Updated at: 06/17/2013 3:35 PM
By LARRY NEUMEISTER and TOM HAYS
(AP) NEW YORK - Nine owners and managers of 7-Eleven stores across Long Island and in Virginia were charged Monday with making tens of millions of dollars by exploiting 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 Brooklyn news conference.
"These nine defendants created a modern-day plantation system, with themselves as overseers, with the immigrant workers as subjects, living in their version of a company town," U.S. Attorney Loretta Lynch told 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 successfully arguing against bail for most defendants. Another defendant is a citizen of the Philippines. The government said the defendants pocketed tens of millions of dollars in the scheme, hiding some 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.
"This case came to light because some of these defendants, despite their lack of legal status, came forward to report the exploitation," Lynch said.
Lynch said 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.
In a statement, 7-Eleven, Inc. said it has cooperated with the investigation and will take "aggressive actions" to audit the employment status of all its franchisees’ employees. It said it was also taking steps to assume corporate operation of the stores involved in the action.
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.
The defendants appeared in court on Long Island and Norfolk, Va., facing wire fraud conspiracy, identity theft and alien harboring charges. They face up to 20 years in prison if convicted of conspiracy and other charges.
Three men arrested in Virginia were ordered held until a Thursday bail hearing.
Robert Del Col, attorney for Malik Yousaf, the general manager for 14 7-11 stores on Long Island, said his client denies the charges.
"To allege this systematic conspiracy, I don’t think it’s borne out in the documentary evidence," he said after his client pleaded not guilty and was detained after an appearance in federal court in Central Islip. "These people came in looking for jobs."
Those arrested also included a married Long Island couple who owned, co-owned or controlled a more than dozen 7-Eleven franchise stores on Long Island and Virginia. The couple bought their first franchise license in 1988. Attorney Steve Politi, who represents Bushra Baig, said his client is a 49-year-old mother. "It’s nonsense," he said of the charges against her. "I would be surprised if they can prove that she had any knowledge of enslavement. She doesn’t run anything."
Jennifer Kwiecinski, 36, who lives across the street from an Islip Terrace store that’s part of the investigation, said she’s known the "always nice" owners since she was a child.
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.
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.
Associated Press writers Frank Eltman on Long Island, Brock Vergakis in Norfolk, Va. and Candice Choi in New York contributed to this report, as well as AP video journalist Jon Gerberg.
(Copyright 2013 by The Associated Press. All Rights Reserved.)