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http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2000/09/21/MN4322.DTL
A QUESTION OF FRAUD
Silicon Valley pushes for more foreign workers despite federal probes
David Lazarus, Chronicle Staff Writer Thursday, September 21, 2000
Federal authorities have started nationwide investigations into the
hiring of foreign high-tech workers, including charges of visa fraud
and allegations that the practice is riddled with abuse, The Chronicle
has learned.
The investigations by the Immigration and Naturalization Service and
the Department of Labor are being conducted as Silicon Valley, facing
a severe shortage of workers, pushes Congress to expand the
controversial H-1B visa system.
The immigration service is looking into assertions that H-1B
applicants are falsifying academic and work credentials, and that U.S.
employers -- in many cases acting as nothing more than agencies for
temporary employees -- are exploiting workers.
``We deny tens of thousands of (visa) cases every year,'' said Bill
Yates, a senior immigration service official in Washington, D.C. ``But
are we catching most of the fraud? The truthful answer is that we're
not.''
He said immigration agents began re-examining H-1B cases throughout
the country in July as part of a sweeping attempt to gauge the scope
of ``misrepresentations'' by visa applicants and employers, which
include some of the biggest names in the U.S. tech industry.
Labor Department officials, meanwhile, said a separate investigation
of possible H-1B violations is now under way in the Bay Area. They
refused to elaborate.
``All I can say is that we have cases open in Silicon Valley,'' said a
department spokesman.
H-1B visas have emerged as a hot political issue, with both Vice
President Al Gore and Texas Gov. George W. Bush embracing Silicon
Valley's calls for raising the number of foreign tech workers allowed
into the country each year.
Congress is considering whether to increase the current annual limit
of 115,000 H-1B visas to 200,000. Demand for the visas is so fierce,
this year's allotment ran out in March.
``It's a major problem,'' said Thom Stohler, director of workforce
policy for the American Electronics Association, an industry group
representing more than 3,000 high-tech heavyweights. ``When you talk
to the HR people in Silicon Valley, they say it's very hard finding
skilled people.''
But critics of H-1B visas, including many U.S. programmers and
engineers, say tech companies are overstating the scope of worker
shortages to maintain a steady supply of foreign-born employees
willing to work longer hours for lower wages.
``H-1B is indentured servitude,'' said Rob Sanchez, a programmer from
Phoenix who maintains that he lost his job last year to an H-1B visa
holder. ``That's the whole idea behind this program.''
Actually, Sanchez and other critics concede that many if not most H-1B
visa holders are meeting a legitimate demand for skilled workers and
play a key role in the continued expansion of the U.S. tech industry.
STEPPING STONE TO GREEN CARD
But, as the current fraud investigations illustrate, the system is not
foolproof. By any reckoning, the H-1B program in place today has
substantially changed from its legislative roots.
When the program first began in the early 1950s, its intent was to
allow qualified foreign workers to hold temporary positions with
American companies.
Today, the H-1B visa is seen by applicants as a stepping stone to
obtaining permanent U.S. residency -- the coveted ``green card.'' And
a tier of entrepreneurs has emerged to both expedite and profit by
from the immigration process.
Known as ``body shops,'' some of these middlemen are at the heart of
many of the charges of visa fraud and abuse.
They recruit workers overseas and arrange for their visas. They then
farm out the workers to U.S. companies, often cutting themselves in
for as much as half of the employee's salary.
Body shops are especially prevalent among Indian workers, who make up
by far the largest segment of H-1B visa holders. According to a report
released this month by the U.S. General Accounting Office, Indians
accounted for about half of all H-1B visas handed out in the last
fiscal year.
`CONSULTANCY' PROCESS
As for how legitimate body shops operate, it would be hard to find a
better or more efficient example than that of Manka Ahluwalia, who
runs her small ``consultancy,'' TIC Resources, out of her husband's
law office on the fringe of San Francisco's Financial District.
Manka's spouse, Raja, is himself an immigration lawyer, allowing TIC
to make a persuasive case for the breadth of its services when
recruiting workers back in India.
