Executives indicted for tax evasion re: illegal employees

A new strategy to attack employer use of illegal workers has emerged: indicting corporate executives for tax evasion when they pay their employees off the books. We already know about failing to buy workers compensation insurance. This tax evasion attack will I expect be a potent tool against the medium to large sized employer. About half of illegal workers are estimated to be paid in cash without tax or social security payments being made.
The Wall Street Journal carried a story on 2/23 about indictments against a cleaning and maintenance company with commercial customers throughout the U.S. (“Homeland Security Strategy Hits Executives, Illegal Workers”). Per the article “ Pressing ahead with its new strategy to ‘attack the economic engine’ that fuels most illegal migration into the U.S., Homeland Security agents arrested three top executives of a national cleaning service for allegedly employing illegal immigrants and defrauding the government. The sweep also netted nearly 200 employees believed to be illegal immigrants.”
Nevada-based Rosenbaum-Cunningham International Inc., or RCI, provided cleaning and maintenance services to popular hospitality venues and restaurants like Hard Rock Cafe, ESPN Zone and House of Blues, taking in more than $54.3 million between 2001 and 2005, Homeland Security officials said yesterday .
According to a 23-count indictment unsealed yesterday, the company knowingly hired illegal immigrants, intentionally failed to withhold taxes and created shell accounts to line the pockets of top executives. RCI co-owners Richard M. Rosenbaum and Edward Scott Cunningham and firm controller Christina Flocken face criminal fraud, immigration and tax charges.
More from the article…


Another 195 people working for RCI as cleaners were arrested on illegal-immigration charges in raids in 17 states and Washington, D.C. A message on an answering machine for RCI in Florida said it had ceased operations as of yesterday. The government said its investigation was ongoing.
U.S. Immigration and Customs Enforcement, part of the Department of Homeland Security, began the investigation 20 months ago over concerns about cleaning crews at the Grand Traverse Resort in northwestern Michigan.
Earlier this month, Homeland Security Secretary Michael Chertoff promised that there would be more work-site enforcement arrests and promised to bring high-impact criminal cases against employers who systematically violate immigration laws.
He said that in 2006, DHS set a new record, in terms of work-site enforcement cases, with 716 criminal arrests and more than 3,600 administrative apprehensions. That was a 700% increase since 2002, before the department was created.

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