As detailed in this article from www.itbusinessedge.com, officials of Dibon Solutions, a sponsor employer of H-1B visa workers, were recently arrested by Federal authorities for criminal charges for conspiracy to commit visa fraud and wire fraud.
The Federal indictment was filed under seal on February 20, 2013 with the U.S. District Court, Northern District of Texas, and unsealed on March 1. The indictment alleges an illegal H-1B temp- service (bodyshop) employment arrangement of the type alleged by workers represented by this blog’s attorney-authors in matters concerning other employers. That is, Dibon allegedly has a business model where they make false promises to H-1B applicants and to the Federal government- including promises that full time work will be available, and that the workers will be paid legally-required wages including required wages for nonproductive/benched time between work projects- and once the workers are hired they learn that the promised work and wages are not provided.
According to the indictment:
Contrary to the representations made by the conspirators to the workers (and the government), the conspirators paid the workers only when the conspirators placed the workers at a third-party company and only if the third-party company actually paid Dibon first for the workers’ services. Additionally, in Dibon’s visa paperwork, the conspirators falsely represented that the foreign workers had full-time positions and were paid an annual salary, as required by regulation to secure the visas.
This scheme provided the conspirators with a labor pool of inexpensive, skilled foreign workers who could be used on an “as needed” basis. The scheme was profitable because it required minimal overhead and Dibon could charge significant hourly rates for a computer consultant’s services. Accordingly, the conspirators earned a substantial profit margin when a consultant was assigned to a project and incurred few costs when a worker was without billable work.
This scheme is known as “benching.” Benching is defined by U.S. Department of Labor (DOL) as “workers who are in nonproductive status due to a decision by the employer, such as lack of work.” Dibon actively recruited H-1B workers and “benched” them.
In the blog authors’ view, this type of “benching” scam occurs with many H-1B employers across the U.S. and could be prosecuted, both in criminal and civil contexts, to a much greater extent than is currently occurring.