How to Report Visa Fraud for a Whistleblower Reward
A settlement with India-based management consulting firm Mu Sigma shows how whistleblowers can make a difference in visa enforcement. In September, 2019, Mu Sigma agreed to pay the U.S. $2.5 million to settle claims that it evaded H-1B visa requirements and brought employees to the U.S. on B1 visitor visas, misrepresenting the nature of their intended employment. In announcing the settlement, Immigration and Customs Enforcement stated that the Mu Sigma investigation was launched by a whistleblower complaint in 2013, and the $2.5 million settlement included payment of $1.6 million to resolve civil claims, citing a qui tam case under the False Claims Act.
Immigration scams affect all manner of hopeful immigrants, from hardworking agricultural laborers, to highly skilled professionals, to business investors. These scams create an unfair playing field for those who follow applicable regulations, leave immigrant workers exposed to employment abuse and the threat of deportation, and cause investors to lose money.
Individuals with information about the misuse of certain visa programs should consider filing a claim under an applicable U.S. whistleblower law. As an added bonus, whistleblowers, including non-U.S. citizens, can sometimes be rewarded for their efforts with a share of any money recovered from the fraudster.
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Reporting EB-5 Visa Fraud under the SEC Whistleblower Program
The EB-5 visa program provides foreign investors with the opportunity to obtain lawful permanent residence status in the U.S. in exchange for making investments above specified amount in ventures that create more than a specified number of U.S. jobs. The EB-5 program has attracted substantial foreign investment, particularly from Chinese nationals. However, the EB-5 program has also proven to be a fertile hunting ground for fraudsters.
Fraudsters may target foreign nationals with bogus EB-5 investment schemes. Because the EB-5 program involves investments and the marketing of securities, the Securities and Exchange Commission is frequently involved in EB-5 enforcement actions. Where EB-5 fraudsters violate U.S. securities laws, by misrepresenting the nature of the investments or the planned use of the invested funds, by promising specified investment returns or visa issuance, or by failing to comply with securities regulations regarding registration, licensing, and disclosures, the SEC may have jurisdiction to impose sanctions.
Individuals with knowledge of fraudulent EB-5 investment schemes can submit a claim to the SEC Whistleblower Program. Whistleblowers may receive up to 30% of any government recovery resulting from their tip.
Examples of SEC enforcement actions involving EB-5 investment fraud include:
- Golden California Regional Center. New! In November 2019, the SEC announced a $50 million settlement with Golden California and its principal Bethany Liou, who marketed interests in the GCRC Cupertino Fund, LP as securities qualifying under the EB-5 visa program. Defendants represented that investor funds would be used to finance real estate development but, in fact, Liou diverted the funds to personal use.
- Jay Peak Ski Resort. Two individuals, Ariel Quiros and Bill Stegner, were alleged to have fraudulently obtained more than $200 million from foreign investors, claiming the funds would be used for construction at the ski resort and a nearby proposed biomedical research facility. The resorts ended up in receivership, and Quiros and Stegner were accused of having diverted investor funds, with the assistance of a registered representative at the investment bank of Raymond James & Associates, Inc. Raymond James agreed to pay $150 million, and Quiros has agreed to repay more than $81 million in investor funds.
- Juiceblendz and Yoblendz. In 2017, Jason Ogden agreed to pay more than $1.2 million to settle SEC charges that he misused EB-5 investor funds that he solicited in an offering stating that the funds would be used to develop Juicblendz and Yoblendz stores in malls. However, Ogden later changed his business model without updating investors, and diverted investor funds to personal use.
- California Investment Immigration Fund, LLC. In 2017, attorney Victoria Chan pleaded guilty for her role in a scheme that collected more than $50 million from foreign investors, admitting that the funds provided by investors was not used for the intended purposes, and often simply stolen by her and co-conspirators.
Reporting H-1B and B-1 Visa Fraud Using the Federal False Claims Act
The federal False Claims Act prohibits any person from knowingly presenting a false or fraudulent claim to the government, and from knowingly underpaying an obligation to the government. Even where the government is not directly paying for goods or services, claims can arise. Whistleblowers can use the FCA to report fraud and misconduct not only in federal government contracts, but also in other federal programs, including federal programs for employment visas. If money is recovered by or on behalf of the government, the whistleblower may be eligible to receive a financial reward up to 30% of the amount recovered.
