Vision Systems vs U.S. Government
Vision Systems vs U.S. Government
Date: Friday, July 31, 2009 7:50 PM
<<<<< JOB DESTRUCTION NEWSLETTER No. 2045 -- 7/31/2009 >>>>>
The story about the fraud case against Vision System is several months old.
What little news coverage the story received has subsided, but the case is
still working its way through the courts -- and hopefully those arrested are
still in jail. After obtaining a couple of the court documents I decided to
revisit the case.
In February 2009 the U.S. Immigration and Customs Enforcement (ICE) agents
arrested 11 people in 7 states. The suspects are all of Indian origin but at
this time I don't have information on their immigration status. Many
government agencies were involved in the investigation including the
Department of Labor, Postal Inspection Service, Department of State, Social
Security Administration's Office of the Inspector General, and the U.S.
Attorney's Office for the Southern District of Iowa.
Several companies including Vision Systems are accused of visa fraud, mail
fraud, wire fraud, money laundering, and conspiracy.
Patrick Thibodeau wrote a Computerworld article about the Vision Systems
arrests, although you wouldn't know it by the title of the article: "H-1B
workers outnumber unemployed techies". He had a comment that was quite
alarming:
"in January of 2009, the total number of workers employed in the
information technology occupation under the H-1B program
substantially exceeded the 241,000 unemployed U.S. citizen
workers within the same occupation."
Say what? Did Thibodeau just say that the total number of H-1B workers
outnumber unemployed techies? The answer is yes, that's what he wrote. He
didn't make it clear that he got that startling information directly from
court records -- in this case from document #22 (see link below).
The indictment documents contain other gems worthy of discussion.
Upon closer review the case is very different than what we have previously
seen involving H-1B. In the past most court cases were prosecuted on the
behalf of H-1Bs who got shafted by employers who underpaid them, and
occasionally there is a case that involves a few individuals that conspired in
a visa scam. While on the surface the Vision case would seem to fall into the
latter category because of the visa fraud there is far more to it because this
time because the U.S. government is accusing employers of purposefully using
H-1B to discriminate against U.S. workers. Here is more from document #22:
Although the sufficiency of an indictment is generally determined by
the four corners of a document, the government is prepared to
demonstrate to the Court the manner in which the defendant s schemes,
along with similar schemes by similar companies have substantially
deprived U.S. citizens of employment.
One of the barriers hampering Americans from being able to sue employers is
the lack of a legal precedent that U.S. citizens are harmed by H-1B. The lack
of a precedent has discouraged many American workers from taking legal action
against employers. Perhaps this case could be used as a new precedent. It has
the potential of becoming a major breakthrough for American workers who have
been displaced and discarded in favor of H-1Bs.
The following passage is substantial, and may be the most important part
because there is a recognition that American workers suffer real damage when
the H-1B program is used to discriminate against them.
Although the exact amount of loss to U.S. citizen workers has not
yet been determined, there is no question that the amount of lost
wages and benefits to U.S. citizens has been substantial.
The government makes the argument that abusing H-1B is tantamount to taking
property away from workers. It's a good argument because Amendment 5 of the
U.S. Constitution requires the government to protect property from illegal
seizure.
It is also generally recognized within the Eighth Circuit that the
term "intent to defraud" means to act knowingly and with the intent
to deceive someone for the purpose of causing some financial loss
or loss of property or property rights to another or bringing about
some financial gain to ones self or another to the detriment of a
third party.
Vision Systems is being accused of several different types of fraud including
placing fake job ads. As we know, companies do this routinely but they rarely
get in trouble for it.
In addition to the general intent to deprive U.S. citizens of
employment contracts, wages and benefits, the government also
has evidence from seized records demonstrating the manner in
which specific U.S. citizens were denied meaningful
opportunities for employment. Vision Systems Group and other
related companies repeatedly advertised information technology
jobs within the United States as a "mere formality", and never
acted upon any of the resumes' submitted by U.S. citizens
seeking such employment. In fact, Vision Systems Group and
related companies consistently hired only foreign workers in
order to fill information technology positions within the
United States.
