U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) is the largest investigative agency in the Department of Homeland Security. HSI 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, HSI has uncovered various schemes by which employers and businesses pay their illegal employees. These schemes include the using complicit money services businesses, establishing and utilizing shell corporations, structuring transactions to evade reporting requirements and failing to file currency transaction reports.
To combat this threat, HSI launched Operation Paycheck, an enforcement initiative that leverages HSI’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.
HSI has 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 money services businesses in direct violation of Section 1960 of Title 18, Prohibition of Unlicensed Money Transmitting Businesses (18 USC § 1960). 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 18 USC § 1960 to prosecute money services businesses that conspire with companies for the purpose of paying illegal alien workers is a significant tool to be used in furtherance of HSI’s worksite enforcement and financial investigative programs. Aggressively investigating violations of this statute 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.
One of the most successful Operation Paycheck activities was an investigation of Pronto Cash in Orlando, Fla.
In this investigation, HSI 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 workers’ compensation insurance on their illegal alien employees in order to qualify for contracts. The shell companies used Pronto Cash, a money services business, to cash checks for the actual employer of the illegal aliens, typically in excess of $10,000 each.
In furtherance of this activity, Pronto Cash failed to file currency transaction reports or filed currency transaction reports 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 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 currency transaction reports, mail fraud, wire fraud and hiring illegal aliens. Additionally, HSI agents served search and seizure warrants on Pronto Cash businesses and bank accounts throughout Florida. Those warrants resulted in the seizure of more than $3.8 million, as well as computers, records and other items of evidentiary value.
The owner and president of Pronto Cash was arrested by HSI agents and subsequently pleaded guilty in the Middle District of Florida to conspiracy to commit money laundering in violation of Section 1956 (h) of Title 18.
Red Flag Indicators identified through HSI investigations:
- The withdrawal of large sums of cash from business bank accounts for the payment of wages.
- Business bank accounts, alleged to belong to subcontractors, 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 a money services business.
- Multiple checks issued to the same payee, sequentially numbered, and under the $10,000 reporting requirement.