``Others have to find an attorney and do all the work,'' Manka said.
``I just give the whole thing to my husband.''
The chain begins in Delhi, where Manka's brother-in-law, Preet, serves
as TIC's recruiter. He advertises in local newspapers and on the
Internet for workers with specific tech skills -- proficiency in the
Java programming language, for example.
Manka said Preet will sift through submitted resumes and check
academic and vocational references. Then, when a suitable candidate is
found, TIC will begin the application process for an H-1B visa.
The applicant, now technically a TIC employee, signs a contract before
leaving home agreeing to a fixed salary, usually about $60,000 a year,
or roughly $30 an hour for a 40-hour workweek.
Manka said she shells out about $3,000 per employee for airfare to the
Bay Area, moving costs and a week or two of initial rental payments.
The idea is to quickly place the worker as an independent contractor
with a local tech firm.
``We usually start marketing him a week before he comes here,'' Manka
said.
Once a job is found, she said she often charges the hiring company
about $60 an hour for the services of TIC's ``consultant.'' Half this
amount goes to the worker, per the conditions of the previously signed
contract, and the rest is profit for TIC.
``I don't have to work any more,'' Manka observed. ``Now I do this
full time.''
Her husband, Raja, was quick to note that nothing TIC does is illegal.
``I believe in the entrepreneurial system,'' he said. ``I believe in
the American dream.''
STICKING WITH EXPEDITERS
While admitting that some might see the body-shop system as a form of
exploitation, Raja stressed that no one forces workers to employ the
services of go-betweens and that body shops play a valuable role in
expediting the visa process.
``If they have a preference, people would rather work directly for a
company than a body shopper,'' he said. ``But they stick with the body
shopper because a body shopper can process a green card.''
There's the rub. The procedure for obtaining a green card requires
that the applicant remain on the payroll of a single employer. If the
applicant switches jobs, he or she falls to the bottom of the queue.
In the case of TIC, the incentive not to leave the body shop is even
greater. With Manka's husband handling the green-card application
process, departing workers face the distinct possibility of losing
favor with their own attorney.
Raja freely admitted that other body shops may not be as scrupulous as
his wife's in upholding the law. ``Of course, there is fraud,'' he
said. ``Everybody knows it.''
FAKE CREDENTIALS
One of the most common forms of H-1B fraud involves falsification of
academic and work credentials. A bachelor's degree (or its vocational
equivalent) is required for H-1B status, as well as proof of specific
work skills.
Some Indians have reported that overseas recruiters will charge
workers as much as $6,000 to improve their visa chances. In return,
relatively unskilled workers will receive a month or two of computer
training along with paperwork attesting to far more extensive work
experience.
Diplomas from existing or even nonexistent universities also can be
arranged.
``It's a well-known fact that people in India will take two or three
classes in Java programming, then the body shop will create a resume
for them,'' said Inder Singh, a former H-1B visa holder now working as
a programmer on the East Coast.
``You will find that a lot of them don't have the work experience they
claim to have,'' he said. ``The body shop does it for them. They are
very good at glossing over resumes.''
DETECTING FRAUD TOUGH
Catching all such instances of fraud is virtually impossible for U.S.
consulates abroad. Meanwhile, immigration officials are themselves
overwhelmed by the number of visa applications submitted and seldom
have opportunities to check on specific petitions.
In a scathing report on shortcomings in the H-1B visa system, the
General Accounting Office pointed out that immigration agents are
judged by the number of visa applications they process, not the number
of lies spotted in accompanying documents.
``As a result,'' it said, ``there is not sufficient assurance that INS
reviews are adequate for detecting program noncompliance or abuse.''
The immigration service's Yates said his agency disagreed with much of
the GAO's findings. He said the immigration service is doing a
perfectly adequate job with the resources available.
``We simply don't have the resources to check on every visa
petition,'' Yates said.
Last year, he testified before a congressional subcommittee that the
U.S. Consulate in Chennai (formerly Madras) issued 20,000 visas in the
previous fiscal year, more than any other diplomatic post in India.