Document 34 contains a defense by Vision Systems. Notice that they
characterize the accusation that H-1B was used to defraud Americans out of
jobs as a "new theory" by the U.S. government. They seem to be well aware that
up until this point the legal system has refused to recognize that H-1B harms
American workers.
In addition to being legally defective, however, the governments
new theory portends a trial about immigration policy, not
criminality. The government's brief previews evidence it will
introduce at trial: "In January of 2009, the total number of
workers employed in the information technology occupation under
the H1B program substantially exceeded the 241,000 unemployed U.S.
citizen workers within the same occupation." This "evidence" is
strikingly similar to objections to the H-1B program urged by its
political opponents. See Patrick Thibodeau, "Grassley: H-1B Visas
Used to Displace U.S. Workers (online at computerworld.com).
It's very odd that Vision Systems makes the claim that the U.S. government has
been misled by Patrick Thibodeau. They used a very bad example because the
article quoted never compares the number of H-1Bs to high tech workers.
It almost seems that Vision Systems had an axe to grind against Thibodeau so
they randomly picked one of his many articles about H-1B. I hope the judge
reads that article because he will be perplexed why the defense chose that one
as an example. Using Thibodeau as a scapegoat is unlikely to help their cause
because the facts on H-1B are widely known and Thibodeau is just one of many
journalists who write about the topic.
Vision Systems denies the mail fraud charge, and then attempts to dispute the
claim that jobs are property. They trivialize the situation by claiming that
depriving Americans of a chance to get a job (fake job ads, phony
interviews) is not equal to depriving somebody of their property. Their
argument is very circular and appears to be an act of desperation by Vision
Systems.
First, the government still has not identified a deprivation of
property within the meaning of 1341. The thing the government
says people lost -- the mere prospect of employment -- is not
property in the hands of a job applicant. Second, even if the
employment prospects did count as property, the government
fails to allege that Vision Systems schemed to obtain that
property. Indeed, it is hard to see how Vision Systems could
scheme to obtain its own jobs.
I read that silly thing about dozen times and it still doesn't make a bit of
sense. Their argument is analogous to stating that you can't be robbed if
banks refuse to give you money. Judges usually aren't impressed by circular
arguments and hopefully this will be no exception.
REFERENCES:
http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=legislation/regulation&articleId=9133529&taxonomyId=70&ints
rc=kc_top
US: H-1B workers outnumber unemployed techies
http://www.businessweek.com/bwdaily/dnflash/content/feb2009/db20090212_920784.htm
Visa Fraud Sparks Arrests Nationwide
http://timesofindia.indiatimes.com/Indians-Abroad/Indians-involved-in-US-H1-B-visa-racket/articleshow/4124465.cms
Indians involved in major US H-1B visa racket
http://www.ice.gov/pi/nr/0902/090212desmoines.htm
11 arrested, indicted in multi-state visa fraud operation
http://www.computerworld.com/s/article/9045798/Grassley_H_1B_visas_being_used_to_displace_U.S._workers
Grassley: H-1B visas being used to displace U.S. workers But senator says he'd
consider increasing annual cap if visa program is reformed By Patrick
Thibodeau November 6, 2007
http://www.jobdestruction.info/ShameH1B/Library/Legal/Vision_systems_Doc22.pdf
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA, UNITED
STATES OF AMERICA, Plaintiff, v VISION SYSTEMS GROUP, INC., Defendant,
Document 22
http://www.jobdestruction.info/ShameH1B/Library/Legal/Vision_Systems_Doc34.pdf
Vision Systems vs. U.S. Document 34
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=legislation/regulation&articleId=9133529&taxonomyId=70&ints
rc=kc_top
US: H-1B workers outnumber unemployed techies Fraud case raises questions
about visa program Patrick Thibodeau
May 26, 2009 (Computerworld) WASHINGTON -- As unemployment among tech workers
increases with the recession, the U.S. government is raising broad questions
as part of a federal case over H-1Bs about the connection of visa fraud to the
unemployment of IT workers.
