The Feds crack down on restaurants

This is something that the Democrats don’t want to publicize and the Republicans want to overlook: The Obama Administration has gotten very tough with employers who hire illegal workers. According to the NY Times, “Under a policy that went into effect in April 2009, the Obama administration is taking a much tougher stance on employers who hire illegal immigrants than any administration in decades. Enforcement agents have subjected businesses across the country to much greater scrutiny, using tactics that were almost nonexistent until two years ago. Federal officials said they expected to announce record numbers of investigations and fines by the end of the year. As of July 31, Immigration and Customs Enforcement, an arm of the Department of Homeland Security, had announced investigations of 2,073 businesses so far this year, outpacing the 1,461 conducted in all of 2009. “
In an article published on September 8, the NY Times reports how aggressive and disruptive the Administration’s policy of enforcement has become:
Immigration Crackdown Steps Into the Kitchen
By Sarah Kershaw
The New York Times, September 8, 2010
For a man facing the possibility of up to 30 years in prison, almost $4 million in fines and the government seizure of his small French restaurant here, Michel Malecot has an unusually jovial and serene air.
During lunch recently, he walked around the French Gourmet, his 45-seat restaurant, bakery and catering company in the city’s Pacific Beach neighborhood, hugging his regular customers and planting a kiss on each cheek, before meandering back into the sprawling kitchen to make himself a herring baguette with butter.
‘Serve this with warm potatoes,’ Mr. Malecot said, ‘and c’est bon.’
An immigrant from the South of France, he came here in 1972, settling in San Diego because he said the climate reminded him of home. And now it is the knotty issue of immigration that has made him a local cause célèbre, thrust him into one of the nation’s most contentious debates, jeopardized his future and sent a current of fear through the $550-billion-plus restaurant industry.
In April, Mr. Malecot, 58, was indicted by a federal grand jury on charges of illegally hiring 12 undocumented immigrants and, in what prosecutors portray as a brazen deception, continuing to employ them after learning that they were in the country illegally. He pleaded not guilty. Now, if convicted, he faces the possibility of forfeiture of the restaurant building, along with an adjacent rental property, Froggy’s Bar. Legal experts say it would be an exceptionally stiff punishment, but one that could be a sign of things to come for an industry that is one of the nation’s largest employers of immigrants.
‘They’re using a body of law intended for drug dealers and money launderers and going after an iconic bakery and philanthropic business,’ said Jot Condie, the president of the California Restaurant Association, which has 22,000 members. ‘If their strategy is to get the attention of the industry, mission accomplished.’

