The Cornerstone Report: Volume 3, Issue 2
ICE Financial Investigation Initiative Combats Illegal Worker Employment
In July 2006, ICE launched Operation Paycheck, a national initiative designed to combat criminal schemes involving the exploitation of the financial industry by businesses to pay the wages of illegal alien workers.
ICE investigators have uncovered schemes throughout the U.S. involving the commission of financial crimes, such as money laundering, structuring funds into and out of financial institutions, and the operation of unlicensed money service businesses (MSBs) to disguise the payment of illegal alien workers.
To combat this criminal activity, ICE investigators are leveraging their combined investigative expertise in financial crimes and worksite enforcement to identify, disrupt and eliminate organizations seeking to exploit our financial industry to facilitate the employment of illegal aliens.
Red Flag Indicators
The withdrawal of large sums of cash from business bank accounts for the payment of wages.
Business bank accounts —alleged subcontractors— that make frequent high-dollar deposits by check and immediate corresponding cash withdrawals.
Checks written from one business to another for payroll expenses, where checks are cashed rather than deposited.
Checks written from one business to another for large sums that are then cashed at an MSB.
Multiple checks issued to the same payee, sequentially numbered, and under the $10,000 reporting requirement.
In most cases, many involving the construction industry in the Southeastern U.S., the employer of illegal aliens establishes shell companies that appear to operate as subcontractors of the actual employer.
The employer is then able to pay the shell company for their services, often in the form of one large check or numerous checks. The shell company (the subcontractor) then cashes the checks—frequently through a culpable MSB—and pays the illegal alien workforce in cash. Naturally, the person or persons posing as the subcontractor charge a fee for this service, as does the culpable MSB.
The employer has now successfully laundered the payroll of his illegal alien workforce.
This scheme may also involve other state and federal violations. For example, the use of a shell company and the payment of the illegal alien workers in cash allows employers to avoid withholding state, federal and Social Security taxes from employees’ paychecks, in violation of state and federal laws.
Under Operation Paycheck, approximately 48 criminal investigations have been initiated. These investigations have resulted in the seizure of over $3 million and the arrest or identification of numerous suspects.
One of the most successful Operation Paycheck investigations was of Pronto Cash, an MSB in Orlando, Fla. In this investigation ICE uncovered a conspiracy involving construction companies and an MSB involved in the payment of illegal alien workers. In the conspiracy, shell companies posing as construction subcontractors falsely claimed to have workers’ compensation insurance on their illegal workers in order to qualify for contracts.
These shell companies cashed checks for the actual employer of the illegal aliens, typically in excess of $10,000, at Pronto Cash, an MSB that used mobile check-cashing vans. Pronto Cash promoted this activity by not filing currency transaction reports (CTR) or by filing CTRs with false information.
The construction companies then paid the cash out to their illegal workers. The scheme also permitted the illegal workers to receive their wages without being required to present identification, which could have exposed their illegal status.
In October 2006, a federal grand jury returned an indictment charging the president of Pronto Cash and several employees with operating an unlicensed MSB, money laundering, avoiding or filing false CTRs, mail fraud, wire fraud and hiring illegal aliens.
ICE agents seized $2.8 million, as well as computers, records and other items of evidentiary value.