Monday, September 25, 2006
Staff photo by John Patriquin
Vaughn LeBlanc was working for the Maine Department of Labor in 2004 when his office was suddenly swamped with applications for foreign high-tech workers.
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Vaughn LeBlanc became swamped in late 2004, when applications for foreign high-tech workers unexpectedly poured into his Maine Department of Labor office.
"I had no room in my office. We would fill a box every other day, they were stacked five or six high, going down the hall," said LeBlanc, a foreign labor specialist for the department until he retired in early 2005.
"I felt something was wrong," he said. "I personally found it hard to believe we needed 1,000 more software engineers in Maine."
In almost two decades of handling foreign labor requests in Maine, LeBlanc had dealt with the seasonal need for housekeepers at York County resorts, Canadian lumberjacks in the northern forests and chefs for Chinese restaurants throughout the state.
But he had never experienced anything like that flood of paper.
LeBlanc was seeing a demand for skilled foreign labor that didn't square with industry needs in Maine.
As the boxes of paperwork piled up in Maine and other rural states, foreign labor experts came to understand what they were seeing: Small companies moving ahead of federal immigration system changes scheduled for March 28, 2005, were flocking to rural states, hoping that their applications for foreign labor would be processed quickly and efficiently.
Their strategy has some questioning whether those companies broke federal laws or just slipped through the system via numerous loopholes.
"I think the state was being used," LeBlanc told the Portland Press Herald/Maine Sunday Telegram.
While the system has changed, state officials and government auditors worry that the problems may persist in other forms.
A number of Maine businesses legitimately apply for green cards, hiring foreign doctors, engineers and other professionals to fill needs in the state's work force. And experts in immigration law suggest abuse of the system is minuscule.
"Is it possible to game the system? I guess it is," said Theodore Ruthizer, past president and general counsel of the American Immigration Lawyers Association and a lecturer in law at Columbia Law School. "My sense is the allegations of fraud and abuse are way overstated and they're not a serious problem."
LeBlanc handled the first step in applications to the federal foreign labor system. He took in paperwork from companies applying for green cards - federal authorization allowing their foreign employees work and live here indefinitely. The companies would file labor certification applications with LeBlanc. Labor certification is the beginning of the complex green card system.
After LeBlanc did a basic check of the companies and their candidates, he sent their labor certification applications to the U.S. Department of Labor's regional office in Boston.
His role as gatekeeper had three distinct parts:
There are 31 different "labor market areas" in the state of Maine alone, breaking down prevailing wages to a local level. LeBlanc checked those wages to ensure American workers' pay scales weren't undercut by foreigners willing to do the work for less.
After establishing those specifics, LeBlanc would send the labor certification applications to the U.S. Department of Labor. An approval there meant the company could petition the Department of Homeland Security's U.S. Citizenship and Immigration Services for a green card.
According to the federal laws that set up the green card system, that labor certification means that the U.S. Department of Labor certifies to the Department of Homeland Security that there are not enough U.S. workers "able, willing, qualified, and available ... and at the place where the alien is perform the work" to take the job. The U.S. Labor Department also certifies to Homeland Security that "the employment of the alien will not adversely affect the wages and working conditions of similarly employed United States workers."
If the U.S. Department of Labor certifies the labor certification application, then companies can petition Homeland Security for a green card. Homeland Security's Citizenship and Immigration unit checks out the companies to make sure they're eligible to bring over foreign workers. After approval by Homeland Security, the State Department interviews the foreign workers - if they're not in the United States already. If they're here under a temporary employment permit, Citizenship and Immigration interviews them. Once the State Department or Citizenship and Immigration interviews the worker and signs off, they get the green card.
But that first part of the federal green-card system - the foreign labor certification leg of the journey - changed on March 28, 2005. That change took the states almost entirely out of the equation. After the change, companies applied for labor certification directly online to the U.S. Department of Labor.
LeBlanc expected to see a "trickle of applications" beyond the normal flow, prompted by the pending change in the system. Instead, he saw a deluge.
"In October of 2004, it hit," he said, "I started seeing massive amounts of applications coming in from attorneys' offices in groups of 15 or 20."
