U.S. Immigration and Customs Enforcement (ICE) agents have arrested seven current and former manages of IFCO Systems North America, the largest pallet services company in the U.S., pursuant to criminal complaints issued in the Northern District of New York. These individuals have been charged with conspiring to transport, harbor, and encourage and induce illegal aliens to reside in the U.S. for commercial advantage and private financial gain, in violation of Title 8, USC Section 1324 (a).
The conspiracy charge carries a penalty of up to 10 years in prison and a fine of up to $250,000 for each alien with respect to whom the violation takes place. Two other IFCO employees have been arrested on criminal charges relating to fraudulent documents.
In addition to the criminal arrests, ICE agents have conducted “consent” searches or executed criminal search warrants at more than 40 IFCO plants and related locations in 26 states that resulted in the apprehension of approximately 1,187 illegal alien IFCO employees. Three of the criminal search warrants were executed at residences in Guilderland, N.Y., where IFCO was allegedly housing illegal alien employees.
The consent searches and search warrants were conducted at locations in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, South Carolina, Virginia and Utah.
The arrests and search warrants are part of an ongoing criminal investigation of IFCO’s Pallet Management Services division that began more than a year ago. The investigation is being conducted by ICE, New York State Police - Upstate New York Regional Intelligence Center, Social Security Administration Inspector General, Internal Revenue Service - Criminal Investigation, and the Department of Labor Inspector General. The Guilderland Town Police Department and Schenectady Police Department also provided assistance.
According to a government affidavit filed in the Northern District of New York, the investigation began in February 2005 when ICE agents received information that IFCO workers in Guilderland, N.Y., were witnessed ripping up their W-2 tax forms and that an IFCO assistant general manager had explained that these workers were illegal aliens, had fake Social Security cards and did not intend to file tax returns.
According to the affidavit, subsequent investigation indicated that IFCO officials transported illegal aliens to and from work; paid rent for the housing of illegal alien employees; and deducted money from the aliens’ monthly paychecks to cover these expenses. Former IFCO employees also said it was common practice for IFCO to hire workers who lacked social security cards or produced bogus identification cards.
The affidavit also alleges that IFCO officials knowingly hired an illegal alien who was an informant for ICE. In numerous recorded conversations, IFCO officials reimbursed this person for obtaining fraudulent identity documents for other illegal alien employees; used the person to recruit other illegal workers; and advised the person and other illegal alien employees on how to avoid law enforcement detection, the affidavit alleges.
The affidavit further alleges that approximately 53.4% of the Social Security numbers contained on the IFCO Systems North America Inc. payroll of roughly 5,800 workers during 2005 were either invalid, did not match the true name registered with the Social Security Administration for that number, or belonged to children or deceased persons. The Social Security Administration sent at least 13 written notifications to IFCO headquarters about such discrepancies on its payroll records in 2004 and 2005, the affidavit alleges.
Employers and workers alike should be on notice that the status quo has changed,” says Michael Chertoff, secretary of the Department of Homeland Security. “These enforcement actions demonstrate that this department has no patience for employers who tolerate or perpetuate a shadow economy. We intend to find employers who knowingly or recklessly hire unauthorized workers and we will use every authority within our power to shut down businesses that exploit an illegal workforce to turn a profit.”
It is important to note that criminal complaints contain mere allegations. Defendants are presumed innocent unless and until proven guilty in a court of law.
In response to the arrests, IFCO SYSTEMS has released the following statement:
“As it is IFCO's policy to comply with all federal and state employment provisions, we take the allegations made by U.S. Immigration and Customs Enforcement (ICE) very seriously and are committed to resolving this matter as soon as possible. We are very disturbed by these allegations and have immediately begun a thorough investigation of the facts.
“The activities and attitudes outlined in the allegations are counter to everything we stand for at IFCO. We have the highest respect for our nation's employment and citizenship laws and are committed to complying with them.
“IFCO is the industry leader with a business model built on the efficiencies of our logistics systems and physical network and we are deeply committed to our employees. We are proud to offer a level of compensation and benefits to our employees that many of our peers do not. These include competitive wages, workers' compensation insurance, affordable health insurance, 401k, and various other benefits.
“We are cooperating fully with ICE and other authorities including voluntarily allowing ICE to visit many of our facilities this past Wednesday. We are now working to understand the facts and will implement any additional changes necessary to further improve our current procedures. So that we will be able to move forward with confidence, we have begun an internal investigation that will be headed by outside counsel. Pending the outcome of our investigation, the local IFCO managers arrested Wednesday have been placed on temporary leave from the company. In cooperation with ICE, we will be reviewing the status of our temporarily detained hourly workers across the country on a case by case basis.
“All of our facilities are in operation and we are working diligently to meet all of our customers' needs.”
Press Conference with Secretary of Homeland Security Michael Chertoff, Assistant Secretary for Immigration and Customs Enforcement Julie Myers, and United States Attorney Glenn Suddaby, April 20, 2006