Nine owners and managers of 7-Eleven stores across Long Island and in Virginia were charged on Monday in a scheme to exploit immigrants from Pakistan and the Philippines, in part by paying them using the stolen Social Security numbers of a child and three dead people while stealing most of their wages.
Most of the defendants were arrested early Monday as federal authorities raided 14 franchise stores. Immigration and Customs Enforcement agents were executing search warrants at more than 40 other stores across the country suspected of similar infractions, authorities said at a news conference in Brooklyn.
Four defendants who hold both U.S. and Pakistani citizenship belong to a family that has participated in social events with Pakistan's former military ruler Pervez Musharraf, prosecutors said in court papers as they highlighted foreign ties while seeking to have the defendants held without bail until trial. Another defendant is a citizen of the Philippines. The government said the defendants pocketed tens of millions of dollars in the scheme, hiding some of the money.
Federal indictments naming eight men and one woman allege that since 2000 they employed more than 50 immigrants who didn't have permission to be in the U.S. They tried to conceal the immigrants' employment by stealing the identities of about two dozen people — including those of the child, the dead and a Coast Guard cadet — and submitting the information to the 7-Eleven payroll department.
When 7-Eleven's headquarters sent the wages for distribution, the employers stole up to 75 percent of the workers' pay, authorities said. The defendants also forced the workers to live in houses they owned and pay them rent in cash, they added.
"The defendants not only systematically employed illegal immigrants, but concealed their crimes by raiding the cradle and the grave to steal the identities of children and even the dead," U.S. Attorney Loretta Lynch said in a statement. "Finally, these defendants ruthlessly exploited their immigrant employees, stealing their wages and requiring them to live in unregulated boarding houses, in effect creating a modern day plantation system."
Lynch told a news conference the stolen identifications were "recycled from store to store and state to state" in a case driven by greed among defendants who bought big houses.
The government seized the franchise rights of 10 stores in New York and four stores in Virginia. The stores will remain open under the parent company's operation. Authorities said the stores had generated $182 million in profits shared by the defendants and 7-Eleven.
Immigration officials detained 18 workers, including some who first notified authorities about the alleged fraud in 2010. Lynch said the workers would be processed through the system, with some who served as whistleblowers being able to remain in the country while the case is prosecuted.
"Several workers came forward and complained," she said of employees who were recruited from the same ethnic communities as the defendants.
The defendants were to appear in court on Long Island and Norfolk, Va., later in the day to face wire fraud conspiracy, identity theft and alien harboring charges. They face up to 20 years in prison if convicted of conspiracy and other charges. Those arrested included a married Long Island couple who owned, co-owned or controlled a dozen 7-Eleven franchise stores on Long Island and Virginia. The couple bought their first franchise license in 1988.
The government said the franchises were licensed by Dallas-based 7-Eleven Inc., the U.S. subsidiary of Seven & I Holdings, which operates, licenses or franchises 49,000 convenience stores worldwide, including 7-Eleven stores in 16 countries.
A 7-Eleven spokesman said the company was cooperating with the investigation, but declined further comment.
The case reflects stepped-up enforcement against employers using bogus documentation for immigrant workers. In the past two years, federal authorities have brought similar charges against more than 500 business-owners and managers, said James Hayes, head of Immigration and Customs Enforcement's New York office.
"There's real teeth to these laws, and we're using them now more than ever before," Hayes said.
Hayes said the workers in the 7-Eleven cases were not innocent victims in the scheme but also were exploited by bosses who paid them a fraction of what they were owed for working up to 100 hours a week.
Chipotle Mexican Grill Inc. also came under investigation in recent years for hiring workers who were in the country illegally. Last year, federal prosecutors charged a Minneapolis man who ran a company that provides labor to large poultry farms with transporting and harboring illegal immigrants.
Haeyoung Yoon, senior staff attorney for the National Employment Law Project, said that low-wage employers are more prone to not having the proper documentation for their workers. Once the fraud is exposed, the workers typically end up getting fired on the spot and sometimes deported, Yoon said.