The government's interest in H-1B fraud-related unemployment turned up in
court filings in a case in U.S. District Court in Iowa against a New Jersey IT
firm, Visions Systems Group in South Plainfield, NJ, which was indicted in
February on visa-related fraud charges.
Visions Systems was included in a sweep that led to arrests of some 11 people
in six states. The government, in announcing its action, said the companies
and people involved were "displacing qualified American workers,"
but didn't identify how many. In court papers filed last month, the U.S.
indicated it may be getting ready to do just that.
The U.S. said it is "prepared to demonstrate to the court the manner in which
the defendant's schemes, along with similar schemes by similar companies have
substantially deprived U.S. citizens of employment." The government then
points out that "in January of 2009, the total number of workers employed in
the information technology occupation under the H-1B program substantially
exceeded the 241,000 unemployed U.S. citizen workers within the same
occupation."
The U.S. government's brief doesn't explain to what extent fraud is
responsible for tech worker unemployment, or cite sources for its data.
Estimates of the size of the tech labor force depend on what government labor
categories are included.
One analysis by the TechServe Alliance (formerly the National Association of
Computer Consultants), found that tech employment was down nearly 200,000 from
December, after reaching a high 4.1 million in November.
The exact size of the H-1B labor force in the U.S. is uncertain because of a
lack of accurate data. The U.S. sets a cap of 85,000 H-1B visas annually.
In the case of Vision Systems, the U.S. said the company "consistently hired
only foreign workers in order to fill information technology positions within
the United States." The government said "although the exact amount of loss to
U.S. citizen workers has not yet been determined, there is no question that
the amount of lost wages and benefits to U.S.
citizens has been substantial."
Vision Systems attorneys, in court papers, dispute these allegations, and said
"there is no exclusivity to a job's seeker's chance to apply for a job," and
that anyone could apply. Vision Systems is fighting the charges and has filed
for dismissal.
Regarding the broader issues raised by the government, Vision Systems
attorneys suggested that the U.S. is politicizing the case, and that the
government is arguing "that there is something illegitimate about the entire
H-1B visa program, not just specific applications of it."
There are interesting arguments being raised in the courts by the U.S. over
the H-1B visa. The U.S. Department of Homeland Security, in its case fighting
the Programmers Guild and others from overturning the extension allowing
foreign nationals with technical degrees to work on student visas from one
year to 29 months, argued that the H-1B visa is needed to avoid a competitive
disadvantage.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.businessweek.com/bwdaily/dnflash/content/feb2009/db20090212_920784.htm
Top News February 13, 2009, 12:01AM EST text size: TT Visa Fraud Sparks
Arrests Nationwide An ongoing federal probe into H-1B visa fraud leads to 13
arrests and the indictment of IT services firm Vision Systems Group
By Moira Herbst
The controversy over the H-1B visa program for highly skilled workers is
heating up once again. Federal agents detained 13 people in six states as part
of a wide investigation into suspected visa fraud, the U.S. Attorney's office
in Iowa announced on Feb. 12, a day after the arrests. Those arrested are
accused of fraudulently representing themselves or other workers in
immigration documents.
Besides the arrests, Vision Systems Group, an IT services firm based in South
Plainfield, N.J., with a branch office in Coon Rapids, Iowa, was indicted on
10 federal counts, including conspiracy and mail fraud charges.
The firm allegedly used fraudulent documents to bring H-1B visa workers into
the U.S. The government is seeking the forfeiture of $7.4 million from Vision
Systems that was gained through the alleged offenses. Five other technology
companies, including Worldwide Software Services and Sana Systems in Clinton,
Iowa, remain under investigation for document fraud, prosecutors said. "We are
only at the tip of iceberg as to where this [investigation] leads," said
Matthew G. Whitaker, U.S. Attorney for the Southern District of Iowa. "We have
a ways to go and more [fraud] to uncover."
