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LABOR & EMPLOYMENT LAW — 3/12/08

Five IFCO managers indicted on federal charges stemming from employing undocumented workers

A grand jury has returned a six-count felony indictment against five current managers of the Pallet Management Division of IFCO Systems North America (IFCO). The indictment charges the managers with engaging in a conspiracy to harbor illegal aliens, to encourage and induce, and to transport illegal aliens.

Charged in the indictment are: Charles Davidson of San Antonio, Texas (IFCO vice president for new market development; William Hoskins of Cincinnati, Ohio (new market development manager); Thomas Soto Castillo of Cincinnati, Ohio (foreman in Cincinnati/operations manager for new market development); and Wendy Mudra of Tampa, Florida (human resources manager).

Glenn T. Suddaby, US attorney for the Northern District of New York, and Julie L. Myers, assistant secretary of homeland security for US Immigration and Customs Enforcement (ICE), announced the indictments on February 28, 2008.

"Under our national worksite enforcement strategy, ICE is bringing to justice corporate managers who harbor illegal aliens for their workforce in order to gain an unfair business advantage over their competition," said Myers. "Today's indictments are the result of significant work by ICE and the United States Attorney's Office, and represent a substantial step forward in this major national worksite enforcement investigation."

Background. The indictment stems from a long-term investigation by ICE of the illegal employment-related practices at IFCO plants nationwide. The investigation began in February 2005, when an employee of the IFCO plant in Albany, New York, called ICE to report that Hispanic workers at the plant were ripping up W-2 forms. A manager told the employee they were performing this procedure because the Hispanic employees were undocumented, had fake social security cards, and did not intend to file their taxes.

On April 19, 2006, agents arrested seven current and former managers and executed search warrants at nine IFCO facilities, including the Houston headquarters of the company. At the same time, a worksite enforcement action was conducted at over 40 IFCO plants nationally. ICE detained nearly 1,200 undocumented workers employed at the plants at the time, the majority of the foremen and manual laborers present at the plants. Nearly all of the pallet workers and foremen ICE encountered at IFCO's newest plants were illegal (24 of 26 pallet workers in Albany, 18 of 19 in Rittman, Ohio, 20 of 21 in Boston, and all of the 27 pallet workers in St. Louis, Missouri).

Seven IFCO managers pled guilty in 2007 to felony and misdemeanor charges related to the unlawful employment of illegal aliens and await sentencing on those charges.

Indictment. The indictment alleges that the conspiracy to harbor, encourage and induce and transport, illegal aliens took place between at least April 2004 and April, 19, 2006, and that the conspiracy had the following manner and means:

• the IFCO managers would and did seek to employ Hispanic manual laborers at IFCO plants with little or no regard to the legal status of the workers.

• When establishing a new IFCO plant, if Hispanic laborers could not be found in the communities of the plants, conspirator IFCO managers would and did move Hispanic alien laborers from outside of the area to staff the new plants.

• the IFCO managers employed defendant-Castillo who had worked for the company as an undocumented worker himself, and another manager from Houston, to find Hispanic laborers for the plants.

• the IFCO managers would and did hire almost exclusively non-US citizen Hispanic aliens for pallet workers jobs at IFCO's new plants without completing I-9, Employment Eligibility Verification forms for the workers and/or falsifying I-9 forms, without the background screening applied to the pallet workers sent to staff IFCO's customers' off-site facilities, and without screening the aliens with employment verification systems available to the company.

• the IFCO managers and other conspirators would and did allow alien workers at IFCO plants to use multiple Social Security numbers and identities during the course of employment at times obtained through the assistance of IFCO managers.

• the IFCO managers and other conspirators would and did transport and attempt to transport illegal aliens, pay for the transportation of illegal aliens and reimburse illegal aliens the cost of their transportation, all for the purpose of employing the aliens at IFCO plants.

• the IFCO managers would and did provide housing for Hispanic alien workers at IFCO plants who could not obtain housing on their own, by among other means, paying for hotel rooms, securing apartments and houses, paying rent, providing pay advances for rental costs.

• the IFCO managers would and did provide financial assistance to alien pallet workers at IFCO's new plants in addition to their pay, by cashing checks for workers, interceding on their behalf with bank personnel, transporting them to the bank to cash paychecks, giving them money for living expenses like food and clothing, and purchasing personal items for workers.

• the IFCO managers and other conspirators would and did assist alien workers at IFCO plants to receive more money in their weekly pay by submitting inflated tax exemptions on W-4 forms and causing less federal taxes to be withheld from their paychecks.

• the IFCO managers would and did take steps to avoid the arrest of illegal alien workers at IFCO plants, including moving illegal alien workers between IFCO plants to avoid difficulties with law enforcement and immigration authorities.

Penalties. All charges carry a ten-year maximum prison term, with the exception of the aiding and abetting charge, which has a five-year maximum term of imprisonment. All counts carry a maximum fine of $250,000.

The criminal investigation is being conducted by ICE; the New York State Police, New York State Intelligence Center (NYSIC) and Special Investigation Unit; the Social Security Administration, Office of Inspector General; the Internal Revenue Service, Criminal Investigation; and the US Department of Labor, Wage and Hour Division.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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