Under a policy that went into effect in April 2009, the Obama administration is taking a much tougher stance on employers who hire illegal immigrants than any administration in decades. Enforcement agents have subjected businesses across the country to much greater scrutiny, using tactics that were almost nonexistent until two years ago. Federal officials said they expected to announce record numbers of investigations and fines by the end of the year. As of July 31, Immigration and Customs Enforcement, an arm of the Department of Homeland Security, had announced investigations of 2,073 businesses so far this year, outpacing the 1,461 conducted in all of 2009.
Restaurants are not the only businesses to fall under the searchlight. But until recently, immigration enforcement had been notoriously lax, with a kind of universal wink at kitchens filled with employees working either off the books or with false documents, government officials and industry experts say.
But that is quickly changing, based on the rising number of investigations and the penalties being sought against restaurateurs.
In June, the owner of two Maryland restaurants who pleaded guilty to hiring and harboring illegal immigrants was ordered to forfeit to the government more than $700,000 in assets — in addition to his motorcycle — and faces up to 10 years in prison. In November, a restaurateur in Mississippi who had pleaded guilty to hiring illegal immigrants was sentenced to a year in prison and a year of supervised release. Combined fines in the case, shared among several defendants, amount to $600,000.
Out of a total of about 12.7 million workers in the restaurant industry, an estimated 1.4 million — both legal and illegal immigrants — are foreign born, according to the Bureau of Labor Statistics. According to 2008 estimates from the Pew Hispanic Center, about 20 percent of the nearly 2.6 million chefs, head cooks and cooks are illegal immigrants. Among the 360,000 dishwashers, 28 percent are undocumented, according to the estimates.
Those numbers sounded low to a Manhattan chef and restaurateur who spoke on the condition of anonymity because he does not want to draw attention to his TriBeCa restaurant.
‘We always, always hire the undocumented workers,’ he said. ‘It’s not just me, it’s everybody in the industry. First, they are willing to do the work. Second, they are willing to learn. Third, they are not paid as well. It’s an economic decision. It’s less expensive to hire an undocumented person.’
While many restaurants do comply with the law, according to government officials, labor economists say immigrants are highly appealing hires because they tend to be especially loyal, stable and dependable. They are also more likely than United States citizens to work for lower wages without health insurance, sick days or paid vacations and paid breaks.
Of nine major chefs and restaurateurs asked about the government’s intensified focus on employers of immigrants — Wolfgang Puck, Stephen P. Hanson, Stephen Starr, Jeffrey Chodorow, Danny Meyer, Daniel Boulud, Rick Bayless, Rich Melman and Nick Valenti — only Mr. Valenti’s company, the Patina Restaurant Group, would comment.
In a written statement, the company said: ‘Patina Restaurant Group does periodically bring in employees from other countries following all Federal Immigration laws. This is a small percentage of our workforce, for which we utilize the programs provided by the department of U.S. Citizenship and Immigration Services, allowing us to bring in chefs and management talent from abroad, along with international students to expand their knowledge with hands on training.’
The TriBeCa restaurateur, who said he had been working in the business for more than two decades, said that about one-fourth of his employees are illegal immigrants, mostly from Mexico, Africa and South America. He said that those who provide him with Social Security numbers are paid by check. Others receive cash, which allows restaurant owners to avoid paying taxes. He insisted that he did not pay anyone less than the federal minimum wage of $7.25 an hour.
‘If they give me a Social Security number, I don’t ask questions,’ he said. ‘That’s what people do.’
If immigration laws are fully enforced in the restaurant business, ‘At the end of the day, the customer is going to end up paying for it,’ he said. ‘We’ll have to pay higher wages, more taxes and then we will have to charge more. The economy is not that great, so you charge more, you have fewer customers and more people going out of business.’
Barbara Coe, founder and president of the California Coalition for Immigration Reform, which advocates limiting immigration, said she has little sympathy for restaurants that hire illegal workers.
‘Any restaurant that chooses to hire them deserves to go bankrupt,’ she said. ‘They are padding their pockets by breaking the law.’
Some advocates for immigrants agree.
‘We don’t think a restaurant should exist if it doesn’t pay legal wages,’ said Ted Smukler, public policy director of Interfaith Worker Justice, a workers’ rights group. ‘New immigrants are deathly afraid of complaining, and that makes them appealing workers for unscrupulous employers.’
At the French Gourmet, the government says that in addition to Mr. Malecot, Richard Kauffmann, a manager and pastry chef, was deeply involved in what it calls a conspiracy. Mr. Kauffmann faces similar charges, prison time and fines, and has pleaded not guilty.
Mr. Malecot opened the French Gourmet, which now has about 120 full- and part-time employees, in 1979. He married an American woman and became a United States citizen in 1985.
He is one of the city’s top caterers, having won a slew of local and state awards for the business. Its wedding cakes have been listed as a ‘Best of Weddings’ pick on for several years.
But the business, whose motto is ‘It’s a Delicious Day at the French Gourmet!’, drew a less welcome brand of attention after Mr. Malecot catered a benefit free of charge for a veteran returning from the Iraq war in 2006. According to Mr. Malecot’s lawyer, Eugene Iredale, the small dinner was held at an Air Force base, where heightened security measures and identity checks led to the discovery that one of the French Gourmet’s employees, an Algerian immigrant, was working illegally. From then on, the authorities were watching.
According to the indictment, the business had already received what are known as ‘no match’ letters from the Social Security Administration, saying that the Social Security numbers used by some employees were not valid. Those letters instruct employers not to take any action against the workers, but instead to resubmit valid numbers.
The indictment contends that Mr. Malecot then started paying those employees in cash, before Mr. Kauffmann and others submitted new Social Security numbers that they falsely certified as genuine. And the government says the French Gourmet went to great lengths to deceive the authorities — leading to felony charges of harboring immigrants, or concealing their illegal status.
On May 15, 2008, the streets around the French Gourmet were shut down as about a dozen armed agents stormed into the restaurant. They arrested 12 workers, dug through papers and carted away hard drives from the office.
(Mr. Malecot was in France at the time of the raid, and charges were not filed against him until last February. He surrendered in court, without being arrested, and was released on $150,000 bail.)
Mr. Malecot’s case points up one of the complexities of hiring immigrants: A federal law requires businesses to submit worker documents that ‘on their face reasonably appear to be genuine,’ the law says. But fake papers are easily obtained by immigrants. To avoid being tripped up by paperwork that looks real, employers say that they are forced into the role of policing immigrants.
Government agencies now recommend that employers hire an auditing firm or train personnel to detect fraudulent documents. A growing number of states now require employers to use E-verify, a government-run online system that instantly determines the eligibility of job applicants to work in the United States. Even in states where the system is not required, industry experts said, more restaurants are using the system. The French Gourmet is now among them.
Critics, however, say that the data in the system can be wrong and that some people who are eligible to work are being turned away.
The National Restaurant Association is lobbying a deadlocked Congress for changes in immigration laws, including policies that would make it easier for undocumented workers to gain legal status.
Mr. Malecot, who spoke freely in an interview at the restaurant, said he believed that he had filed all the proper employment paperwork for the arrested employees. Those workers are now witnesses in the case against him, according to Mr. Iredale.
‘Maybe you just look at this as destiny,’ Mr. Malecot said. ‘I came here with nothing. I guess it’s all a game. But it’s definitely a blow, and it’s frustrating.’
Mr. Malecot is an active philanthropist in San Diego, contributing to causes including Alzheimer’s and cancer research and education to help victims of torture. His employees describe him as a father figure who has paid for their dental work and babysitting, charters a fishing boat for the annual company party and provides every employee with a week’s paid vacation, extremely rare in restaurants.
Because of his financial troubles as a result of the case, he said, he can no longer afford some of these perks. The next court date is Nov. 29.
‘He’s very generous,’ Asunción Gallardo, a Mexican immigrant who has cooked at the restaurant for 16 years, said in Spanish, out of earshot of Mr. Malecot. ‘It’s like we’re all a family. We eat — he gives us three meals a day and food to go. And then he gives out food for the poor.’
Since the indictment, Mr. Malecot said, he has lost at least $500,000 in catering jobs. Catering accounts for about 70 percent of the French Gourmet’s revenues, which so far this year amount to roughly $4.5 million, Mr. Malecot said.
But longtime customers have been dining there more often to show their support, he said.
One of them, Pat Hyndman, has been eating at the French Gourmet for 10 years and said: ‘My immediate reaction is this is a bunch of government nonsense. He’s the most respected caterer in town. But then I realized this is much bigger than Michel.’

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