How Painful Can It Get? Recent Penalties for Noncompliance with Immigration Law

[Editor’s Note: Today’s blog is courtesy of Christine D. Mehfoud, a Director with Spotts Fain, PC in Richmond, VA.]
Compliance-minded companies always want to know, “What’s the risk of non-compliance?”  Or, put another way, “how much will it hurt if we don’t get it right?”  For those companies still wondering whether spending a little now to implement a solid immigration compliance program is a sound investment, some of the recent immigration-related penalties provide compelling reasons to invest in training and compliance.
Remember − all employers have immigration-related compliance obligations regardless of whether they employ any foreign nationals.  Some of the companies suffering significant penalties identified below never even had any unauthorized workers in their workforce, but merely fell short on their obligation to verify employment eligibility (the Form I-9 process) or discriminated against certain individuals during the Form I-9 process.
Penalties imposed in any given case are always fact-dependent, and of course, the employer’s response to the investigation can significantly impact the outcome of any investigation.  With that in mind, taking a look at the recent penalties imposed provides a good perspective of the risk.

Generally, immigration-related violations risk the following potential penalties:

  • Prison Time
    • from up to six months for knowingly hiring an illegal worker to 10 years for harboring
  • Civil Fines
    • up to $16,000 per worker
  • Asset Forfeiture
  • Debarment
  • Loss of Business License
  • Lost Productivity
    • For example, after a Form I-9 inspection in 2009, American Apparel lost 40% of its workforce and suffered significant financial losses that it attributed to lost productivity, causing its stock to drop 41% after reporting losses in the second quarter of 2010.
  • Attorneys’ Fees
  • Negative Publicity
  • And often, other crimes such as tax fraud, social security fraud, money laundering, identity theft, bank fraud and false statements are uncovered during what begins as an immigration-related investigation.

To put these penalties in real terms, below are examples from recent investigations:

Monetary Penalties Prison Time Charge Company Date
$34 Million Visa fraud (misuse of B-1 visa) Infosys October 2013
$275,000 Discrimination in employment eligibility verification process

 

Macy’s

 

June 2013
$400,000 1 count of knowingly accepting a false document

 

McDonald’s(Wichita-based franchisee)

 

December 2012
$2 Million Failing to comply with employment eligibility verification requirements(Form I-9 Process)Failing to act on SSA No-Match Letters

 

ABC Professional Services, Inc.

 

July 2012
$625,000 Failing to comply with employment eligibility verification requirements(Form I-9 Process)

 

Infinite Visions

 

July 2012
Over $2.7 Million 3 years probation (owners)5 years probation (company) Knowingly hiring and aiding and abetting (owner)Harboring (company)

 

Aguila Farms

 

November 2011
Over $3.5 Million 15 years (owner)5 years probation (company) Conspiracy to smuggle, transport and/or harbor, money laundering and tax fraud (owner) Conspiracy to smuggle and harbor (company)

 

YCL(The Gateway Hotel)

 

October 2011
$290,400 Discrimination in employment eligibility verification process

 

Farmland Foods

 

August 2011
$1 Million Failing to comply with employment eligibility verification requirements(non-compliant electronic Form I-9 system)(no unauthorized workers and employer had used E-Verify for years)

 

Abercrombie & Fitch

 

September 2010
$4.5 Million Knowingly hiring and continuing to employ  Pilgrim’s Pride

 

December 2009
$26 Million 27 years (former CEO)23 months (supervisor)1 year + 2 years supervised release (manager)2 years probation (manager) Aiding and abetting in harboring (supervisor)Bank fraud, false statements, money laundering (company)

 

Agriprocessors

 

June 2010 and March 2009
Over $20 Million 16 managers and executives convictedand fined Knowingly hiring and continuing to employ; Overtime violations;Conspiring to harbor illegal aliens (managers)

 

IFCO Systems

 

December 2008

 

Christine Mehfoud, a Director with Spotts Fain PC in Richmond, VA, regularly assists clients by conducting internal investigations and responding to administrative, civil and criminal investigations. Christine has advised businesses facing civil and criminal investigations on a wide variety of matters such as alleged violations of immigration law, environmental crimes, healthcare fraud, mortgage fraud, financial fraud, and theft of trade secrets. Christine has particular experience with immigration compliance and enforcement. She advises employers regarding their employment-related work authorization obligations, conducts Form I-9 training and auditing, develops immigration compliance policies and procedures, analyzes E-Verify requirements and conducts E-Verify training and auditing. Christine also defends employers facing ICE Form I-9 Notices of Inspection and DOJ discrimination investigations. Twitter***