All were for software engineer and programmer positions.
In 2004 and 2005, 29 companies filed certification applications through Maine for 10 or more green cards for software engineers and related positions, according to state records. Combined, they applied for 800 green card certifications. The firms had names like Net Matrix Solutions, which filed for 11 labor certification applications; Sriven Systems, which filed for 27; BCC USA Inc., for 29.
The jobs paid $65,000 and up, according to the paperwork. The positions called for an alphabet soup of programming skills - C++, J2EE, XML, PL/SQL and other languages. The green card applications were for people who were often already here in the United States, working on temporary visas.
The companies were "staff augmentation firms" - unofficially called "body shops" in the industry - that file immigration papers for foreign high-tech workers and place them as contract employees with larger companies or government agencies. Essentially, they are temp agencies that are staffed with foreign high-tech workers.
The workers contract on projects for anywhere from a few months to a few years, moving around the country. The clients pay the staffing agency for the employees; the agency takes a cut and then pays its employees.
By law, said LeBlanc, these firms needed to be doing business in Maine to file for labor certifications here - that's why he checked to make sure they had unemployment insurance accounts. The workers were supposed to be employed within Maine, too.
The labor certification applications the companies filled out were called the ETA 750 form. It contained sections requesting, among many things, the name and address of the employer, and the "Address Where Alien Will Work."
Under instructions for filling out the form, the U.S. Department of Labor explains companies must "enter the full address of site or location where the work will actually be performed."
The ETA 750, like many federal documents, also has a boxed section prominent at the top of the form that reads, in part, "To knowingly furnish any false information in the preparation of this form ... is a felony punishable by $10,000 fine or five years in the penitentiary, or both."
In 2004 and 2005, though, many of the firms that said they had offices in the state had little or no connection to Maine.
Roughly half rented cubicles or small offices at two locations in Portland: 480 or 477 Congress Street. Those addresses belonged to the Portland Business Center and David Glaser's Executive Office Centers Inc., respectively. They offered short-term leases for fully equipped cubicles or offices, complete with a shared receptionist.
Other staffing firms rented space downtown, near the two business centers.
Joan McCleod, assistant property manager at Boulos Property Management, remembers one tenant she had from October 2004-October 2005 in Portland's Time & Temperature building: Axiom Systems Inc.
"They were a tenant, although we never saw them, never laid eyes on them," said McLeod. "They had 14 desks set up, computers, radio. No one was ever there. They sent me priority mail envelopes to mail them their mail (in New Jersey)."
Axiom filed 160 H1B visa and green card certification applications for foreign workers. An H1B visa is a temporary permit allowing a skilled foreigner to work in the United States. Messages left at what seems to be the company's new offices in Pittsfield, Maine, in September weren't returned.
Many of the companies no longer have any presence in this state.
In at least five cases, the businesses have since closed their offices. In six cases, the newspaper has been unable to determine any actual connection to Maine. A few, like BCC, are still here and say they plan to bring workers to Maine.
As LeBlanc began checking out the various companies, he found many that didn't have state unemployment accounts. They weren't valid Maine employers, and he denied their applications outright.
Other firms had accounts, though, which they had just set up recently. These firms were paying a very low amount for unemployment insurance, which would equate to having few employees here.
The fact that many such companies suddenly appeared in Maine - at a handful of addresses - and were requesting large numbers of foreign workers raised suspicions, said LeBlanc.
"Maybe they're expanding, but ..." LeBlanc said.
LeBlanc challenged the businesses.
"I contacted one of the companies, I said - 'I don't believe you're there,"' LeBlanc said. "They sent me photos of a woman with a laptop computer, and a piece of paper with the company name above her, an outside shot of the (Portland Business Center), pictures of plants and the Xerox machine."
Other Maine Labor Department units also were seeing the sudden increase in activity. Between 2004 and 2005, Maine saw 800 certification requests for green cards for software engineer, programmer-type positions - an increase of 693 percent from the two years earlier. Between 2002 and 2003, there had been only 101 requests.
