U.S. Officials in Texas Arrest Six on Charges of H-1B Visa Fraud

Don Tennant

In a move that demonstrates the determination of federal authorities in Texas to prosecute H-1B visa fraud, six top officials working for Dibon Solutions, an IT consulting company near Dallas, were arrested last week on a charge of conspiracy to commit visa fraud and 10 related wire fraud charges.

According to an indictment that was filed under seal in the U.S. District Court for the Northern District of Texas on Feb. 20, the six defendants conspired to engage in the fraudulent activity from Feb. 2008 to Feb. 2011. The following excerpt from the indictment, which was unsealed on March 1, details the scheme:

As part of their scheme, the conspirators recruited foreign workers with computer expertise who wanted to work in the United States. The conspirators sponsored the workers’ H-1B visas with the stated purpose of working at Dibon headquarters in Carrollton, Texas, but, in fact, required the workers to provide consulting services to third-party companies located elsewhere. Contrary to the representations made by the conspirators to the workers (and the government), the conspirators paid the workers only when the conspirators placed the workers at a third-party company and only if the third-party company actually paid Dibon first for the workers’ services. Additionally, in Dibon’s visa paperwork, the conspirators falsely represented that the foreign workers had full-time positions and were paid an annual salary, as required by regulation to secure the visas.

This scheme provided the conspirators with a labor pool of inexpensive, skilled foreign workers who could be used on an “as needed” basis. The scheme was profitable because it required minimal overhead and Dibon could charge significant hourly rates for a computer consultant’s services. Accordingly, the conspirators earned a substantial profit margin when a consultant was assigned to a project and incurred few costs when a worker was without billable work.

This scheme is known as “benching.” Benching is defined by U.S. Department of Labor (DOL) as “workers who are in nonproductive status due to a decision by the employer, such as lack of work.” Dibon actively recruited H-1B workers and “benched” them.

Dibon’s “benching” scheme was facilitated by the conspirators’ use of the company as a staffing company. Dibon employed H-1B workers to perform services with third-party companies. The design of the H-1B system intended for the H-1B worker to perform services for the petitioning company, i.e. Dibon. In fact, regulations required that a petitioning company inform the government in the LCAs and H-1B petitions if the workers were assigned to a different location than the petitioning company’s address—which Dibon did not do. Moreover, as an intermediary company, Dibon claimed that jobs existed with third-party companies when, in fact, Dibon had not yet secured contracts with these companies; thus, Dibon filed false Labor Condition Applications (LCAs) with the DOL requesting H-1B workers for positions that did not exist.

According to the indictment, the defendants include Atul and Jiten “Jay” Nanda, two brothers who co-founded Dibon; Siva Sugavanam, Dibon’s chief recruiter of foreign workers for H-1B visas, who was responsible for training other recruiters;  Vivek Sharma, the office manager for Dibon, who coordinated placement of benched workers with third-party contracts and kept track of benched employees; Rohit Mehra, another recruiter who recruited employees for the bench and transported benched employees to and from Dibon headquarters; and Mohammad Khan, who handled the bookkeeping for Dibon and issued payroll checks to employees.

Court documents available at this writing detail the status of all of the defendants with the exception of Sharma. Those documents show that the defendants were arraigned on Feb. 27, and that they pled not guilty. They were released on personal recognizance after surrendering their Indian passports. Conditions of their release included avoiding all contact with the co-defendants and former Dibon employees; and agreeing that Dibon’s records would be subject to inspection by the U.S. Attorney’s Office upon request, from now through trial.

The indictment of the Dibon officials comes at a particularly sensitive time for Infosys, whose immigration management operations are in nearby Plano, Texas. As I’ve previously reported, the grand jury subpoena that was issued against Infosys in May of 2011 was issued by the U.S. District Court for the Eastern District of Texas. That subpoena sought documents related to the U.S. government’s investigation of alleged violations by Infosys of U.S. immigration and tax laws, principally related to the company’s use of B-1 visas. The results of that investigation are looming.


I spoke on Monday with Kenny Mendelsohn, the attorney who represented Jay Palmer, whose whistleblower report of alleged visa fraud at Infosys triggered the government’s investigation. Mendelsohn said the Eastern District, and the Northern District where the Dibon indictment was filed, are “next-door neighbors without a fence.” I asked Mendelsohn what the Dibon indictment told him about the likelihood of a similar indictment being brought against Infosys. His response:

I can’t comment with respect to Infosys, but I think what it truly shows is the Department of Justice, and particularly the U.S. Attorneys in Texas, are serious about enforcing visa laws, especially as they relate to H-1 violations. That’s what this one’s about, but I think it’s going to be the same with B-1 violations. It’s pretty serious, to me.



