Eleven owners or managers of 7-Eleven convenience stores on Long Island and in Virginia exploited workers living here illegally by forcing them to work long hours and confiscating their pay in a scheme that took in over $180 million, federal prosecutors said Monday.
The arrests were part of an ongoing national investigation into the chain's employment practices, according to prosecutors.
Several hundred agents of U.S. Immigration and Customs Enforcement took part in the dawn raids mainly in Suffolk County on Long Island, as well as several states nationally, officials said. The national raids were done to sample how widespread the scheme might be, officials said.
The government is planning to seize the franchise rights to the stores, claiming their profits are the result of an illegal enterprise.
Officials said that the 14 targeted stores on Long Island and in Virginia allegedly forced employees to work as much as a 100 hours a week, which would have produced pay of around $2,000. But the accused allegedly submitted documentation for just 25-30 hours and then gave the worker between $300 and $500. The employees were ordered to live in housing owned by the operators and required to pay their rent in cash.
Those arrested were mainly of Pakistani or Filipino origin, and were naturalized citizens. The alleged victims, prosecutors said, also were mainly of Pakistani or Filipino origin, and were living in the country illegally, officials said.
"hese defendants ruthlessly exploited their immigrant employees . . . in effect creating a modern-day plantation system," said Loretta Lynch, U.S. attorney for the Eastern District, at a news conference in Brooklyn, adding that the defendants "dispensed wire fraud and identity theft, along with Slurpees and hot dogs."
The accused were able to exploit the workers because of the way pay is distributed at many 7-Eleven stores, officials said.
Though most stores are independent franchises, payroll bookkeeping is centralized at the national headquarters in Dallas, prosecutors said. The accused allegedly stole the identities of actual people and used them to submit workers' salary claims.
When checks in fictitious names were returned to the stores, operators would cash the checks, and pay the workers only a fraction of what they were owed, officials said.
James Hayes, who heads the New York office of ICE, was highly critical of the chain's national management, saying: "They made little or no effort to ensure the integrity of their payroll system, allowing the same Social Security Number to be used for multiple employees."
Investigators are not clear yet as to how the accused and employees came into contact, according to sources. It is not certain whether they were recruited in their native county and lured to the United States under false pretenses or already were in the county and recruited, the sources said.
In a statement, a spokesman for 7-Eleven said, "7-Eleven Inc. has cooperated with the government's investigation. All of our franchise owners must operate their stores in accordance with laws and the 7-Eleven franchise agreement."
The statement continued, "7-Eleven, Inc. will take aggressive actions to audit the employment status of all its franchisees' employees."
All but two of the defendants on Long Island were held without bail, after Assistant U.S. attorney Christopher Ott argued in court papers that they were flight risks because they had millions in resources and expertise with identity theft.
Two of those held without bail, Farrukh Baig, 57, and his wife, Bushra, 49, were said by officials to control 12 of the convenience stores on Long Island and in Virginia raided by agents Monday.
They, along with the other lead defendants, were charged with harboring illegal aliens for financial gain, fraud and identity theft. They pleaded not guilty at arraignment before U.S. District Judge Sandra Feuerstein.
Farrukh Baig's attorney, Karen Svendsen, of Bay Shore, said her client has "conducted himself as a business owner in the finest sense of the word . . . an outstanding model citizen in our community for 33 years."
Bushra Baig's attorney, Steve Politi, of Central Islip, said his client was essentially a housewife who had little role in the family business.
If convicted, they, and other defendants, could face up to 14 years in prison under federal sentencing guidelines.
Of the people charged in the case locally, only one has not been apprehended, officials said. He was identified as Azhar Zia, 49, of Great River, who was said to control two local 7-Elevens, according to officials. Zia is believed to have been traveling abroad, according to sources.
While workers without immigration documents may be picked up for questioning by agents on Long Island and elsewhere, no criminal arrests are planned against them, except for possibly being in the country illegally, officials said.
Most 7-Eleven stores are not owned by the Dallas-based corporation, but are franchises, as were those involved in the case.
With Víctor Manuel Ramos and John Riley