Representatives of Vision Systems, Worldwide Software, and Sana Systems could
not be reached for comment after business hours on Feb. 12. Whitaker declined
to identify the other three companies being investigated.
H-1B Program Under Scrutiny
The coordinated, nationwide enforcement effort began 18 months ago and
continues, officials said. It is the first to specifically address fraud in
the H-1B visa system, which critics say brings lower-cost tech workers into
the U.S., displacing American workers.
As unemployment rises in the U.S., the H-1B program is drawing scrutiny for
its potential effects on U.S. jobs. In October the U.S. Citizenship &
Immigration Service (USCIS) released a report showing rampant fraud in the H-
1B visa program. At the same time, critics say that outsourcing firms,
including Infosys Technologies (INFY) and Wipro (WIT), use H-1B visas to
replace U.S. employees with cheaper workers from abroad, often cycling
overseas staff through U.S. training programs before sending them back home to
perform such jobs.
Large U.S. tech companies such as Oracle (ORCL) and Microsoft (MSFT), which
want to raise the annual limits on H-1B visas, are seeking to differentiate
themselves from firms that commit fraud. Bill Kamela, director of policy
counsel for Microsoft, told BusinessWeek in January that the company has been
working with USCIS to ensure the program is free of fraud and abuse.
Allegations of Displacing U.S. Workers
The fraud identified in the Feb. 12 announcement echoes patterns outlined in
the October USCIS report. Specifically, Vision Systems Group is accused of
filing petition requests with the government showing the H-1B visa workers
would be employed in Iowa to take advantage of lower requirements for wage
rates. But the workers were allegedly placed in locations on the East and West
coasts. Whitaker says that by doing so, the company "dislocated and displaced
United States workers that could have done those jobs."
In other cases uncovered in the investigation, foreign workers have allegedly
been placed in jobs and locations not previously certified by the Labor Dept.,
displacing qualified American workers and violating prevailing wage laws. The
companies and foreign workers allegedly submitted false statements and
documents to state and federal agencies supporting their visa petitions.
The operation was conducted by federal, state, and local law enforcement
agencies in Iowa, California, Massachusetts, Texas, Pennsylvania, Kentucky,
and New Jersey.
Herbst is a reporter for BusinessWeek in New York.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://timesofindia.indiatimes.com/Indians-Abroad/Indians-involved-in-US-H1-B-visa-racket/articleshow/4124465.cms
Indians involved in major US H-1B visa racket PTI 13 February 2009, 04:02pm
IST
WASHINGTON: US federal authorities have claimed to have unearthed a major H-1B
visa racket with the arrest of at least 11 persons, most of them suspected to
be of Indian origin.
Though the officials did not reveal the citizenship of those arrested, the
names released indicated that almost all of them are either Indian or persons
of Indian origin.
Vision Systems Group, an IT company headquartered in South Plainfield New
Jersey, has been indicted on 10 federal counts including conspiracy and mail
fraud charge. Viswa Mandalapu is its CEO and president, according to the
information available on the company's website.
US attorney Matthew Whitker alleged that Vision Systems Group, with a branch
office in Coon Rapids, Iowa, used fraudulent documents to bring H-1B visa
workers into the country.
The government is seeking the forfeiture of USD 7.4 million in proceeds raised
through the alleged offenses.
"This is just the tip of the iceberg as far as this investigation goes," he
said.
Besides Vision System Groups, at least five other companies are under
investigations because of their alleged visa fraud. Two of them Worldwide
Software Services and Sana Systems are based in Iowa.
According to the list of those arrested by the federal authorities, Shiva
Neeli was arrested in Boston; Ramakrishna Maguluri in Atlanta, Villiappan
Subbaiah in Dallas and Suresh Pola in Philadelphia.
Chockalingham Palaniappan and Vijay Myneni were arrested in San Jose,
California, while Venkata Guduru and Amit Justa were arrested in New Jersey.
One Karambir Yadav was also arrested. All the arrests were made on Wednesday
and on charges of conspiracy and mail fraud, the attorney said.
