June 10, 2008

Illegal Pay Schemes: Operation Paycheck

Fact Sheet

U.S. Immigration and Customs Enforcement (ICE) is the largest investigative agency in the Department of Homeland Security. ICE is charged with enforcing a wide array of customs and immigration laws through investigations that target the people, money and materials that support terrorists and other criminal activities.

In recent years, ICE investigations have uncovered various schemes by which employers and businesses pay their illegal employees; to include the utilization of complicit Money Services Businesses (MSBs), the establishment and utilization of shell corporations, structuring transactions to evade reporting requirements and failing to file Currency Transaction Reports (CTRs).

Operation Paycheck

To combat this threat, the Office of Investigations (OI) launched Operation Paycheck, an enforcement initiative that leverages ICE’s 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.

ICE investigations have identified various schemes used by employers to pay illegal alien workers. These schemes enable the employment of illegal aliens and further criminal activity such as human smuggling and trafficking. Two of the most common schemes identified through these investigations include the use of shell corporations and mobile check cashing vans.

Each of these schemes involves conspiracies with MSBs in direct violation of Section 1960 of Title 18, Prohibition of Unlicensed Money Transmitting Businesses. Section 373 of the USA PATRIOT Act modified Section 1960 of Title 18, by broadening the statute to make it a federal crime for a person to be involved in the transportation or transmission of funds that are known to have been derived from or is intended to be used for criminal activity.

The use of Section 1960 of Title 18 to prosecute MSBs conspiring with companies for the purpose of paying illegal alien workers is a significant tool to be used in furtherance of ICE’s worksite enforcement and financial investigative programs. The aggressive investigation of violations of this statute is also an excellent investigative resource that can lead to the identification of additional financial and immigration criminal violations, such as money laundering, document fraud, and conspiracy to smuggle, transport and harbor illegal aliens.

Pronto Cash

One of the most successful Operation Paycheck activities was an investigation of “Pronto Cash” in Orlando, Fla.

In this investigation, ICE uncovered a conspiracy involving construction companies and a money service business involved in the payment of illegal alien workers. In the conspiracy, “shell companies” posing as construction subcontractors, falsely claimed to have worker’s compensation insurance on their illegal alien employees in order to qualify for contracts. The shell companies used MSB Pronto Cash to cash checks for the actual employer of the illegal aliens, typically in excess of $10 thousand each.

In furtherance of this activity, Pronto Cash failed to file CTRs or filed CTRs with false information. The construction companies then paid the cash out to their illegal alien employees. The scheme also permitted the illegal alien employees to receive their wages without being required to present identification, which could expose their illegal status.

In October of 2006, a federal grand jury returned an indictment charging the president of Pronto Cash and several employees with operating an unlicensed money service business, money laundering, avoiding or filing false CTRs, mail fraud, wire fraud and hiring illegal aliens. Additionally, ICE agents served search and seizure warrants on Pronto Cash businesses and bank accounts throughout Florida. Those warrants resulted in the seizure of over $3.8 million as well as computers, records and other items of evidentiary value.

The owner and president of Pronto Cash was arrested by ICE agents and subsequently pled guilty in the Middle District of Florida to conspiracy to commit money laundering in violation of Section 1956 (h) of Title 18.

Operation Paycheck Results to Date

To date, Operation Paycheck investigations have resulted in the seizure of over $10 million in cash, monetary instruments and miscellaneous property, 157 administrative arrests, 59 criminal arrests, 63 indictments and 33 convictions.*

*Statistics as of April 2008

Red Flag Indicators

• The withdrawal of large sums of cash from business bank accounts for the payment of wages
• Business bank accounts, alleged to belong to sub-contractors, where frequent high-value check deposits are made with immediate corresponding cash withdrawals
• Checks written from one business to another for payroll expenses, where checks are cashed instead of 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 thousand reporting requirement

U.S. Immigration and Customs Enforcement (ICE) was established in March 2003 as the largest investigative arm of the Department of Homeland Security. ICE is comprised of five integrated divisions that form a 21st century law enforcement agency with broad responsibilities for a number of key homeland security priorities.

  Last Modified: