While the recent H-1B and green card fraud bust has been applauded for focusing attention on abusive and exploitative H-1B employers and “bodyshops,” short shrift has been given to the fact that several H-1B employees were also indicted for their alleged participation in the scheme.

Of the 11 people arrested last week, eight were employees. The employees were indicted as co-conspirators based on their alleged role in obtaining H-1B visas and seeking permanent residency by fraud, according to redacted indictments filed in U.S. District Court of the Southern District of Iowa.

The H-1B employees are accused of the following legal violations:

  • Conspiring with their employers to obtain by fraud H-1B visas and permanent residency by falsely claiming they lived and worked in Iowa when in fact they were living and working in other states. 18 USC 371
  • Mail fraud for stating on tax and/or immigration documents they lived and worked in Iowa when they actually did not. 18 USC 1341, 18 USC 1342

These employees may not have originally devised the alleged scheme -in fact, they may well have been talked into it by their employers against their better judgment-but the pressure the employees may have felt does not excuse violations of the laws.

Are you worried about finding yourself in this same situation? In this article we discuss the charges and the laws at issue to help explain why these employees were arrested and what steps you can take to protect yourself and your status.

What are the Laws Being Violated?

The law prohibits an employer from assigning an H-1B employee to work outside the geographic area stated in his H-1B documents (an “approved locale”) except for temporary assignments lasting less than 30 days, or up to 60 days within certain circumstances. See 20 CFR 655.

If the employer wants the employee to work for an extended period in another locale or to move permanently to another locale, approval and a new prevailing wage must be obtained from the Department of Labor. In other words, the employer cannot get an H-1B for someone in a low paying region and then place them in a higher paying region but pay them the lower wage of the approved locale.

If the employee submits tax or other documents stating his address is in the approved locale when in fact he has been living and working in a different location long-term, he violates the law.

The employees and employers are charged with conspiring to violate these laws to obtain H-1B visas and permanent residency by fraud, and by using the postal system in furtherance of this conspiracy to defraud the government.

What Was the Alleged Scam?

The companies are accused of hiring foreign nationals on H-1B visas under the pretense of having a job, but when the employees arrive for work, they discover no such job exists, according to the indictments.

At this point, although not alleged in the government’s indictments, these fraudulant companies typically put the H-1B employee to “work” sending out resumes for third-party consulting jobs on the employer’s behalf. If the employee finds a taker, he is assigned to the project and finally paid. If the employee cannot land a job, then he remains benched until he does.

In addition to not having jobs for these H-1B employees, the companies are also accused of stating on the Department of Labor H-1B and permanent residency labor certification and immigration forms forms the employee would be working at offices in Iowa, a locale known for its low prevailing wage, but in reality they were working in jobs in markets where a higher salary normally was commanded, such as California, Texas and Boston.

With regards to Visions Systems Group in particular, the Daily Times Herald, an area newspaper in Carroll, Iowa, is reporting the Iowa office might have been a “ghost” office, intentionally set up to take advantage of the lower prevailing wage in Iowa, although no H-1B employees were ever based there.

What Were the Employees Charged With?

The employees are accused of conspiring with their employers to obtain H-1B visas and permanent residency by fraud. Specifically, the employees were charged with conspiracy and mail fraud basically for stating they lived and worked in Iowa when they actually did not. The employees are alleged to have sent in Iowa state tax returns and/or immigration forms (Form G-325) falsely claiming they lived and worked in Iowa, when in fact they were living and working in other cities throughout the country.

How Can I Avoid Violating the Law?

An employer violates the law by benching employees and directing them to work in cities different than the city stated on the H-1B documents.

If your H-1B employer is asking you to work for an extended period of time in a city other than your approved locale, you should refuse unless your employer obtains government permission and shows you proof of that approval.

If your employer is telling you to put down false information on any government form, no matter how seemingly unimportant, you must refuse.

Keep in mind that H-1B employees can also find themselves in violation of the law and found to be lying on government documents and/or not maintaining their status, even if that failure is due to acts by the employer.

We urge employees to not let this happen. As these indictments show, your employer’s violations will not excuse your own. The government does not tolerate lying. Inform yourself about the laws governing your status as an H-1B visa holder. If you think your employer is asking you to do something that you think may violate the law, listen to your instinct. Do not accept the word of your employer that what they want you to do is legal. Seek assistance from a competent attorney immediately.

Who was Indicted?

The Companies

Three companies are implicated in the schemes, including Vision Systems Group, Inc. of Somerset and South Plainfield, New Jersey, Pacific West Corporation, registered in Iowa, but with offices in Santa Clara, CA and Venturisoft, Inc. of South Plainfield, New Jersey. All three promote themselves as software and IT solutions companies.

Vision Systems Group was indicted as a company, whereas key officers of the other two were indicted. No employees of Vision Systems Group were named among those arrested Thursday, February 11, 2009, but four employees each from the other two companies were.

According to the Department of Labor’s H-1B LCA database, the Foreign Labor Certification Data Center, these three companies are likely volume H-1B employers. The New Jersey office of Vision Systems Group submitted 190 LCAs in FY 2008, 260 LCAs for FY 2007, 133 LCA’s for FY 2006, 19 LCA’s FY 2005 and 39 LCA’s in FY2004, among other years. Similarly, dozens of LCA’s each year were submitted using its Iowa office address.

The database shows Pacific West Corporation, using the Iowa office address, submitted 52 LCA’s in FY 2007, 40 LCA’s in FY 2006, and 41 LCA’s in FY 2005. Using its CA office as the worksite Pacific West submitted 22 LCA’s in FY 2008 and 58 LCA’s FY 2007.

For Venturisoft, using its Iowa office, 5 LCA’s were submitted in FY2008, 54 LCA’s in FY 2007, 5 LCA’s in FY 2006, 73 LCA’s in FY 2005 and 21 LCA’s FY 2004.

The Individuals

Eleven individuals in seven states were arrested last week, three employers and eight employees. Those charged were identified in the redacted indictment as:

Employers

  1. Vishnu Reddy, identified as the President of Pacific West Corporation, was arrested in Los Angeles, CA, and charged with conspiracy, mail fraud and wire fraud.
  2. Chockalingam Palaniappan, identified as the Vice President of Pacific West Corporation, was arrested in San Jose, CA and charged with conspiracy, mail fraud and wire fraud.
  3. Praveen Andapally, identified as the President of Venturisoft, was arrested in New Jersey and charged with conspiracy, mail fraud, wire fraud, and making false statements in an immigration matter.

Employees

  1. Venkata Guduru, identified as an employee of Venturisoft, arrested in New Jersey and charged with conspiracy and mail fraud.
  2. Karambir Yadav, identified as an employee of Venturisoft, arrested in Louisville, KY and charged with conspiracy and mail fraud.
  3. Amit Justa, identified as an employee of Venturisoft, arrested in New Jersey and charged with conspiracy and mail fraud.
  4. Suresh Pola, identified as an employee of Venturisoft, arrested in Pennsylvania and charged with conspiracy and mail fraud.
  5. Ramakrishna Maguluri, identified as an employee of Pacific West Corporation, arrested in Atlanta, GA and charged with conspiracy and mail fraud.
  6. Shiva Neeli, identified as an employee of Pacific West Corporation, was arrested in Boston, MA and charged with conspiracy and mail fraud.
  7. Vijay Myneni, identified as an employee of Pacific West Corporation, was arrested in San Jose, CA and charged with conspiracy and mail fraud.
  8. Villiappan Subbaiah, identified as an employee of Pacific West Corporation, was arrested in Dallas, TX, and charged with conspiracy and mail fraud.

In a separate incident, the Clinton Herald is reporting two other foreign national employees in Clinton, Iowa were arrested and charged last week with similar immigration-related crimes.

What is the Punishment They Face?

The individuals were arrested and charged variously with conspiracy, mail fraud, wire fraud and making false statements on an immigration matter.

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.

In addition, for Vision Systems Group the government also is seeking the forfeiture of $7.4 million in proceeds raised through the alleged offenses.

Additional Information

For more H-1B employee rights information, please visit the blog’s main page at http://h1blegalrights.com/. For information about Legal (Attorney) Services for H-1B employees, please visit here.

To learn more about H-1B rights and options, please see these posts:

For information about H-1B Rights & Immigration Rights Attorneys Michael F. Brown and Vonda K. Vandaveer, please visit here.

DISCLAIMER: The information in this article is NOT legal advice, nor does it establish an attorney-client relationship between you and the attorneys or law firms above. Legal advice often varies among situations. If you want legal advice for your specific circumstances, you must consult with an attorney.