Yates told legislators that a subsequent immigration service
investigation revealed that 21 percent of vocational resumes submitted
by visa applicants were fictitious and 29 percent more ``were either
probably or possibly fraudulent.''
DOING THEIR BEST
Christopher Lamora, a spokesman for the State Department's bureau of
consular affairs, told The Chronicle that diplomatic officials are
doing their best to keep visa fraud at bay.
``We know that visa fraud exists,'' he said. ``If we find out about
it, we do our best to crack down.'' Lamora declined to discuss current
investigations.
Yates of the immigration service said that in the year since he
appeared before Congress, advances in computer technology have
significantly improved his agency's ability to spot bogus credentials.
Nevertheless, he said, about 20 percent of resumes submitted still
contain fraudulent information.
``There's no denying that applications can slip through,'' Yates said.
``If it is the intention of the employee or the employer to defraud
the government, you may not be able to ferret it out.''
Once a worker is in the country, it is largely the responsibility of
the Department of Labor to ensure that conditions of the H-1B visa are
not being abused.
WORKERS FEAR COMPLAINING
But there's a big catch: Labor officials can investigate potential
fraud or abuse only after a complaint has been lodged by an H-1B
worker. Few workers dare jeopardize their employment status or
green-card prospects by filing such complaints.
``The notion that this program can be enforced on a complaint- only
basis is naive, if not misguided,'' said John Fraser, deputy
administrator of the Labor Department's wage and hour division.
The numbers suggest as much. Out of more than 600,000 H-1B tech
workers who have arrived in the United States since 1990, fewer than
400 have ever complained to the Labor Department of mistreatment.
``Others have taken that data and argued that compliance is not an
issue,'' Fraser said. ``We know it's an issue.''
An aspect of H-1B visas that especially rankles Labor officials is the
practice of ``benching.'' This is when a body shop cannot find
immediate work for a ``consultant'' and leaves the worker essentially
to fend for himself, with reduced or no pay in violation of his
contract.
Workers who complain about being benched are frequently threatened
with being shipped back to India.
``This is illegal,'' Fraser said. ``Unfortunately, it's quite
common.''
Raja Ahluwalia, the immigration lawyer, said that while benching is
against the law, it has become a routine part of the body-shop trade.
``In business, you do what is best for your business,'' he explained.
``Where there is a possibility for profit, an entrepreneur, by
definition, should exploit it.''
INDIAN CONSULTANTS PROFIT
Another development that has authorities scratching their heads is the
way major Indian consulting firms -- among the leading petitioners for
H-1B visas -- are manipulating the system for their own benefit.
In such cases, the consultancy learns from clients about a coming tech
project and agrees to provide H-1B workers to help meet the project's
deadlines. In so doing, the consultancy may parcel out some or all of
the work to other employees back in India.
This is how Tata Consultancy Services operates. A subsidiary of
India's largest conglomerate, Tata boasts of a client list that
includes such Bay Area powerhouses as Oracle Corp., Intel Corp. and
Cisco Systems.
Subramanian Sambamurthy, regional manager at Tata's San Francisco
office, said his company's service allows clients to maintain
production schedules on a virtually round-the-clock basis, with work
performed simultaneously in the United States and in India.
``Shortening the time to market is what we are doing,'' he said. ``We
are not seeking to create employment opportunities for Indians in the
U.S. We are seeking to help our customers.''
However, each consultant the company brings over from India to learn
the particulars of a client's project requires the issuance of an H-1B
visa, even though the visa will not be used, as originally intended,
to fill a local need among U.S. firms.
Rather, this is an example of H- 1Bs being used at least in part to
drum up business for foreign companies and their workers overseas.
Tata received 320 H-1B visas between October 1999 and February of this
year, according to immigration service records. Other major Indian
``outsourcing'' consultancies include Mastech Corp. (389 visas),
Syntel Inc. (337) and Wipro Corp. (327).
