once again fraud found in H-1B program

once again fraud found in H-1B program


Date: Tuesday, October 14, 2008 9:35 PM


<<<<< JOB DESTRUCTION NEWSLETTER No. 1929 -- 10/14/2008 >>>>>

Yet again, the federal government found widespread fraud in the H-1B program,
and yet again the mainstream media and most politicians are surprised there is
so much fraud. An editorialist for FierceCIO said that "The report is quite
shocking", while 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.

I disagree with the widespread contention that there is something "shocking"
or "stunning" about the amount of fraud in the H-1B program. The only surprise
is that anyone who is familiar with the program is surprised!

The recent study is nothing new -- for instance in the year 2000 the GAO
released a study called "Better Controls Needed to Help Employers and Protect
Workers". Going back a little further, in 1994 the Department of Labor wrote a
report titled "Foreign Labor Certification Programs: The System is Broken and
Needs to be Fixed". A watered down final version of the DOL report was
published in 1996 that lacked some of the punch of the
1994 version but was still quite damning. Throughout the 1990's there were
numerous studies that discussed the widespread fraud (Bartlett and Steele for
example), and there were several Congressional testimonies that confirmed the
fraud. Even as recently as 2006 a group of activists testified before
Congress, but of course everything they said fell on deaf ears.

One thing for sure is that nobody should be surpised or shocked by the newest
study.


http://www.oig.dol.gov/public/reports/oa/pre_1998/06-96-002-03-321s.htm
1996 report

http://www.gao.gov/archive/2000/he00157.pdf
GAO report


U.S. Sen. Chuck Grassley (R-Iowa) should be thanked for urging that this
investigation be done, but he said something that may seem innocent at first,
but is very disturbing upon closer examination:

Grassley -- who is an ardent H-1B critic -- said that the USCIS
report "validates the major flaws" in the visa program. "It's
unacceptable," he added, "that these fraudulent activities are
slipping through the cracks when there is so much legitimate
demand for H-1B visas."

So just what legitimate demands for H-1B visas is Grassley talking about?
Let's ponder that question.

Keep in mind that what is legitimate is not necessarily ethical or moral -- it
just means that if you follow the law you won't end up in jail (so far nobody
has ended up in jail because they violated H-1B laws but several unscrupulous
employers have paid some small fines). In my opinion approximately 99% of the
visas issued are ethically, morally, or legally fraudulent so the study is an
underestimate.

If Grassley wants to only allow legitimate visa applications let's see just
what that means in practical terms.

The USCIS claims that they found 13% of their sample to be fraudulent, and
another 7% to have technical violations. That means that about 20% have some
kind of problem, and 80% conform closely enough to the loophole laden law that
they are "legitimate", according to Sen. Grassley.

It's not clear if the H-1B petition they found for the washing machine
repairman in the laundry was a technical or fraudulent violation. What is
clear is that nobody has been paying attention because this is nothing new.
H-1Bs are used for all sorts of dubious positions, like the ones at California
Pizza Kitchen or the ones at McDonald's. Reporters could have found this out
in 1999 when I put my first LCA database online. Duh!

Before you start rejoicing that Grassley is calling for better enforcement,
and the USCIS said they are going to get tougher, let's look at some numbers.

Most of the 7% technical violations are for things like not filling a blank on
one of the forms with correct information or they could even be typos.
Employers may also be fudging the rules on prevailing salaries but it was done
in a way that isn't a violation of the law. Most of these types of errors can
be cleared if employers file an appeal, and appeals are usually approved.
Since these visas would probably get approved anyway, we can just ignore them
from the count. From a practical point of view, enforcing these types of
violations won't help Americans to get jobs.

The 13% that are remaining were found to be fraudulent, which means that
somebody involved in filling out the forms was willfully deceitful. These
errors can't be cleared on appeal, so assuming the employer is caught, the
visas would be rejected -- but Americans still won't get these jobs and here
is why:

Thirteen percent may sound like a large number, but it only represents 11,050
of the 85,000 visas approved. In the fiscal year of 2008 the USCIS got 150,000
petitions for H-1B in the first two days of filing. We don't know how many
total petitions they received because they haven't done an annual report since
2004. Speaking of law breakers -- the USCIS is required by law to publish
their annual report, which they haven't done since 2004.

