Missouri Man Convicted in Scheme to Place Undocumented Workers in Hotels
On October 28, 2010, a Missouri man was convicted by the U.S. District Court in Missouri for his role in a racketeering scheme that involved placing undocumented workers at hotels in 14 states, including several hotels in the Kansas City, Missouri, area. United States v. Dougherty, No. 4:09-CR-00143 (W.D. Mo. Oct. 10, 2010). Beth Phillips, the U.S. Attorney for the Western District of Missouri, indicated that “Mr. Kristin Dougherty was found guilty of racketeering, participating in a Racketeering Influenced and Corrupt Organizations Act (‘RICO’) conspiracy and wire fraud. He faces a possible sentence of up to 60 years in federal prison without parole, plus a fine up to $75,000.”
Ms. Phillips added that this was not an isolated criminal enterprise. The federal RICO indictment alleged . . .
an extensive and profitable criminal enterprise in which hundreds of illegal aliens were employed at hotels and other businesses across the country. Participants in the scheme used false information to acquire fraudulent work visas for the illegal workers, many of whom were recruited with false promises related to the terms, conditions and nature of employment. Once workers entered the United States, participants in the scheme kept control of the workers through threats of deportation and other adverse immigration consequences.
We have previously noted our concerns about hospitality employers that use the H-2B program to supplement seasonal staffing shortages. The Dougherty prosecution is another reminder of the serious consequences that can arise from fraudulent schemes or other unlawful activities in this area.
Fourth Circuit Court Approves Probation Term Barring Participant in H-2B Visa Scheme from HR Work
The recent decision by the U.S. Court of Appeals for the Fourth Circuit in United States v. Starkes, No. 09-5051 (4th Cir. Nov. 3, 2010)(unpublished), underscores the dangers inherent in the H-2B program. In Starkes, the Fourth Circuit upheld a special condition of probation for an HR manager, who was convicted as part of an H-2Bvisa fraud scheme, that barred her from working in any position that involved access to labor contracts.
The Starkes decision involved the former HR manager at a major hotel in Williamsburg, Virginia. In 2007, Ms. Starkes encountered a member of a criminal organization who asked her to submit fraudulent documentation for H-2B visas that overstated the number of temporary workers the hotel required. In exchange, Ms. Starkes received a $200 gift card and was promised 10 – 15 cents per man-hour for each H-2B employee who worked at the hotel. The government discovered the scheme before Ms. Starkes could profit from the illegal arrangement. Ms. Starkes pled guilty to one count of mail fraud for her participation, and was sentenced to three years’ probation, with the special condition that she was prohibited from engaging in any aspect of the HR business or any similar occupation where she would have access to labor contracts.
The Starkes prosecution is part of a growing trend to ferret out fraud committed by management of hospitality employers involved in the H-2B worker program. Every hospitality employer that participates in the H-2B program would be well advised to review its policies and procedures for these employees to ensure that both the organization and its management are satisfying all legal requirements.