Vishnu Reddy, president of Pacific West Corporation of Santa Clara in
California was arrested in Los Angeles. Praveen Andapally, president of
Venturisoft Inc in South Plainfield, New Jersey, was arrested in New Jersey on
charges of mail fraud, conspiracy and for false statement in immigration
matters.
According to the indictment Vision Systems failed to maintain a permanent
office for workers in Iowa, while most of its workers worked in different
states.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.ice.gov/pi/nr/0902/090212desmoines.htm
February 12, 2009
11 arrested, indicted in multi-state visa fraud operation
DES MOINES, Iowa - U.S. Immigration and Customs Enforcement (ICE) agents
arrested 11 individuals in seven states Wednesday as part of an investigation
into suspected visa and mail fraud. Matthew G. Whitaker, U.S.
Attorney for the Southern District of Iowa, announced the operation, which was
carried out by federal, state and local law enforcement agencies in Iowa,
California, Massachusetts, Texas, Pennsylvania, Kentucky and New Jersey.
Vision Systems Group Inc., a New Jersey Domestic Profit Corporation with a
branch office in Coon Rapids, Iowa, was also indicted in a 10-count federal
indictment that included one count of conspiracy, eight counts of mail fraud,
and one count of 'Notice of Forfeiture' in the amount of $7.4 million.
"Today's multi-state enforcement action is the result of an extensive, ongoing
investigation into suspected H-1B visa fraud, mail fraud, and conspiracy,"
said U.S. Attorney Whitaker. "Dubbed "Operation Pacific Vision," this
investigation is the result of outstanding cooperation and collaboration among
law enforcement agencies at all levels of government."
The investigation is being conducted by ICE in collaboration with U.S.
Citizenship and Immigration Services' Fraud Detection and National Security
Division (FDNS); U.S. Department of Labor's Office of Inspector General; U.S.
Postal Inspection Service (USPIS); U.S. Department of State; Social Security
Administration's Office of the Inspector General, and is supported by the U.S.
Attorney's Office for the Southern District of Iowa.
"This case highlights the Department of Homeland Security's commitment to
identifying and dismantling visa fraud schemes," said Homeland Security Acting
Assistant Secretary for ICE John P. Torres. "Ensuring the integrity of our
nation's legal immigration system is a top priority for ICE."
"This is a prime example of how the Department of Homeland Security identifies
fraud," said Michael Aytes, USCIS's acting deputy director. "Our adjudication
officers can spot inconsistencies during the application process that
ultimately led to the successful outcome we're seeing today.
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."
Federal authorities, with assistance from state and local law enforcement,
served search warrants at addresses in Urbandale and Clive, Iowa; in Santa
Clara, Rancho Cucamonga and Arcadia, Calif.; and in South Plainfield, N.J.
This investigation involves companies that sponsor primarily H-1B non-
immigrants, or temporary workers in specialty occupations that require a
particular expertise. The companies that are the subject of this investigation
have asserted that the foreign workers have been brought to the U.S. to fill
existing vacancies. However, the companies allegedly have not always had jobs
available for these workers, thereby placing them in non-pay status after they
arrive in the United States. In some cases, the foreign workers have allegedly
been placed in jobs and locations not previously certified by the Department
of Labor, displacing qualified American workers and violating prevailing wage
laws.
The companies and foreign workers have allegedly submitted false statements
and documents in support of their visa petitions. The false statements and
documents were mailed or wired to state and federal agencies in support of the
visa applications. The companies are suspected of visa fraud, mail fraud, wire
fraud, money laundering and conspiracy.
"The foreign labor certification programs are designed to permit U.S.
employers to hire foreign workers to fill jobs essential to American
businesses," said Daniel R. Petrole, deputy inspector general, U.S.
Department of Labor. "Our agency remains resolute in its commitment with its
law enforcement partners to investigate fraud committed against these
Department of Labor programs."