Assuming that 13% of those 150,000 filed petitions were fraudulent, then there
would be 130,500 valid petitions to take the place of the 11,050 bogus
petitions. Even assuming that all 20% of the petitions were rejected, there
would still be 120,000 potential H-1B visas that could be issued. In total,
the fraud is like a drop in the bucketcompared to the huge numbers of
foreigners who want to use H-1B visas.

Just FYI -- in 2004 there were 312,000 petitions filed. If 13% of them were
rejected, then there would be 271,440 that would be legally available!

http://www.uscis.gov/files/nativedocuments/H1B04Annual_08_7.pdf

In conclusion, what Grassley is saying is that as long as the H-1B visa
petitions meet legal standards everything is A-OK. The problem is that the H-
1B program is full of loopholes so the fraud that occurs isn't that much of a
factor in terms of American job destruction. In practical terms that still
means that 85,000 Americans a year will lose their jobs to H-1B visa holders
with or without enforcement of the law. Enforcement of the H-1B regulations
accomplishes nothing in terms of opening up jobs for Americans!

H-1B is a program that is morally and ethically bankrupt. The only way to
eliminate the fraud is to abolish H-1B. Reforms, like the one proposed by
Grassley and Durbin, or better enforcement like what the USCIS suggests, will
have no net effect on the labor market.

I conclude this newsletter from a quote from Norm Matloff:

http://blog.vdare.com/archives/2008/10/13/dr-norm-matloff-h-1b-fraud-still-dwarfed-by-legal-abuse/

I don t know how to say this any more clearly or loudly, but once
again, everyone: THE FRAUD ISSUE IS IRRELEVANT. It will be used by
the industry lobbyists for their benefit, to prevent Congress from
taking real action. This includes the excellent Durbin/Grassley
bill; if the bill is addressed at all by Congress, the good,
loophole-plugging, parts will be deleted, leaving only the parts
dealing with fraud, which are of very little value.




Articles Used



http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9116758
Widespread problems, fraud found in H-1B program


http://www.businessweek.com/bwdaily/dnflash/content/oct2008/db2008108_844949.htm?chan=rss_topEmailedStories_ssi_5
High Rate of H-1B Visa Fraud


http://www.fiercecio.com/story/time-reevaluate-h1b-visas/2008-10-12
Time to reevaluate H1B Visas


http://www.examiner.com/a-1486221~The_Feds_crack_down_on_visa_fraud__finally.html
The Feds crack down on visa fraud, finally


http://newswire.ascribe.org/cgi-bin/behold.pl?ascribeid=20081013.065213&time=07%2008%20PDT&year=2008&public=0
Outsourcing Expert Reacts to Report on H-1B Visa Fraud


http://www.sunjournal.com/story/286930-3/National/Fraud_plagues_work_visa_program/
Fraud plagues work visa program

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9116758

Widespread problems, fraud found in H-1B program

U.S. study finds incidents of forged documents, fake degrees, 'shell'
companies
Patrick Thibodeau
October 9, 2008 (Computerworld) 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.


+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.businessweek.com/bwdaily/dnflash/content/oct2008/db2008108_844949.htm?chan=rss_topEmailedStories_ssi_5

High Rate of H-1B Visa Fraud
A study finds that 13% of the visa petitions for U.S. employers to bring in
skilled foreign workers are fraudulent By Moira Herbst

A report released Oct. 8 by the U.S. Citizenship & Immigration Services
(USCIS) reveals that 13% of petitions filed for H-1B visas on behalf of
employers are fraudulent. Another 7% contain some sort of technical
violations.

The study, released to members of the U.S. Senate Judiciary Committee, marks
the first time the agency, part of the Homeland Security Dept., has documented
systematic problems with the controversial program. Technology companies, in
particular, have come to rely on the H-1B visa program to bring in skilled
foreign workers to fill jobs that employers claim can't be filled with U.S.
candidates. Tech companies like Oracle (ORCL), Microsoft (MSFT), and Google
(GOOG) have pushed to get more visas, claiming that a shortage of skilled
workers is hampering U.S. competitiveness. Microsoft Chairman and co-founder
Bill Gates has twice testified in front of Congress on the issue.

Critics say H-1Bs help U.S. companies replace American workers with less
costly foreign workers. "The report makes it clear that the H-1B program is
rife with abuse and misuse," says Ron Hira, assistant professor of public
policy at the Rochester Institute of Technology. "It shows the desperate need
for an auditing system." However, both Presidential candidates, Senator Barack
Obama (D-Ill.) and Senator John McCain (R-Ariz.), have said they support
expanding the program.

