YORK (AP) - Nine owners and managers of 7-11 stores across Long Island
and in Virginia were charged Monday with making tens of millions of
dollars by exploiting immigrants from Pakistan and the Philippines, in
part by paying them using the stolen Social Security numbers of a child
and three dead people while stealing most of their wages.
Most of the defendants were arrested early Monday
as federal authorities raided 14 franchise stores. Immigration and
Customs Enforcement agents were executing search warrants at more than
40 other stores across the country suspected of similar infractions,
authorities said at a Brooklyn news conference.
"These nine defendants created a modern-day
plantation system, with themselves as overseers, with the immigrant
workers as subjects, living in their version of a company town," U.S.
Attorney Loretta Lynch told a news conference in Brooklyn.
Four defendants who hold both U.S. and Pakistani
citizenship belong to a family that has participated in social events
with Pakistan's former military ruler Pervez Musharraf, prosecutors said
in court papers as they highlighted foreign ties while successfully
arguing against bail for most defendants. Another defendant is a citizen
of the Philippines. The government said the defendants pocketed tens of
millions of dollars in the scheme, hiding some money.
Federal indictments naming eight men and one woman
allege that since 2000 they employed more than 50 immigrants who didn't
have permission to be in the U.S. They tried to conceal the immigrants'
employment by stealing the identities of about two dozen people -
including those of the child, the dead and a Coast Guard cadet - and
submitting the information to the 7-11 payroll department.
When 7-11's headquarters sent the wages for
distribution, the employers stole up to 75% of the workers' pay,
authorities said. The defendants also forced the workers to live in
houses they owned and pay them rent in cash, they added.
"This case came to light because some of these
defendants, despite their lack of legal status, came forward to report
the exploitation," Lynch said.
Lynch said stolen identifications were "recycled
from store to store and state to state" in a case driven by greed among
defendants who bought big houses.
The government seized the franchise rights of 10
stores in New York and four stores in Virginia. The stores will remain
open under the parent company's operation. Authorities said the stores
had generated $182 million in profits shared by the defendants and 7-11.
In a statement, 7-11, Inc. said it has cooperated
with the investigation and will take "aggressive actions" to audit the
employment status of all its franchisees' employees. It said it was also
taking steps to assume corporate operation of the stores involved in
Immigration officials detained 18 workers,
including some who first notified authorities about the alleged fraud in
2010. Lynch said the workers would be processed through the system,
with some who served as whistleblowers being able to remain in the
country while the case is prosecuted.
The defendants appeared in court on Long Island and
Norfolk, Va., facing wire fraud conspiracy, identity theft and alien
harboring charges. They face up to 20 years in prison if convicted of
conspiracy and other charges.
Three men arrested in Virginia were ordered held until a Thursday bail hearing.
Robert Del Col, attorney for Malik Yousaf, the
general manager for 14 7-11 stores on Long Island, said his client
denies the charges.
"To allege this systematic conspiracy, I don't
think it's borne out in the documentary evidence," he said after his
client pleaded not guilty and was detained after an appearance in
federal court in Central Islip. "These people came in looking for jobs."
Those arrested also included a married Long Island
couple who owned, co-owned or controlled a more than dozen 7-11
franchise stores on Long Island and Virginia. The couple bought their
first franchise license in 1988. Attorney Steve Politi, who represents
Bushra Baig, said his client is a 49-year-old mother. "It's nonsense,"
he said of the charges against her. "I would be surprised if they can
prove that she had any knowledge of enslavement. She doesn't run
Jennifer Kwiecinski, 36, who lives across the
street from an Islip Terrace store that's part of the investigation,
said she's known the "always nice" owners since she was a child.
The government said the franchises were licensed by
Dallas-based 7-11 Inc., the U.S. subsidiary of 7 & I Holdings,
which operates, licenses or franchises 49,000 convenience stores
worldwide, including 7-11 stores in 16 countries.
The case reflects stepped-up enforcement against
employers using bogus documentation for immigrant workers. In the past
two years, federal authorities have brought similar charges against more
than 500 business-owners and managers, said James Hayes, head of
Immigration and Customs Enforcement's New York office.
"There's real teeth to these laws, and we're using them now more than ever before," Hayes said.
Hayes said the workers in the 7-11 cases were not
innocent victims in the scheme but also were exploited by bosses who
paid them a fraction of what they were owed for working up to 100 hours a
Chipotle Mexican Grill Inc. also came under
investigation in recent years for hiring workers who were in the country
illegally. Last year, federal prosecutors charged a Minneapolis man who
ran a company that provides labor to large poultry farms with
transporting and harboring illegal immigrants.
Haeyoung Yoon, senior staff attorney for the
National Employment Law Project, said that low-wage employers are more
prone to not having the proper documentation for their workers. Once the
fraud is exposed, the workers typically end up getting fired on the
spot and sometimes deported, Yoon said.
Associated Press writers Frank Eltman on Long
Island, Brock Vergakis in Norfolk, Va. and Candice Choi in New York
contributed to this report, as well as AP video journalist Jon Gerberg.
Copyright 2013 The
Associated Press. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.
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