U.S. businesses use the H-1B program to employ foreign workers in specialty
occupations that require theoretical or technical expertise in specialized
fields, such as scientists, engineers, or computer programmers. As part of the
H-1B program, the Department of Homeland Security (DHS) and the Department of
Labor (DOL) require U.S. employers to meet specific labor conditions to ensure
that American workers are not adversely impacted, while the DOL's Wage and
Hour Division safeguards the treatment and compensation of H-1B workers.
Congress sets a numerical cap for the admission of skilled workers into the
U.S. The current H-1B cap is set at 65,000 visas per fiscal year. H-1B aliens
can work in the United States for three years, with an option for an
additional three years (for a maximum of six years).
Those arrested Wednesday by ICE agents include:
1. Shiva Neeli, arrested in Boston, Mass.; charged with conspiracy and mail
fraud.
2. Ramakrishna Maguluri, arrested in Atlanta, Ga.; charged with conspiracy
and mail fraud.
3. Villiappan Subbaiah, arrested in Dallas, Texas; charged with conspiracy
and mail fraud.
4. Suresh Pola, arrested in Pennsylvania; charged with conspiracy and mail
fraud.
5. Vishnu Reddy, arrested in Los Angeles, Calif.; charged with conspiracy,
mail fraud and wire fraud.
6. Chockalingam Palaniappan, arrested in San Jose, Calif.; charged with
conspiracy, mail fraud and wire fraud.
7. Vijay Myneni, arrested in San Jose, Calif.; charged with conspiracy and
mail fraud.
8. Venkata Guduru, arrested in New Jersey; charged with conspiracy and mail
fraud.
9. Praveen Andapally, arrested in New Jersey; charged with conspiracy, mail
fraud, wire fraud, and making false statements in an immigration matter.
10. Amit Justa, arrested in New Jersey; charged with conspiracy and mail
fraud.
11. Karambir Yadav, arrested in Louisville, Ky.; charged with conspiracy and
mail fraud.
The maximum sentence for conspiracy is five years in prison and a $250,000
fine. The maximum sentence for mail fraud is 20 years in prison and a $250,000
fine. The maximum sentence for wire fraud is 20 years in prison and a $250,000
fine. The maximum sentence for making a false statement in an immigration
matter is 10 years in prison and a $250,000 fine.
The Department of Homeland Security has a multifaceted approach to detecting
and investigating immigration and benefit fraud. ICE's Document and Benefit
Fraud Task Forces were created in March 2006 to target and dismantle criminal
organizations that threaten national security and public safety and close
vulnerabilities in the immigration process. USCIS created the Fraud Detection
and National Security Division (FDNS) to enhance the integrity of the
immigration systems and to identify persons who pose a threat to national
security or public safety. Cooperation between FDNS and ICE has helped to
increase the incidence of enforcement actions. More information on these
initiatives is available at www.ice.gov and www.uscis.gov.
The following agencies investigated or assisted in this case: U.S.
Attorney's Office, Southern District of Iowa; U.S. Immigration and Customs
Enforcement; U.S. Citizenship and Immigration Services' Fraud Detection and
National Security Division; U.S. Department of Labor's Office of Inspector
General; U.S. Postal Inspection Service; U.S. Department of State's Kentucky
Consular Center (a field office of the Bureau of Consular Affairs); U.S.
Diplomatic Security Service; U.S. Marshals Service; Social Security
Administration's Office of Inspector General; Internal Revenue Service's
Criminal Investigations; Des Moines Police Department; West Des Moines Police
Department; Iowa Department of Transportation's Motor Vehicle Enforcement
Office.
As with any criminal case, a charge is merely an accusation; a defendant is
presumed innocent until and unless proven guilty. Because this investigation
is in its early stages, it would be inappropriate to provide further details
on the case at this time. As this is an open federal investigation, until
further notice, the media is asked to direct any inquires on Operation Pacific
Vision to the U.S. Attorney's Office, Southern District of Iowa's Public
Information Officer, Mike Bladel at
(515) 473-9342. No other agency is authorized to respond to questions on this
matter.
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