Program Abuses Alleged
A USCIS spokesperson was not immediately available for comment. The report's
conclusion states: "Given the significant vulnerability, USCIS is making
procedural changes, which will be described in a forthcoming document." A
spokeswoman, Beth Pellett Levine, says Senator Chuck Grassley (R-Iowa), a
longtime critic of the H-1B program, is drafting a letter to USCIS in response
to the study.

The H-1B visa program has become increasingly controversial in recent years as
groups such as the Programmers Guild and WashTech, which represent U.S.
tech workers, allege it is being abused, resulting in mistreatment of foreign
workers, wage depression, and the displacement of U.S. workers. The program
was originally set up to allow companies in the U.S. to import the best and
brightest in technology, engineering, and other fields when such workers are
in short supply in America. But data released this year by the federal
government show that offshore outsourcing firms, particularly from India,
dominated the list of companies that were awarded H-1B visas to employ workers
in the U.S. (BusinessWeek, 3/6/08) in 2007. Indian outsourcers such as Infosys
(INFY), Wipro (WIT), and Tata (TCS.NS) accounted for nearly 80% of the visa
petitions approved last year for the top 10 participants in the program.

There is also evidence that workers on H-1B visas are being mistreated. In a
pending case (BusinessWeek, 1/31/08), H-1B workers for State Farm Insurance
allege they were underpaid.

Critics say such instances of abuse represent the tip of an iceberg of deeper
problems with the visa program. Academics and U.S. tech worker advocates point
out the requirement that even employers who abide by the law--for example by
paying the required "prevailing wage"--are able to underpay workers . "We
shouldn't forget that the major problem with the H-1B program are caused by
massive loopholes that allow firms to legally pay below-market wages and force
US workers to train foreign replacements,"
says Hira. "Those wouldn't show up in this investigation because they are
entirely legal." Hira says that a bill proposed by Grassley and Senator Dick
Durbin's (D-Ill.) bill in 2007, S. 1035, would address both fraud and legal
loopholes in the program.

Companies Not Named
The USCIS report, called H-1B Benefit Fraud & Compliance Assessment, is based
on a sample of 246 H-1B petitions. It does not name companies involved in the
study. The report says that 80% of the fraud or technical violations were
uncovered during site visits.

Fraudulent cases include instances in which the visa worker was not working or
had never worked at the specified location on the application. Technical
violations involved situations in which the worker was paid at or below the
prevailing wage, which companies are required by law to pay.

In other cases, the job duties were significantly different from the position
listed on the visa petition. This could involve misrepresenting the skill set
required or the location of the job. Accounting, human resources, business
analyst, sales, and advertising occupations are more likely than other
categories to involve fraud, according to the study.
Other areas in which violations were found include computer-related
occupations, and art and managerial jobs. "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," said Grassley in a
statement. He was referring to situations in which companies misrepresent what
type of work the visa holder will do.

In the study, visa workers with only bachelor's degrees were subject to higher
fraud or technical violation rates (31%) than those with graduate degrees
(13%). Fraud and violations were more common for companies employing 25 or
fewer employees and with annual gross income of less than $10 million.

Herbst is a reporter for BusinessWeek.com in New York.


+++++++++++++++++++++++++++++++++++++++++++++++++++


http://www.fiercecio.com/story/time-reevaluate-h1b-visas/2008-10-12

Time to reevaluate H1B Visas
By judi
Created Oct 12 2008 - 4:10pm

The high tech community has been lobbying not only to maintain the H1B visa
program but to expand it on the premise that employers cannot find enough
qualified American workers to meet their needs. This issue of Fierce CIO
reports on word that federal government has found that employers have been
abusing the system, engaging in fraud and even paying foreign workers less
than they were entitled to receive.

The report is quite shocking. Investigators found forged documents, fake
degrees and companies giving fake addresses to obtain the permits. The U.S.
Citizenship and Immigration Services report was released by Sen. Chuck
Grassley (IA), a critic of the visa system.

"This report validates the major flaws in the H1B visa program that we have
been discussing for some time," Grassley said. "Until we make a conscious
effort to close the loopholes, we're going to see continued abuse. This report
is proof that reform must come sooner rather than later. The program ought to
operate the way Congress intended so qualified, high-tech American workers
aren't left behind."

The findings confirm the worst fears of American IT workers and their
advocates, who have long been opposed to the program and complained of abuse
by American companies.

