was quietly doing business under multiple corporate names, according to U.S. Justice Department filings.

Today, Seadie’s website, Greencardmaker.com, describes his practice as “one of the top U.S. law firms in business immigration law.” He says he was chatting with the investigator in general terms about how the H-1B staffing market works.

“I was telling her what was going on in the industry, in the market,” Seadie told CIR. “And this guy was going to do the same garbage,” he added in reference to Reddy, his former client.

Even as he was being investigated for wage theft, Reddy was obtaining more recruits in India. But his operation had run up against U.S. immigration officials’ hard line on credentials.

In February 2008, Naidu told Reddy that he knew a government IT supervisor who might sign phony letters, according to court filings. Reddy put up $7,000 in bribe money.

Enter Schwartz, a then-49-year-old IT specialist for the State of Massachusetts. He supports his ex-wife and three sons financially and is the primary caretaker of his 85-year-old blind, cancer-stricken father, according to sentencing documents.

Naidu gave Schwartz prewritten letters and got him to sign them on official letterhead provided by Schwartz, according to court documents.

At the time, the Justice Department was gathering visa fraud evidence throughout the country in preparation for what would be touted in press releases as a nationwide crackdown on misuse of H-1B visas.

In early 2007, agents had raided an Edison, New Jersey, staffing firm and arrested the owner on immigration fraud charges. In exchange for a reduced sentence, he pleaded guilty and provided names of other staffing firm owners suspected of fraud.

Reddy, Naidu and Schwartz were charged in December 2008. The following February, agents made 11 arrests across seven states, detaining the owners of staffing firms in New Jersey and California.

“We’re trying to close these loopholes and take away the incentive to conduct these fraudulent schemes,” then-U.S. Attorney Matthew Whitaker told the media.

Naidu was the first to flip in the Massachusetts case, telling all to prosecutors in a plea agreement that gave him two years’ probation and a $6,000 fine.

“Really, the guy’s a great guy; that happened years ago with me getting him out of that jam,” said Naidu’s attorney, Jonathan Plaut of the Boston firm Cohan Rasnick Myerson Plaut. “We got him out of the jam by telling the truth.”

Naidu, who also goes by Venkat Janapareddy, went on to help found several other staffing and outsourcing-related firms.

Reddy also pleaded guilty and received three years’ probation and an $18,000 fine. He was deported and didn’t respond to interview requests.

In its criminal prosecution, the Justice Department played up the public corruption angle in Schwartz’s use of Massachusetts government letterhead in a fraudulent scheme.

“The defendant legitimately holds a position of public trust,” Justice Department attorneys wrote in arguing that Schwartz should be sentenced to a year in jail plus fines. “He used his position … to facilitate entry of non-immigrants to the United States.”

Schwartz pleaded guilty and was sentenced to three years’ probation and $10,000 in fines. But he told CIR that he barely knew what had hit him.

“I worked for a place that hired them as a contractor, truthfully,” he said. “I wish I knew more.”

In October, Schwartz was sentenced to six months in jail plus three more years’ probation after he was caught with a fake driver’s license.

Dabhadkar, author of the new book “Green Carrot – America’s Work Visa Crisis,” said that despite the government’s crackdown, client letters haven’t lost their role as an underground currency for one simple reason: “It’s the structure of the market.”

 

This story was edited by Amy Pyle and copy edited by Stephanie Rice and Nikki Frick.

Matt Smith can be reached at msmith@cironline.org.