Infosys Settles With U.S. in Visa Fraud Probe

Infosys Ltd. (INFO), India’s second-largest software exporter, agreed to pay the U.S. a record $34 million in an immigration case to settle allegations the company abused a visa program intended for business travelers.

Infosys will pay $5 million to U.S. Homeland Security Investigations, $5 million to the State Department and $24 million to the U.S. Attorney’s Office for the Eastern District of Texas, according to a filing yesterday in federal court in Sherman, Texas. Infosys, which denied the government’s substantive allegations, admitted it violated record-keeping requirements, according to the filing.

Infosys committed “systemic visa fraud and abuse of immigration processes,” John Bales, the U.S. attorney for the district, said in a complaint filed yesterday with the settlement.

“We think Infosys has cleaned up their act and if they haven’t, of course, they are going to be in more trouble,” Bales said at a press conference yesterday in Plano, Texas.

David Marwell, special agent in charge of the Homeland Security Investigations office in North Texas and Oklahoma, said his unit is probing other companies for possible visa violations. He declined to name the companies, saying the investigations “are maturing.”

Requirements Circumvented

Infosys circumvented requirements of the H-1B visa program through its use of B-1 visas, the U.S. said. H-1B visas allow businesses to temporarily employ a foreign national in a “specialty occupation” to live and work in the U.S., while a B-1 visa only allows temporary entrance to the U.S. for limited business purposes, according to the complaint. B-1 visa holders are prohibited from performing skilled or unskilled labor while in the U.S.

“Infosys committed visa fraud by knowingly and unlawfully using B-1 visa holders to perform skilled labor in order to fill positions in the U.S. for employment that would otherwise be performed by U.S. citizens or require legitimate H-1B visa holders,” according to the complaint.

“There are other companies we know of that are using these same practices to be on a competitive footing and we are looking at them as well,” Marwell said in an interview.

Grand Jury

Infosys, based in Bangalore, said in an Oct. 11 regulatory filing that it received a federal grand jury subpoena seeking records related to its sponsorships for B-1 business visas and its use of them. The company and “certain” employees were targets of the investigation, according to the filing. Infosys said it was cooperating with the probe.

Infosys said at the time that it had reserved $35 million for a settlement tied to the probe and that it was engaged in talks to resolve the matter.

“Infosys denies and disputes any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse,” the company said yesterday in a statement. “The settlement removes the uncertainty of prolonged litigation and allows us to continue to focus on delivering measurable results for our clients.”

Under the accord, Infosys agreed to retain an independent auditor to review its compliance in maintaining employee records. The auditor will file reports to the U.S. attorney. Infosys’s office in Plano oversees immigration practices and procedures for the company’s U.S. operations.

Infosys was accused in a lawsuit brought by a consultant it employed of manipulating the B-1 visa program to send Indian employees to the U.S. to work on a permanent basis, according to court records.

Consultant’s Allegations

The consultant, Jack Palmer Jr., reported the allegations to federal authorities and claimed he was the victim of a retaliation campaign. U.S. District Judge Myron Thompson in Montgomery, Alabama, ruled in favor of Infosys and dismissed the case. The lawsuit didn’t involve whether the company violated U.S. immigration law, according to the decision.

Under the False Claims Act, Palmer can receive as much as 25 percent of the settlement, Bales said. The government did a lot of the work during its 2 1/2-year investigation, so that would go into the calculation of Palmer’s share, he said.

“Mr. Palmer will be amply and justly rewarded,” Bales said at the press conference yesterday.

The information-technology industry is spending about 25 percent to 30 percent more for on-site workers as H-1B visas, required for specialized workers, become more difficult to obtain, according to Ankur Rudra, a Mumbai-based analyst with Ambit Capital Pvt.

Worker Instructions

Infosys provided instructions to B-1 visa holders about how to “deceive” U.S. consular officials and Customs and Border Protection officers to secure entry into the U.S., according to the complaint.

A memorandum provided by Infosys to foreign nationals included directions such as “Do not mention activities like implementation, design & testing, consulting, etc., which sound like work,” according to the filing.

Infosys also directed foreign nationals to tell U.S. officials that their destination in the U.S. was the same as that in labor applications, even though the company knew the workers had been assigned to other locations in the U.S., the government said.

The case is U.S. v. Infosys Ltd., 13-cv-00634, U.S. District Court, Eastern District of Texas (Sherman).

Source: Bloomberg