There has to be some balance. There's no doubt some foreign workers help fill
the skill void, but gaming the system and engaging in fraud is unacceptable.

When Congress returns in January, officials responsible for running the system
and employers abusing the process should be called on the carpet.
And with unemployment rising and layoffs predicted in the IT arena, there
should be a complete reevaluation of H1B visa program. It is certainly time to
institute more controls to make sure the program works as intended. It also
may be time take a second look at the current yearly limit, and see if it is
needed and if it should be scaled back. - Judi [1]

+++++++++++++++++++++++++++++++++++++++++++++++++++


http://www.examiner.com/a-1486221~The_Feds_crack_down_on_visa_fraud__finally.html

Editorial
The Feds crack down on visa fraud, finally The Washington DC Examiner
Newspaper
2008-07-14 07:00:00.0
Current rank: # 4,575 of 5,596

WASHINGTON -
Highly educated Americans with much-sought-after technical and scientific
skills have been complaining for years about not being able to find jobs or
being replaced by foreign workers who have come to this country on H-1B visas
(Congress authorizes only 65,000 H-1B visas annually, for hiring foreign
workers with skills that can t be found here).

Turns out they were right. The Department of Labor has finally started
cracking down on law firms and corporations deliberately bypassing federal
laws aimed at protecting American workers from being displaced by foreigners
willing to work for much less.

When they apply for H-1B visas, U.S. companies must first certify that they
cannot find any qualified American applicants. But, as Chicago network
engineer David Huber discovered, the certification process can be rigged.
Huber, a University of Chicago graduate with NASA management experience, had
to train his own replacement at Commonwealth Edison. He claimed Chinese
nationals were given access to Commonwealth Edison data communication switches
controlling the Chicago electrical grid.

Huber told The Examiner that when he applied for a Cisco Systems job
advertised in the Chicago Tribune last year, he noticed that the contact was
not a Cisco hiring manager, but a lawyer working for the nation s largest
immigration law firm, Fragomen, Del Ray, Bernsen & Loewy.

A subsequent Labor Department audit uncovered evidence that New York-based
Fragomen -- whose client list includes many Fortune 500 companies -- was
improperly advising clients to disqualify American candidates so they could
hire much cheaper foreign workers. In an unprecedented move, Labor Department
officials are now auditing all of Fragomen s pending visa applications.

The probe has been extended to San Francisco, where LawLogix was caught red-
handed submitting more than 100 fraudulent applications. The software firm is
now barred from submitting any applications for the next three years. And
after a video of Cohen & Grigsby lawyer Lawrence Lebowitz brazenly telling
clients that "our goal is clearly not to find a qualified and interested U.S.
worker" was posted on YouTube, Labor officials placed the Pittsburgh law firm
on "supervised recruitment" -- which means heightened scrutiny for all future
visa applications.

The displacement of highly qualified American scientific and technical workers
by foreign visa holders has gotten scant attention by the media, which tend to
focus on protecting illegal immigrants in sanctuary cities like Washington,
D.C., and San Francisco. The legal part of our broken immigration system has
gotten much less attention, which is why it may very well pose as grave a
threat to national security as porous borders.

Examiner

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://newswire.ascribe.org/cgi-bin/behold.pl?ascribeid=20081013.065213&time=07%2008%20PDT&year=2008&public=0

Mon Oct 13 07:08:41 2008 Pacific Time

Outsourcing Expert Reacts to Report on H-1B Visa Fraud; Ron Hira, Author
of 'Outsourcing America,' Calls Program 'Thoroughly Corrupted'
ROCHESTER, N.Y., Oct. 13 (AScribe Newswire) -- A new report that
reveals a 20-percent violation rate in the nation's H-1B Visa program has led
to strong criticism of the system by outsourcing expert Ron Hira, assistant
professor of public policy at Rochester Institute of Technology and author of
"Outsourcing America."

The H-1B program provides temporary work visas to skilled foreign
workers employed in the United States. Hira argues that loopholes and lack of
program oversight have allowed companies to misuse the H-1B system by paying
below-market wages to foreign guest workers and facilitating the outsourcing
of U.S. jobs overseas.

"I'm stunned by the high incidence, nearly one in five, of obvious
fraud and serious violations in H1-B visas. That means that literally tens of
thousands of these visas have been granted under false pretenses. The system
has been thoroughly corrupted," notes Hira.