The Bureau of Labor Statistics became overwhelmed with the hundreds of prevailing wage determinations it was being asked to make. As LeBlanc checked on more and more companies, the unemployment bureau began investigating more work sites, said Lloyd Black, a tax section manager with the Maine Labor Department. Over a four-month peak of activity, the bureau was investigating at least two or three sites a week.
"When we went out, we'd find empty cubicles. We'd find a table, maybe a desk, a chair, a phone, maybe a laptop, sometimes a person," said Black. "If you'd call the phone number, you'd get an out-of-state cell phone."
LeBlanc said he called the U.S. Department of Labor's Boston region office to notify them of the problem. Software staffing companies were playing the system, he told them, exploiting loopholes. They were applying for immigration papers through Maine, though they had tenuous connections here, at best.
"They said there was really nothing they could do; they didn't see any laws were being broken," said LeBlanc. "I was told to just keep processing, they'll check and, 'We'll make a decision if it's an issue."'
The U.S. Department of Labor declined to specifically address these criticisms, despite repeated newspaper inquiries.
LeBlanc also noted his suspicions on some of the applications before sending them on. For example, on one application released by the state to the Portland Press Herald/Maine Sunday Telegram, he wrote in boldface, typed letters, "Problem Case: The employer's tax account has been closed as they have no employment in Maine yet they applied to bring workers into Maine. Not a valid Maine employer."
The Department of Labor certified that application anyway - as it did with many others that LeBlanc had flagged.
Labor issued a brief statement when asked about the surge in numbers and the charge by LeBlanc that the federal government ignored the problem. Spokesmen for the department would only comment as unnamed sources, until an e-mail was sent directly to Secretary of Labor Elaine L. Chao, asking for comment. Asked a series of questions by e-mail, the Labor Department answered briefly.
"Maine's experience before the new (green card) system took effect March 28, 2005, was typical of that seen around the country. In the months leading up to the expiration of the old program, an estimated 40,000 foreign labor certification applications were received nationwide over and above the normal expected number of filings," Labor spokesman John Chavez responded in an e-mailed statement.
The statement did not address the charge that the U.S. Labor Department turned a blind eye to questionable filings amid that increase in activity.
By late 2004, LeBlanc had drawn enough attention to the problem that various officials at the Maine Department of Labor met to discuss it, including Commissioner Laura Fortman and Assistant Attorney General Liz Wyman. They realized there were systemic issues, and the state made LeBlanc's concerns a priority for tax investigators.
"We were so concerned, (we said) 'My gosh, are we unknowingly facilitating something that's not working the way it's supposed to be?"' said Wyman. "We weren't sure what we were looking at, but none of us felt it was legitimate. It wasn't adding up."
They couldn't find any Maine laws being broken. If there was any issue, it was federal, said LeBlanc.
"They met the (letter) of the law. I don't know ethically if it was right... I guess that's all you can say," said LeBlanc.
Laura Boyett, director of the Bureau of Unemployment Compensation, said her department did forward the information to the U.S. Department of Labor's Inspector General.
"I think they took us seriously" Boyett said. "(But) there was no follow-up. That's part of the frustration, we don't know what happened."
Whether or not laws were being broken, the contracting companies seemed to be playing the system, said LeBlanc.
It was fairly clear that if any of these immigrants were hired, they wouldn't be working in Maine, but at sites around the country, LeBlanc and his counterparts in other states said. The jobs weren't really going to be here.
That's an issue because LeBlanc - per federal regulations - was checking to make sure they paid the prevailing wage for Portland, and was having them advertise for the openings in area publications before sending the labor certification applications on to the U.S. Department of Labor's Boston office.
It was not LeBlanc's job to investigate where the foreign workers actually went, if they got a green card. However, he had some strong suspicions about what happened.
"They're definitely taking jobs away from American workers because they're being certified in Maine and being placed in New Jersey, Silicon Valley," said LeBlanc. "Most of the people coming in would go anywhere."
LeBlanc's counterparts in the other states had similar experiences at the same time.
Francis Morrissey handled foreign labor certification requests in New Hampshire, and saw companies "dumping unusually large numbers of applications, 40 or 50 at a time."
"It seemed obvious that these people did not have the work there, the work was not going to be done here," he added. "If I saw they requested 40 people to be processed and only had one person (on the payroll), that's a red flag."
New Hampshire had been seeing between 300 and 400 green card applications a year, maybe a few more, said Morrissey. By the time the March 28, 2005, switchover came, the number had jumped to about 1,500 a year, said Morrissey.
Vermont saw applications double, said Terry LaManna, program coordinator for the state's labor certification program.
Madhavi Bhadbhade, the foreign labor certification coordinator in Nebraska, said she processed hundreds of what she saw as suspect applications during that time.
"I don't see those companies around any more," she said.
Morrissey said he believed the federal officials did what they could.
"I felt that they were understaffed, and in cases where there was serious concern, they did turn it over to the Office of Inspector General, and something did happen," said Morrissey.
Morrissey was referring to the federal investigation of Cybersoftec, a New Jersey firm that had opened offices in both New Hampshire and in Maine, at the Portland Business Center. The president of Cybersoftec, Narendra V. Mandalapa, has pleaded guilty to one count of immigration fraud and is set to be sentenced Nov. 27.
But Vermont's LaManna and LeBlanc said they were frustrated with what they saw as a lack of response from the federal Labor Department.
"We were complaining, but Boston would say something to Washington, and I guess Washington just seemed to want ignore (it)," said LaManna. "It seemed like they never really wanted to deal with the tough issues."
"At some point," LeBlanc said, "you just start banging your head on the wall. Does anybody care but me?"
LeBlanc, Morrissey and LaManna suspect the companies focused on their states to take advantage of quick green-card paperwork processing times in rural locations.
The companies weren't sure how the March 28, 2005, change would affect wait times, so they looked to get their paperwork into the system through states that they knew processed the forms quickly.
Other, busier states like New York or California took months or years to process the certifications that lead to green card applications. Maine's processing times were measured in days, or weeks - as they were in Vermont, New Hampshire and Nebraska.
Some of the companies said that Maine's processing speeds were a factor in their decision to open offices here, but not the main one. Many said they were trying to tap into what they saw was an underserved market, bringing contract workers to Maine.
The companies said on the federal forms that the jobs would be in Maine, at specific addresses. In some cases, they added "and other unanticipated locations throughout the United States."
George D. Hepner III, a local immigration law attorney with Bernstein Shur in Portland, said he saw a lot of questionable stuff cross his desk over the past few years as potential clients attempted to retain his services - "labor certifications I knew were fraudulent."
The Portland Press Herald/Maine Sunday Telegram asked Hepner to review dozens of the files it had obtained from the state, and he said much of what he saw didn't make sense. One detail, in particular, that was present on many of the applications made him suspicious.
"The address - 480 Congress Street; it's an office with a secretary. You know this guy's a jobber," said Hepner.
He went on to explain what he meant.
"He's just bringing in people and sending them God knows where," Hepner said.
Hepner said that the changing federal law was probably the main motivation for filing through Maine. But, he added, filing through Maine also allowed the companies to list prevailing wages from here on the forms.
Maine Labor Commissioner Fortman said that companies might have wanted to bring workers in through the state so they could pay the workers less. Prevailing wages in Maine are generally lower than in urban centers of states such as California or New Jersey.
According to the U.S. Department of Labor, software engineers in Portland make about $10,000 a year less than their counterparts in Middlesex County, N.J. The same positions in Silicon Valley pay about $20,000 a year more than they do in Maine. U.S. Department of Labor regulations allow a company to use its headquarters location to determine prevailing wage for a roving employee if the eventual job site is unknown.
"If they can pay the guy $75,000 (the Maine wage) in Jersey, they are gaming the system," said Hepner.
The problem is that companies with minimal operations in Maine - or nothing here at all - have been calling it their home base.
"They were just calling the Maine place their headquarters, or the Vermont place their headquarters," said LaManna, of Vermont. "In a lot of cases, they wouldn't even have a Maine or Vermont telephone number."
