Widespread problems, fraud found in H-1B program

U.S. study finds incidents of forged documents, fake degrees, 'shell' companies

An internal report by the U.S. Citizenship and Immigration Services (USCIS) examining the H-1B visa program has found evidence of forged documents and fake degrees, and even "shell" companies giving addresses of fake locations.

The USCIS report, released Wednesday by U.S. Sen. Chuck Grassley (R-Iowa), indicates that serious violations of the H-1B program by employers are so common that one in five visas are affected by either fraud or "technical violations." This means that potentially thousands of employers may be violating the rules, some willfully.

Employers didn't pay prevailing wages in some cases and benched employees when there wasn't work, while some employees worked at jobs that differed from what the application claimed they would be doing. In one bizarre case, an H-1B holder was found "working in a laundromat doing laundry and maintaining washing machines," the report said.

"This report validates the major flaws in the H-1B visa program," Grassley said in a statement. "It's unacceptable that these fraudulent activities are slipping through the cracks when there is so much legitimate demand for H-1B visas."

The 15-page report summarizes findings and doesn't detail the employers who apply for the H-1B temporary work visas. Although the H-1B employers have been cited and fined from time to time for violations of the program, this broad examination is the first of its kind.

"Until we make a conscious effort to close the loopholes, we're going to see continued abuse where people coming to this country on H-1B visas are working at laundromats," Grassley said.

Investigators used a random sample of 246 cases drawn from a pool of nearly 100,000. Documents were reviewed and H-1B employers and workers were interviewed. The report's investigators discovered most of the problems during visits to work sites. Out of that number, 51 of the cases had problems.

The report's authors wrote that their confidence in their findings is 95%, and that the results represent a "significant vulnerability."

"USCIS is making procedural changes, which will be described in a forthcoming document," the report concluded.

Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology and co-author of Outsourcing America, said he was stunned by the size of the problem.

"It is clear that oversight, including an auditing function, are desperately needed to clean up the corruption," Hira said. "But we shouldn't forget that the major problems with the H-1B program are caused by massive loopholes that allow firms to legally pay below-market wages and displace and undercut American workers. Those wouldn't show up in this investigation because they are entirely legal and wouldn't be considered fraudulent or a violation." Grassley and Sen. Dick Durbin (D-Ill.) have been ardent critics of the H-1B program, pushing for reforms and tougher enforcement.

The tech industry wants an increase in the H-1B program, now capped at 85,000 annually, with 20,000 visas set aside for graduate degrees. But much of the lobbying for the increase came last spring, before the full weight of the current economic crisis.

Congress has not taken action on that legislation, and efforts to increase the H-1B cap have so far failed as well.

Copyright © 2008 IDG Communications, Inc.

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