"Where has the government been for the past 10 years? The H-1B program
has completely spun out of control and is in desperate need of reform to
ensure that both foreign and U.S. workers are treated fairly and justly."

The report, conducted by U.S. Citizenship and Immigration Services in
the Department of Homeland Security, found that one of the most common
incidences of fraud is companies paying below prevailing wages or not paying
workers at all.

Hira has previously contended that numerous companies have manipulated
the H1-B program to facilitate their knowledge-transfer operations to ship
work overseas. Companies rotate in low-cost foreign workers to learn U.S.
workers' jobs, who then take the work back to their home countries.

Hira says that rather than providing firms with workers who possess
unique skills, the program is dominated by low-wage workers who provide little
added value-and instead of preventing outsourcing, the program is speeding it
up.

"This report makes it clear that better oversight, including an
auditing function, is desperately needed to clean up the corruption," Hira
adds. "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 force U.S. workers to train foreign replacements.
Those wouldn't show up in this investigation because they are entirely legal
and wouldn't be considered fraudulent or a violation. This report has simply
scratched the surface in identifying what's wrong with the H-1B program."

To view the full U.S. Citizenship and Immigration Services report,
visit http://grassley.senate.gov/private/upload/100820081-3.pdf .




CONTACT: William Dube, RIT News Services, 585-475-4954 or
wjduns@rit.edu

Media Contact: See above.

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.sunjournal.com/story/286930-3/National/Fraud_plagues_work_visa_program/

Fraud plagues work visa program

By Matt Wickenheiser , Portland Press Herald Tuesday, October 14, 2008 A
federal program that allows skilled foreign nationals to work in this country
has such a high incidence of outright fraud that it has "significant
vulnerability," according to a new report from the Department of Homeland
Security.

Homeland Security found that 21 percent of all applications for H1B visas were
either fraudulent or contained technical violations. H1B visas allow employers
to bring in highly skilled workers such as engineers, computer programmers,
accountants and others.

"It's evident after reviewing the sample of H1B petitions and conducting site
visits to employers that there is a serious problem with outright fraud in the
visa program," said U.S. Sen. Susan Collins, R-Maine. "This isn't an issue
that was confined to the state of Maine. It is clearly a nationwide (issue)."

Collins filed an amendment in last year's Appropriations Bill that required
Homeland Security to investigate the potential for H1B fraud. Her focus on the
issue was prompted by a 2006 investigative report by the PORT 66,69,254,99,131,16 bring workers into the country
didn't, in fact, exist.

The educational degrees or experience letters of the sought-after foreign
worker were fraudulent.



Signatures had been forged on supporting documents.

The foreign worker was performing duties other than those described on the
petitions.

"In one instance, the position described on the petition -- was that of a
business development analyst," according to the Homeland Security report.
"However, when (the department) conducted its review, the petitioner stated
the H1B beneficiary would be working in a laundry doing laundry and
maintaining washing machines."

Technical violations included instances where the employer required the
foreign worker to pay part of the filing fees for the visa or didn't pay the
foreign worker at least the prevailing wage for the job they were doing. In
other cases, the foreign worker was employed in a geographic location other
than what was applied for in the visa petition, or the employer "benched" the
foreign worker when work wasn't available. That term means the foreign worker
wasn't paid or was paid less than the full hours specified on the petition.

"The findings of this new report reveal not only troubling evidence of fraud
in the H1B program but also the need for serious review and reform of our
immigration system as a whole," said Congressman Tom Allen, D-Maine, in a
written statement. "Lax oversight and enforcement of existing laws have led to
some unscrupulous companies abusing the system.

"Congress created this program to ensure that employers can fill positions
critical to their businesses, but not at the expense of American workers,"
he said. "The H1B must not be a license for unscrupulous employers to hire
foreign workers when there are willing and qualified Americans available."

According to the report, 13.4 percent of the cases investigated contained
fraud, and 7.3 percent had technical violations. Extrapolating that to the all
96,827 petitions, about 20,000 of them may have some type of fraud or
violation, Homeland Security said.

In response to its findings, Homeland Security said it was clarifying
employers' responsibilities with regards to the H1B visa program. It said it
would apply greater scrutiny to petitions where fraud indicators are present,
and it would find some of those indicators using third-party, independent
information, the agency said.

Homeland Security said a law change may be needed to allow it to share more
information with the Department of Labor. Currently, Labor can't start an
investigation based on H1B violations uncovered by Homeland Security's
inspection of the applications.

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