Yates of the immigration service said he had not heard about such use
of the visas but said he found it troubling. ``If it takes work away
from American workers, that's a problem,'' he said.
DEFENDING VISA LAW
Lenni Benson, an associate professor at New York Law School
specializing in immigration law, said that despite such blatant
manipulation of H-1B statutes, she would not encourage Congress to
tamper significantly with the law.
The system, she said, is clearly benefiting U.S. industry by supplying
access to thousands of skilled workers.
``If you're a startup in Silicon Valley,'' Benson observed, ``you can
go directly to a body shop and have them take care of everything.''
To better protect workers, though, she said the law at least should be
amended to allow H-1B holders to switch employers without jeopardizing
their employment status or green-card prospects.
``Give them free agency,'' Benson said. ``Give them the same powers as
any other worker in the United States.''
In fact, legislators are pondering measures along these lines,
although it remains unclear what, if anything, they will do in
conjunction with a proposed increase in the annual visa quota.
Manka Ahluwalia, for one, would not be displeased to see a greater
number of H-1B visas available. Her body shop is always on the lookout
for new talent.
``There are so many projects going on,'' she noted. ``There will
always be room for more consultants.''
``Business is thriving for everyone,'' her husband said.
_________________________________________________________________
E-mail David Lazarus at dlazarus@sfchronicle.com.
VISA FRAUD
_________________________________________________________________
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[LINK]
05/10/2000 - Girl reporters selling their expose .
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01/21/2000 - Young Berkeley journalists broke landlord story early .
01/01/1998 - Programmers in the Driver's Seat.
>>more related articles...
_________________________________________________________________
[LINK]
Feedback The Gate
VISA BREAKDOWN
Most H-1B visas go to Indian workers in the high-tech industry.
BC:
CHART:
-- Industry
Systems Analysis and Programming 54%
Other IT-Related Occupations 5%
Electrical/ Electronics Engineering 5%
Remaining Occupations 36%
.
-- Country of Origin
India 48%
China 9%
Philippines 3%
Canada 3%
United Kingdom 3%
Remaining 34%
.
Source: Immigration and Naturalization Service
--------------------------------------------
CHART 2:
EMPLOYERS OF MOST H-1B WORKERS
For period October 1999 to February 2000
Company Number of H-1Bs(x) Type of business
Motorola 618 High tech
Oracle 455 High tech
Cisco Systems 398 High tech
Mastech 389 IT Consulting
Intel 367 High tech
Microsoft 362 High tech
Rapidigm 357 IT Consulting
Syntel 337 IT Consulting
Wipro 327 IT Consulting
Tata Consultancy
Service 320 IT Consulting
.
(x) - Includes all the company's successful applications for H-1B visas;
in some cases the company may not have actually hired the H-1B worker.
.
Source: Immigration and Naturalization Service
CHRONICLE GRAPHIC
--------------------------------
CHART 3:
HOW H-1B WORKERS COME TO THE U.S. THROUGH `BODY SHOPS'
(1) ``Body shop'' recruiter searches overseas for skilled technical
workers who want to come to the United States.
(WHAT CAN GO WRONG: Recruiters may accept bribes
from unqualified workers. College degrees or documents verifying
skills may be counterfeit.)
.
(2) Body shop, which functions as an agency for temporary employees,
hires worker, applies for H-1B visa for new employee and brings
worker to United States.
(WHAT CAN GO WRONG: Workers may languish without a job in the United
States, unpaid by body shop.)
.
(3) Body shop turns to U.S. tech company and offers worker's services.
(WHAT CAN GO WRONG: The body shop may hire the worker for $30 an hour,
then charge the tech company $60 an hour for the worker's services.
Critics call this a form of exploitation and against the spirit of the
H-1B law.)
.
(4) Body shop, having hired worker and expedited H-1B paperwork, promises
to get worker a green card.
(WHAT CAN GO WRONG: Workers cannot switch jobs while green card application
is in the works. They are tied to the body shops in what some say is a form
of indentured servitude.)
John Blanchard / The Chronicle
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