Added New Hampshire's Morrissey, "If you call an office with someone answering the phone and a couple of other people the corporate headquarters, and there are literally hundreds of other employees, there's something odd there."
A third possible reason for filing through rural states is so that foreign workers face less U.S. competition for the advertised positions.
When a company files for a green card for an employee, it must advertise for the position. For software-based positions, ads in rural states are less likely to draw a slew of applications than they would in areas where the jobs will actually be done, like New Jersey, Virginia or Silicon Valley.
If fully qualified Americans apply for the job, the company is supposed to hire them before foreigners. But according to the U.S. Department of Labor's auditors, most position-based green cards are filed for employees who already hold the jobs with visas.
Foreigners often work for these staffing firms because the companies specifically promise they will file for a green card for them. In those cases, they really don't want to have an American take the job.
"You're much more likely to find qualified people in a metropolitan area than in rural markets," said LaManna. "I do think people should be advertising where the job is to see if people can do the job."
The Portland Press Herald/Maine Sunday Telegram tried to locate about 150 foreign workers who had labor certification applications filed for green cards through the state of Maine in 2004 and 2005, using a combination of Internet searches and directory assistance. Most phone numbers had been disconnected, likely because computer consultants working for temporary staffing firms generally don't work in any one location for very long. But about 15 of the phone numbers were still active.
Eleven of those workers didn't return messages left by the newspaper. Four of these workers agreed to speak with the newspaper. Only one said he had ever worked in Maine.
Officials from the rural states are concerned that misuse of the system may become even more common with the automation of the process.
"Our concern is what is happening now that we don't know?" said Boyett at the Unemployment Bureau. "That system check has been eliminated, the big question that's left for us is how will we ever know?"
The U.S. Department of Labor's Office of Inspector General raised the same concerns ahead of the switchover in a 2003 report. The new green card labor certification application system "will significantly speed up the time required to process applications," auditors wrote.
"However," they continue, "the system will eliminate most, if not all, human intervention or review/screening of 80 percent of applications received. In our opinion, the system will result in reduced controls and an increased risk of fraud."
Labor spokesman Chavez said the new system will fight fraud, not increase it.
For many U.S. technology companies, the green card system is an important part of their legitimate efforts to use foreign labor to supplement their domestic work force.
Paula Collins, vice president of government relations at Texas Instruments, said less than 3 percent of its total U.S. work force of 15,000 is here on H1B visas - roughly 450 people. By the end of the year, she said, the company expects to make between 300 and 400 green card applications.
"Texas Instruments seeks green cards for virtually all of the employees we have hired on H1B visas. And we begin the process as soon as they are hired," said Collins. "Unfortunately, unreasonable caps, unrealistic allotments and extreme administrative delays can hold these people in legal and professional limbo for years."
She said increasing access to foreign workers is important to her firm.
"We know that more than half - and in some disciplines two-thirds - of the advanced degrees awarded at U.S. universities in science and engineering are earned by foreign nationals. Due to a number of factors - including demographic shifts, interest, poor preparation, and lack of awareness of opportunities - we also know that fewer U.S. students are choosing to study in many of these fields," said Paula Collins. "On top of this, U.S. high school students perform poorly in comparison to their international peers on math and science assessments.
"We need access to that talent, especially those that have been doing cutting edge nano-electronics research. So do our competitors. Let me tell you, there is a constant scramble for these people."
She said Texas Instrument officials have heard the allegations about fraud in the foreign labor system.
"I can only tell you that TI is scrupulous about following the letter of the law. Among the incentives to do that is the fact that companies that break the law are no longer allowed to participate in the H1B Visa program. That would be a major problem for TI," Collins said.
Ruthizer, the Columbia Law School lecturer, said he thought cases of abuse are "a drop in the bucket." According to the U.S. Citizenship and Immigration Services division of the Department of Homeland Security, the government issued 782,000 green cards in 2005."To the extent they exist, I think they tend to be focused in these so-called body shops. I think the Labor Department recognizes that," Ruthizer said of actual cases of abuse.
But, he added, they do obviously exist."It's not an absolutely clean program," he said. "I don't think it's a tainted system or a system that is so rife with fraud or abuse.
