Personal Assets Forfeited and Other Penalties for Employer Violations  Posted Oct 02, 2009
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MurthyDotCom and MurthyBulletin readers have been provided with a series of articles on employer compliance with immigration laws and policies and on government investigations. We strive to keep employers informed of the risks involved in failing to comply with immigration requirements. This is a report of a recent case involving a business owner faced incarceration, as well as forfeiture of business and personal assets. The Murthy Law Firm was not involved in any aspect of this case. While the case involved undocumented workers in a painting business, the potential consequences for employers who knowingly violate immigration-hiring provisions extend to all types of employers.
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Knowingly Hiring Undocumented Workers
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The owner of a Maryland painting company was found to have knowingly hired undocumented workers over the course of three years. The number of such workers alleged to have been hired was up to 24 at one time. Some of the workers were housed in properties belonging to the business owner. The workers were also transported using company vehicles.
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Sentence and Forfeiture of Over $1 Million in Company and Personal Assets
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The company was investigated by U.S. Immigration and Customs Enforcement (ICE). This investigation led to charges of hiring undocumented workers and money laundering. The owner was sentenced in September 2009 to six months' time in a half-way house, as part of a three-year probationary period. The U.S. District Court also entered an order that required the company owner to forfeit more than $1 million in company and personal assets. ICE announced this forfeiture in a press release.
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Seven Properties Forfeited
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In this case, the company owner forfeited five bank accounts, ten vehicles, and seven properties. The Federal Court found that all of these assets were proceeds from or were paid for with proceeds from the company. Since the proceeds were generated through employment of undocumented workers, they were subject to forfeiture. The government also has authority to order forfeiture of property, when that property was used to carry out a crime. An example of this is discussed in our October 3, 2008, NewsBrief, Company's Officials Plead Guilty to Immigration Violations.
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ICE and IRS Cooperate to Punish the Company and the Owner
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In the painting company case, ICE agents worked in cooperation with agents from the U.S. Internal Revenue Service's (IRS's) Criminal Investigations office. The money laundering charges arose because the company owner paid his undocumented workers in cash. The company did not report these earnings to the IRS, providing the basis for the separate money-laundering charges. (Money laundering is, essentially, a scheme to hide the source of illegally obtained funds, such that the funds appear to be generated legitimately.) This case is another example of inter-agency cooperation and information sharing that is a hallmark of the new push for employer-focused immigration and labor law enforcement.
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Owners Can also be Personally Liable for H1B Violations
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U.S. federal agencies are increasingly seeking the forfeiture of both corporate and personal assets when an employer is found to have violated immigration-related employment provisions. Often, H1B investigations involve back-wage claims, improper liquidated damages clauses, and improper payroll deductions. Thus, owners of companies who may have committed H1B violations need to be aware that negative findings by a federal agency may threaten their personal assets. An example of this was reported in our January 30, 2009 NewsBrief, Company and Owner Both Liable for H1B Back Wages.
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Conclusion
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Employers uncertain as to whether they are in compliance can consult with the Murthy Law Firm regarding their questions, and should consider having an internal audit of their practices. We will continue to monitor federal investigations and update our readers on compliance expectations and the consequences of violations.