An employer or agent may apply for an H-1B visa for a foreign national to work in the U.S. for up to three years (which can be extended), if the foreign national is being hired to perform specialized professional work and other H-1B criteria such as prevailing wage requirements are met. If employers, including employment agencies, lie to the government about the work to be performed by the immigrant, or otherwise misrepresent eligibility for the H-1B visa, they may face liability for making false claims.
Employers and employment agencies may also commit visa fraud by misrepresenting eligibility for B-1 visas, which are available only for those whose U.S. business activities are temporary, with an initial period of six months.
Examples of employment visa fraud cases with financial recoveries the U.S. include:
- Mu Sigma. Mu Sigma allegedly circumvented H-1B visa regulations by actively and unlawfully employing B-1 visitor visa holders for work in the U.S. These workers were also paid in India, at India-based wages, even while in the U.S. In addition, Mu Sigma was alleged to have required its immigrant employees to sign “bond contracts” purporting to require employees to pay up to $10,000 to Mu Sigma if their employment ended early. After a whistleblower complaint was filed under the False Claims Act, Mu Sigma agreed to pay $2.5 million to resolve claims with the U.S.
- Infosys. IT consulting company Infosys agreed in 2013 to pay $34 million to resolve an investigation initiated by a whistleblower alleging that the company unlawfully used B-1 visa holders to perform skilled work in the U.S., including work on U.S. government contracts, and circumvented H-1B visa requirements. Infosys misrepresented to the U.S. the nature of the work to be performed, and provided instructions to immigrant employees to evade detection by immigration and consular officials. More recently, in 2019, Infosys agreed to pay the State of California $800,000 in a case brought by a whistleblower under the California False Claims Act, alleging that the company had – again – misclassified employees as working on B-1 visas rather than H-1B visas.
- Globant. In 2017, the Argentinian company Sistemas Globales S.A. and its U.S. affiliate Globant LLC agreed to pay $1 million to resolve a False Claims Act case alleging that they caused foreign-national employees to apply for and obtain B-1 visas to travel into the U.S. for temporary work including training, when the true purpose of travel was to perform IT work that was not permissible on a B-1 visa.
Blowing the Whistle on Visa Fraud
Whistleblowers who come forward to disclose evidence they have of fraud in visa programs play a critical role in enforcing the law, stopping such fraud, and protecting vulnerable workers and immigrants. Without information provided by whistleblowers, such fraud may go undetected.
Almost anyone with evidence of visa fraud can be a whistleblower. You do not have to be a current or former employee of the company that engaged in the fraud or misconduct. You do not need to be an American citizen or resident. You may be a whistleblower even if you have been involved to some extent in the misconduct. Business competitors can also be whistleblowers.
Whistleblowers may be legally protected from retaliation. In addition, whistleblower submissions are usually made confidentially, and may sometimes be made anonymously.
Under the False Claims Act, the SEC Whistleblower Program, and other whistleblower programs, whistleblowers may be eligible to receive a share of funds recovered by or on behalf of the government.
The whistleblower attorneys of Constantine Cannon have extensive experience representing whistleblowers under the False Claims Acts and the SEC Whistleblower Program. If you have evidence of visa fraud, please contact us. We can advise you on the merits of your potential claim, help you decide whether to blow the whistle, and work with you to plan your next steps.
Learn more about being a whistleblower:
Tagged in: FCA Federal, Financial and Investment Fraud, Importance of Whistleblowers, International Whistleblowers, SEC Whistleblower Reward Program, Securities Fraud, Visa Fraud,
While fraud in the EB-5 program is worrying, you can reduce the risk of falling victim to fraud by performing thorough due diligence before choosing investment partners, a regional center, a project, etc. For example, you should thoroughly vet all parties involved in a project, especially those with access to funds, by checking whether they are in good standing with relevant professional associations. Fully understanding the mechanics of EB-5 investments is also crucial before making the leap. I found the advice on due diligence provided in the following article particularly helpful: