Fed indictments tell how H-1B visas were used to undercut wages

U.S. announces arrests in several states alleging visa fraud

Federal agents on Thursday said they arrested 11 people in six states in a crackdown on H-1B visa fraud and unsealed documents that detail how the visa process was used to undercut the salaries of U.S. workers.

Federal authorities allege that in some cases, H-1B workers were paid the prevailing wages of low-cost regions and not necessarily the higher salaries paid in the locations where they worked. By doing this, the companies were "displacing qualified American workers and violating prevailing wage laws," said federal authorities in a statement announcing the indictments.

Employers are required to pay H-1B workers prevailing wages, but those wage rates can vary significantly -- by tens of thousands of dollars, depending on the region. How many U.S. workers may have been displaced was not detailed by federal authorities.

The arrests were carried out by federal, state and local agents working in Iowa, California, Massachusetts, Texas, Pennsylvania, Kentucky and New Jersey. The government's action "is the result of an extensive, ongoing investigation into suspected H-1B visa fraud, mail fraud and conspiracy," said Matthew Whitaker, the U.S. attorney for the Southern District of Iowa, in a statement. The investigation was dubbed Operation Pacific Vision.

The H-1B workers were also victims, according to the federal indictments. Some were hired for jobs that didn't exist. One worker from Pakistan who arrived in the U.S. for a programming job, for instance, ended up with a job pumping gas.

The Iowa focus and connections raised in the indictments are notable in one regard: It's the home state of the U.S. Senate's leading critic of the H-1B program, Republican Chuck Grassley, who released in October a study on visa fraud by the U.S. Immigration and Citizenship Service (USCIS) that found that one in five H-1B applications were either fraudulent or had violated a law or regulation in some way.

The company that seemed to get the most attention from federal authorities is Vision Systems Group Inc., which authorities said had its principal places of business in Somerset and South Plainfield, N.J., and an office in Coon Rapids, Iowa. The company was cited in a 10-count indictment. Calls to the company seeking comment were not returned by press time.

The indictment, in part, alleges that Vision Systems submitted a Labor Condition Application that detailed prevailing wage data for a location in Iowa "rather than the prevailing wage where the worker would actually be employed."

The indictment does not say where the H-1B employee would be employed, but from a prevailing wage perspective, location is important.

For instance, using data from the Foreign Labor Certification Data Center Online Wage Library, the prevailing wage of a computer programmer in Des Moines, for instance, ranges from $42,800 a year for an entry-level worker to more than $71,000 a year for an experienced one. But in the Newark, N.J., area, a computer programmer's pay would range from $55,000 to $108,100, according to the wage calculator.

Michael Aytes, acting director of the USCIS, said the action "is a prime example of how the Department of Homeland Security identifies fraud."

"Our adjudication officers can spot inconsistencies during the application process that ultimately lead to the successful outcome we're seeing today," said Aytes in a statement. "Visa fraud undermines the integrity of the immigration system, and I'm proud that our officers have helped to ensure that the American people and our customers can continue to depend on a reliable system."

The government arrested on conspiracy and mail fraud Shiva Neeli in Boston, Ramakrishna Maguluri in Atlanta, Villiappan Subbaiah in Dallas, Suresh Pola in Pennsylvania, Karambir Yadav in Louisville, Ky., Amit Justa and Venkata Guduru, both in New Jersey, and Vijay Myneni in San Jose.

Charged with conspiracy, mail fraud and wire fraud was Vishnu Reddy in Los Angeles and Chockalingam Palaniappan in San Jose, who operated a company named Pacific West Corp. in Santa Clara, Calif.

Praveen Andapally, in New Jersey, was charged with conspiracy, mail and wire fraud, and making a false statement in an immigration matter.

The government can charge mail and wire fraud if it believes the mail was used to send a false statement in support of a visa application.

Copyright © 2009 IDG Communications, Inc.

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