"But you've put your fingers on some of it, (and) the Labor Department probably does not have the resources or incentives to go and investigate every one of these cases."
Labor's Office of the Inspector General said in its 2003 report that it has found illegal operations in Virginia, New Jersey and other states, in which approved labor certifications were illicitly sold to foreigners for between $4,500 and $20,000.
The Inspector General auditors also noted in a report late last year that the U.S. Labor Department's hurry to eliminate the backlog of labor certification applications may be opening the green card program up to even more fraud. The backlog was created in the switchover from the old green card labor certification process to the new.
According to the auditors, as of August 2005, the U.S. Labor Department had 312,438 green card labor certification applications pending. The department expected to get rid of the backlog by 2007, the auditors said.
"We are concerned that in eliminating the backlog, many applications that should be denied are being certified," the auditors said. "Previous audits projected that 69 percent of the applications were either misrepresented or incomplete.
"Given that the foreign labor certification program is one of the few avenues available for immigrants who want to enter the U.S. legally, and the large amounts of money unscrupulous agents or recruiters can earn from aliens seeking entry into the country, there is a strong incentive to commit fraud or abuse, which can have adverse effects on American wages and working conditions."
Staff Writer Matt Wickenheiser can be contacted at 791-6316 or at: mwickenheiser @pressherald.com
Questions/Comments
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Hmmmm,I can't help but wonder why a immigration attorney would try to down play the obvious....$$$$?
Sounds like there is plenty of fraud and abuse to go around...plus loophole jumping, something that lawyers thrive on with the help of a government that does not have the will to protect American workers.
Why would the Maine Department of Labor place advertisements in the Portland Press Herald and the Maine Sunday Telegram giving the appearence of a job with the state when in fact the state labor department was just forwarding resumes to one of these staffing companies?
Advertising the job may have been part of the so-called "process" but why would the state do the advertising? I would think it would be up to the staffing company to prove the required advertising.
Did the staffing company create the ad? Or did a state employee or state contracted service create the ad? On whose nickle? Who paid the advertising costs for the PPH/MST ads?
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I find this trend very troubling. First of all, I'm over 40 and working in maufacturing. We all know how much of a dead end manufacturing has become over the past 30 years. So, I decided to get an education with the thought of changing careers. Mind you, changing careers at mid-life is pretty tough in itself. But, to work toward a BS, raise and support a family, and still pay the bills makes the challenge all that much tougher.
I am currently 12 credit hours shy of a BS in Computer Information Systems with a minor in Business. I've sent out dozens of resumes for entry level software jobs, and have only heard back from three employers. Of the three, I had one interview. The starting pay was so low, I could have done much better financially to go to work at the new Wal Mart distribution center in Lewiston as a fork truck driver.
My experience so far is that many employers want upwards of 5 years of experience, as well as certifications for an entry level job. Back in the 90's, an entry level job was one with less than 2 years of experience. In addition, many employers are requiring more acronyms and letters associated with the experience than we have letters in the English alphabet. As others being interviewd in this article pointed out, these ads are often exculding virtually any single individual. Many of these ads would require the services of multiple experienced people to fill just one position, let alone having one single person be able to perform all the required tasks being asked for in the ad.
My disocuragement is being further exacerbated by people such as Bill Gates and organizations such as MESDA stating we need to encourage more people to enter the field of computer science. Over the next 15 to 20 years, the software industry is predicting a tremendous shortfall of qualified people. Yet, educated Americans are unable to qualify for even the most basic of software jobs in their own country. What a pathetic indictment of corporate greed!report abuse
But if you want a REAL scandal, that directly affects Maine people and their pocket books, how about covering the Democrat MaineCare software scandal.
Their you have an $87 million (direct and indirect costs) debacle brought to us by Baldacci and Co. where an offshore Indian software company (CNSI) was hired to write a new Mainecare system that Americans could have written. It was supposed to cost $7 million. It still doesnt work.
Talk about being swept under the rug.
Ask ANY Mainecare service provider what it's done to them.
It's a Maine Democrat scandal. And Baldacci continues to lie about it.
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