Many H-1B-Dependent Employers Received Covid Funds

Dante’s circles of Hell revisited

By David North on November 11, 2021

Just as different kinds of sinners were destined for different circles of Hell according to Dante, some H-1B employers are worse than others, with the higher the number, the greater the sin.

Before we get into these distinctions, many created by the U.S. government, let me note that even at the highest level of H-1B evil, the same U.S. government has rewarded the worst of the lot with Covid moneys via the Paycheck Protection Program (PPP), which ended earlier this year.

In fact, one study showed that the Small Business Administration (SBA) lavished $1.8 billion on more than 2,000 H-1B-dependent employers.

Dante had nine circles of Hell, starting with the first (or outer) circle for virtuous pagans, and moving into the eighth (fraud) and the ninth (treachery). Let’s update the first eight circles for H-1B employers, using some governmental and some non-governmental distinctions, with an asterisk * indicating that the category is based on current law and regulations.

  • Circle One: Occasional users of small numbers of H-1Bs;
  • Circle Two: Steady users of small numbers of these workers;
  • Circle Three: Steady users of medium numbers of them;
  • Circle Four: Regular users of large numbers of H-1Bs;
  • Circle Five: H-1B-dependent employers, defined below*;
  • Circle Six: H-1B employers debarred from the program*;
  • Circle Seven: Employers regarded by the Labor Department as willful violators*; and
  • Circle Eight: Those hauled into federal courts on fraud charges*.

H-1B-dependent employers, appropriately, are charged higher fees by the Department of Homeland Security than those in the first four circles; there are, as we might expect in this context, three levels of the dependent ones. They are:

  1. Employer has 25 or fewer full-time employees and more than seven employees are in H-1B status;
  2. Employer has 26 to 50 full-time employees and more than 12 are in H-1B status; and
  3. Employer has more than 50 full-time employees and about 15 percent or more of total hires are H-1Bs.

The U.S. Department of Labor has a (much too small) list of employers who have handled the program so badly that they have been expelled from it for a year or two. Most on the current (October 1) list — six of them — are regarded as debarred, and two others are noted as “willful violators”, presumably worse than the debarred ones.

No one keeps a list of those employers in Circle Eight, which includes firms noted in fraud cases brought by the federal government, but we at CIS have found several H-1B employers in that category in the last year or so.

So, did the SBA, the stressed manager of the PPP, decide that employers of foreign workers or even government-identified bad actors among these employers should be scrutinized carefully? Apparently not.

We now turn to the work of Matthew Bonness, a volunteer activist with White-Collar Workers of America, whose research shows us that the SBA made $1.8 billion worth of PPP loans, many subsequently forgiven, to a grand total of 2,164 H-1B-dependent employers (those in our Circle 5).

But it's worse than that. Two of the eight on the current debarred list in Circle Six, Business Intelligence Solutions ($265,860) and Invensys ($225,700), got PPP loans and perhaps even grants. The ever-cautious Labor Department does not provide the addresses of the debarred employers, although the listing carries an “employer address” space that is left blank.

To top it all off, at least one firm, Cloudgen of Houston, Texas, which pleaded guilty to immigration fraud in a federal court (thus a member of our Circle Eight) got a $225,700 loan (perhaps forgiven). Whether the pleading was before or after the SBA decision cannot be ascertained. According to my colleague John Miano, Cloudgen would:

file documents with the Departments of Labor (DOL) and Homeland Security (DHS) containing fraudulent statements about the availability of work at third-party national employers. Cloudgen would then submit forged contracts stating each third-party company had a job for the individual Indian national. Next, based on those false documents, Cloudgen would submit paperwork to get an H-1B worker’s visa for the Indian nationals. When granted, they would use that visa to allow the Indian nationals to enter the United States.

PPP had a maximum of $10 million for an individual loan, so the really big body shops (Tata, Infosys, Cognizant, and the like) did not participate in the program, but it brought an average loan of more than $800,000 to those H-1B-dependent employers that did. All of which were rewarded despite the fact that all had expressed a preference for foreign workers over domestic ones — otherwise they would not be on the H-1B-dependent list, and thus in our Circle Five.

Trivia: Ironically, given the metaphor I have been using, the 2,164th employer, the last of the list, is Pluto Consulting Services, in my old home area of Morris County, N.J.

The author is grateful not only to Matthew Bonness, for his body of work, but also to Rodney North (my son) for additional research and to an informant who uses the name Manish Pandit for calling the whole subject to my attention.