Add Comment      Leave a comment on this blog post

Mar 6, 2013 4:28 AM Mr America Mr America  says:
What ever happened to Infosys H1B investigation... What happened to palmer. Reply
Mar 7, 2013 5:30 AM Dolores Dolores  says:
More abuse: http://www.theworld.org/2013/03/skilled-worker-visa/ Schools churing out 9 week coders to replace 9 year American coders. Reply
Mar 7, 2013 3:03 PM jay tenant hater jay tenant hater  says:
Palmer's case was thrown out because he actually falsified evidence. Jay Tenant seems to hate Infosys, but no one can figure out why? Perhaps they would not hire him? Reply
Mar 9, 2013 7:57 PM R. Lawson R. Lawson  says: in response to jay tenant hater
No, it was tossed because of Alabama law doesn't adequately protect American workers/whistleblowers. They ruled that it was perfectly legal for Infosys to Jay in that state. It's an indictment on Alabama employment law, not Jay Palmer. What you are saying regarding the reason it was tossed is a blatant lie. If there is one type of people I simply cannot stand it would be liars. Reply
Mar 11, 2013 6:13 AM Don Tennant Don Tennant  says: in response to jay tenant hater
Your eagerness to post false information is self-incriminating. Anyone who followed the Palmer case knows it was thrown out because the federal judge hearing the case ruled that Infosys could not be held liable for retaliation under Alabama state employment law. And who on earth is Jay Tenant? Reply
Mar 11, 2013 10:30 AM Wakjob Wakjob  says: in response to jay tenant hater
Infosys senior level meetings : "We will dump 6 million Indians in US and capture their entire IT market and no American will ever come to know about this. We will throw these Americans out of their own country. They don't know what we are doing over here." Reply
Mar 12, 2013 1:17 PM Ex-Infosys Ex-Infosys  says: in response to Wakjob
From where you got this information? From where are they going to get 60 millions? Reply
Apr 4, 2013 1:06 PM anonymous anonymous  says:
This is common practice with all the desi companies especially companies founded by desis. this become an easy cash for lazy people and risk to innocent people who does not know laws. any creative ideas to counter would prevent harm to workers and their families too and at the same time any changes would make some big IT companies more profitavble as those descisions favor them n lead to monotony in high skilled workers category. atleast law should give some relaxation to workers who come on bench to stay legally with minimum pay till he get some assignment Reply
Apr 30, 2013 8:49 PM yankee yankee  says:
i am working in company i doubt they do this too i am scared to work there not getting paid on time and thinking to change job also thinking to report Reply
May 29, 2013 8:34 PM Sarah Barnes Sarah Barnes  says:
I would like to hear from those who seem to think it is their moral right to come to the US as a foreign citizen and take a job from a citizen. You would decry such practices in India and rightly so. The reason it is legal to take the jobs is because of bribery between these desi companies and American high tech companies and our own government. Given that the desi companies have proven to be corrupt, how can you ever think you will get a fair deal working for them? At a minimum Americans cannot be thrown out of the country (but we can, and do lose our livelihoods to this repulsive fraud). We are supposed to be fellow scientists and take no part in producing bad work and yet some do - cheap, quick, untested products. Are things really so bad in India that it is morally right to come and take another countries' jobs? You didn't like it when the Raj did this to you. Reply
Aug 12, 2013 3:04 PM Aashur Aashur  says:
Please sto pusing the term 'desi' whenever the Indians want to hide behind some cloud so their real identitites are not visible they start using the term desi as if all of South Asia is involved in this and whenever they want to take credit for anything that another South Asian country does they suddenly start tagging their 'Indian' label to it whether it is Bangladesh, Pakistan, Nepal etc. Let me tell this straight and how it is...99.999999 % of all companies and people commiting thie henious fraud and who have messed up the US IT market are nothing but Indians...I have yet to see a nother country's folks do this whether Bengali, Pakistani or Nepali. So please sto pusing desi desi everywhere when you know it is only the Indians we are talkng about. I am myself from Bangladesh and grew up in the US and am a Senior Systems Analyst and I have been seeing this everyday for the past 10 years..I wish the US labor dept and USCIS stop acting like ostriches and sticking their heads in the sand and stop all H1's coming or renewing from 'India'...unless these people can give a proper test to prove their worth. Even their certifications are fake as they pay back home for others to give those! Reply
Dec 12, 2013 4:01 PM Desi Companies Desi Companies  says:
Isn't it all Indian/desi companies doing? They file H1 for Candidates and then place them at Clients for work and get paid and pay to Candidates. What is so different this Company has done that they are after them? Reply
Dec 30, 2013 11:53 AM Ram Ram  says:
Is there a place to report fraudulent activities of companies sending out sub contract candidates on h1's making up names and passing them off with other resumes that arent theirs? ie. can I report them to the ins for investigation? Who would I report to? Reply

Post a comment

 

 

 

 


(Maximum characters: 1200). You have 1200 characters left.

 

 

Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.


 

Resource centers

Business Intelligence

Business performance information for strategic and operational decision-making

SOA

SOA uses interoperable services grouped around business processes to ease data integration

Data Warehousing

Data warehousing helps companies make sense of their operational data