Hanishi Ali

A newly available H-1B Benefit Fraud and Compliance Assessment report, released this month by U.S. Senator Chuck Grassley, R-Iowa, to the Senate Judiciary Committee, revealed that 20.7 percent of the H-1B applications contained fraudulent info­rmation or technical violations of federal laws and regulations.  This article discusses the BFCA report and its implications for employers in­tending to file for H-1B visas.

The report represents the first time the United States Citizenship and Immigration Services has documented problems with the H-1B program.

The report drafted by the Office of Fraud Detection and National Security and the USCIS, found that 13.4 percent of petitions filed for H-1B visas on behalf of employers petitioning for a beneficiary to come to the United States as an H-1B nonimmigrant worker to perform services in a specialty occupation were fraudulent and another 7.3 percent contained some sort of technical violation.

“Fraud” was categorized as “willful misrepresentation, falsification, or omission of a material fact.” “Technical violation,” on the other hand, was defined in the report as circumstances where there was no evidence of willful fraud but “there was evidence that the employer or alien beneficiary failed to comply with applicable laws and regulations.”

Some of the most common misrepresentations uncovered by the report were:

• Forged signatures on supporting documents
• Fraudulent degrees and supporting experience letters
• Fake information in the applications
• Non-existent job locations
• Failure by employers to pay “prevailing wages” to H-1B employees
• “Benching” or placing the beneficiary in non-productive status without pay
• Charging back to the visa worker the filing fees the employer was obligated to pay
• H-1B petitions filed by non-existent or shell companies.

The most blatant misrepresentation cited by the study was that of an H-1B IT professional whose position described him as a “Business Development Analyst” on his H-1B petition and Labor Condition Application but he was working in a laundromat doing laundry and maintaining washing machines.

Proponents of the H-1B program argue that the report’s estimates are based on a small sample study of 246 cases, out of a total of 95,827 H-1Bs approved, denied, or pending I-129 petitions, filed between October 2005 and March 2006. The USCIS, however, estimates a 95 percent confidence level and a margin error of plus or minus 5 percent.

Also, it should be noted that the overwhelming majority of the petitions in the sample size, included beneficiaries who already held H-1B visas and that companies engaging in professional, scientific and technical services, which includes companies performing computer software engineering and development contracting, comprised 52 percent of the sample size. Extrapolating from this sample size, the USCIS estimates that approximately 13,000 petitions may be fraudulent and approximately 7,000 petitions may contain some sort of technical violation.

The report concludes by stating, “Given the significant vulnerability, USCIS is making procedural changes, which will be described in a forthcoming document.”

The report’s documented problem areas are not unusual or alarming for an immigration attorney that regularly files H-1b applications, but some of the numbers in the report were certainly surprising to see.

Although, majority of the employers abide by the federal laws and regulations and only a small group of employers abuse the H-1B works visas, employers can generally expect:

• Greater oversight and more efficiency in running of the H-1B program.
  
• Tighter scrutiny, including a risk-assessment program which will enable the USCIS to scrutinize the H-1B petitions, particularly, from companies that fall within the primary fraud or technical violation indicators, including: companies with 25 or fewer employees; companies with annual gross income of less than $10 million; companies in existence less than 10 years; H-1B petitions filed for accounting, human resources, business analysts, sales and advertising occupations; and companies that file H-1B visa for beneficiaries with only bachelor’s degrees.
  
• Reforms in place, including use of the “independent open-source data” to obtain information about the beneficiaries and employers petitioning for the H-1B visas, which would mean that USCIS could check public records or other third-party independent information sources to verify that an employer is a legitimate business and operating as such.
  
• Revision of the current H-1B application forms and a possible modification of the H-1B evidentiary requirements.

The silver lining for employers intending to hire H-1B employees is that both presidential candidates, Senator Barack Obama and Senator John McCain, have declared that they support expanding the H-1B visa program.

Hanishi Ali is an immigration attorney at Mithras Law Group, which focuses on U.S. and U.K. employment based immigration law. She can be reached at (617) 500-3233; Web: www.mithras­law.com; Blog: http://­immigra­tion­info.­­word­press.com/.