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IFCO Senior Managers Indicted For Immigrant Worker Conspiracy
IFCO Indictments: Two senior company managers were indicted as the probe into IFCO’s hiring of illegal aliens continues. Learn what makes this much more than just a simple case of hiring workers with fraudulent IDs.

By Chaille Brindley
Date Posted: 4/1/2008

   Bad news on the immigration front continues for IFCO Systems North America, the country’s largest pallet recycler. Five managers were recently indicted for conspiring to harbor and transport illegal immigrants from 2004 to 2006. The latest indictments came almost a year after a number of former managers pled guilty to charges related to hiring illegal immigrants. Beyond simply hiring illegal aliens, the U.S. government maintains that IFCO managers set up an elaborate infrastructure to forge documents, recruit, house, transport and provide services for non-authorized workers. 

   The new charges were based largely on email correspondence between previously convicted managers and their superiors. Government prosecutors continue to work their way through the management of the company and have vowed not to stop until they reach all levels involved in the illegal activity.

   Two senior IFCO managers were indicted, Charles Davidson of San Antonio, who was IFCO North America’s director of new market development, and Wendy Mudra of Tampa, human resources manager. Others recently indicted include: managers William Hoskins of Cincinnati and Bryan Bailey of Nashville, and foreman Tomas Soto Castillo of Cincinnati. The charges carry prison terms of up to 15 years and fines of $250,000.

   Since the initial raids in April 2006 caused the company to lose much of its workforce, IFCO has mostly recovered according to its latest public financial reports. It is not clear if the latest criminal indictments will cause further harm to the recycling giant. A lot of that may depend on whether or not the government can prove the criminal conduct extends beyond those indicted to this point. If the government could indict the top company officials, the entire corporation could be implicated. In the past, criminal conduct by top officials brought down much bigger companies, such as Enron, WorldCom and Arthur Anderson. One twist to those scenarios is that IFCO managers are accused of crimes that were considered commonplace in some industries before ICE began its crack down in 2006.

   Two years ago the pallet industry was stunned when agents of U.S. Immigration and Customs Enforcement (ICE) conducted raids against IFCO Systems of North America. The raids resulted in 1,187 foreigners being arrested at IFCO facilities in 26 states. The big surprise was not that there are illegal immigrants working in the pallet industry. It was that the government was actually prepared to do something about it and was going to increase enforcement activities. IFCO raids elevated concerns about the presence of illegal immigrants working in the pallet industry and the need to revisit new hire documentation practices.

   IFCO recently stated, “IFCO did not set out as a matter of corporate strategy to hire undocumented workers or to exploit any of our employees. We deny, without equivocation, any allegations or suggestions to the contrary. The government’s allegations regarding certain events that occurred with these individual employees were not part of any company-wide plan, scheme or practice to violate United States immigration law.”

   Over the past 22 months, IFCO has taken a number of steps to correct the problem. This includes standardizing new hire procedures, enrolling in the government’s online screening program, hiring a vice president for corporate compliance and investing in immigration compliance software.

    Court documents indicate that IFCO managers established an elaborate system to handle staffing concerns and employee needs as new plants were added. The indictment stated that if Hispanic laborers could not be found in the nearby communities, conspirator IFCO managers moved Hispanic alien laborers from outside the area to staff the new plants. These new plants were started in Albany, N.Y.; Detroit, Mich.; Rittman, Ohio; Portland, Ore.; St. Louis, Mo.; Boston, Mass.; and Salt Lake City, Utah. According to ICE, nearly all the pallet workers and foremen at the new IFCO plants encountered during the raids were illegal aliens.

   Assistant U.S. Attorney Tina Sciocchetti, said, “Clearly, our position is that the managers either knew or recklessly disregarded facts that they had employed illegal aliens.”

   The indictments allege that IFCO managers did not require proper documentation for new hires and even falsified I-9 forms. Additionally, they are accused of providing housing, transporting, offering financial/banking assistance, giving money for living expenses, submitting inflated tax exemptions on W-4 forms, and fronting money for illegal documents to assist illegal aliens in obtaining work at IFCO facilities.

   Sciocchetti said, “In this case, it was certainly more than just hiring illegal aliens.”

   Government prosecutors contend that some IFCO managers reprimanded staff that raised concerns about the quality of documents presented by immigrant Hispanic workers.

   Court documents indicate that IFCO senior managers denied a request in 2005 by a payroll manager to check employee data with Social Security records. The stated reason was that “it would result in the loss of half of the company’s workforce.”

   The above statement indicates that upper managers may have known or at least should have suspected that something was wrong with the high number of mismatches identified by the SSA. IFCO senior managers contend the opposite. Official company statements have pointed blame at the complexity of U.S. immigration law as well as claiming that senior managers were kept in the dark about activity by middle managers.

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