H-2A Kingpin Stumbles on H-2B

Has Obama Gone Bulworth on Alien Smuggling? Part 2

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It reported the news exactly three weeks after the fact and one week after we wrote our long analysis of the case. The Washington Post, though, has finally broken the national silence on the federal indictment of the man who has perhaps done more than any one person to change the ethnic makeup of this country over the past quarter century. Slave ships brought Africans to work in America’s plantations in the 18^th and 19^th centuries; Stan Eury brought Mexicans—and is still bringing Mexicans—for what some call the “Modern Day Slavery” of the “new American plantation.”

The alien smuggling dimension is absent, the story was written not by a Post reporter but by a free lancer in Winston-Salem, and it’s somewhat buried away on page A-16, but it does contain some important new information. The person identified only with the initials “S.P.” in the indictment and who is the source of many of the incriminating allegations against Eury and his daughter, Sarah Elizabeth Farrell, is identified by The Post as one Stanley Porter. Porter, The Post reveals, has already been convicted of visa fraud and sentenced to a year in prison and a $100,000 fine and is cooperating with authorities. This is all very bad news, indeed, for Eury and Farrell. Similar to the typical federal drug conspiracy case, Porter is the little fish that is being used to help the Feds land the much bigger fish. But often in those cases the little fish, for pleading guilty and cooperating, gets a lighter sentence than what Porter received. It really looks like Eury and his daughter are looking at some serious prison time if convicted. Forty of the visa-fraud charges are against Farrell and only one is against Eury, The Post reminds us, but each count carries as much as a 10-year prison sentence.

Further indications that something very unusual is happening here and that someone, if not the President himself, has “gone Bulworth” and is actually doing the right thing for once is provided by this passage from The Post:

Criminal prosecutions for H-2B violations are rare, said Jennifer Rosenbaum, the legal director for the National Guestworker Alliance, based in New Orleans. But she said that abuse of the program is common, with employers asking for more workers than they need and requesting the workers for periods far past when there is no longer any work for them to do. Both actions inflate the size of the labor pool and reduce workers’ ability to advocate for better pay and working conditions, she said.

Being moved to different employers is common as well, Rosenbaum said. This underscores the imbalance in the employee-employer relationship, she said, as guest workers cannot go in search of jobs on their own. Employees in the H-2B program, unlike H-2A workers, are not provided housing, reducing an employer’s costs and the incentive to provide sufficient hours for all workers, Rosenbaum said.

“This case takes a comprehensive look at how companies are gaming the system to disadvantage U.S. and foreign workers as well as companies that play by the rules,” she said.

Rosenbaum describes the sort of thing that we noted in the previous article that Eury himself had been doing for years with the H-2A program, and on a much larger scale than in the case of the current indictment. We suggested that the focus upon his H-2B scams might be simply tactical on the part of the Feds. A more cynical explanation, though, could be in order, and it has to do with the distinctive limitations on the two programs. A national cap limits H-2B; H-2A is limited by the ability of employers to provide housing. H-2B pits labor contractors against one another. Stanley Porter set up the Winterscapes company, apparently at Eury’s instigation, to get into the country as many H-2B workers as possible early in the federal fiscal year before the cap limited him. In doing so, he made it more difficult for other users of H-2B to beat the cap. Could it be that Eury finally went too far and had begun stepping on the toes of people with even more influence than he had?

Could the offended party have been, say, a national landscaping business that uses a number of H-2B workers and is big enough that it would not need to contract with a middleman like Eury to get its workers from Mexico? It and similar national companies whether they be in landscaping or perhaps the hotel business would not be very pleased to discover that when they tried to get their H-2B workers, the cap had already been reached, partly because of Eury’s dodges.

Notice that the charges primarily date back to activities in 2008. Federal investigators about that time interviewed my contacts in North Carolina’s Employment Security Commission. One gets the impression that this case has been tied up rather neatly for quite some time but had not been allowed to go forward until something tipped the balance against Eury. The general media silence about the indictment, though, particularly in North Carolina, suggests that the balance of power still hasn’t been tipped completely.

Business as Usual

We can get a better appreciation of what a curious—and possibly momentous—turn of events the big indictment of Eury and daughter is by having a look at David Seminara’s “Dirty Work: In-Sourcing American Jobs with H-2B Workers.” The date on the current online version is January 2010, but there is a note saying that this is only an update of an earlier version. What is being described has been going on for quite a long time. Below is a selection of Seminara’s salient points:

Despite credible allegations and even convictions for fraud and abuse of both H-2B workers and the program in general, neither the Department of Labor (DOL) nor the Department of Homeland Security (DHS) has ever barred a U.S. company from filing H-2B petitions. Some repeat offenders continue to have their petitions approved to this day. 


Industries that are particularly heavy users of the H-2B program include landscaping, forestry, hotels and restaurants, amusement parks and leisure facilities, and seafood processors.




Employers value H-2B workers because their legal status in the United States is tied to their employment and because they often have extended families in their home countries depending on their wages, making them loyal and motivated workers. Racial discrimination may also induce U.S. employers to petition for H-2B workers rather than employ black American workers. 


Hourly compensation for U.S. workers has stagnated since the H-2B program began to expand in 2002, and economists have found no evidence of a labor shortage in the occupational groups that constitute the bulk of H-2B employment. 


H-2B employers are required to advertise job vacancies prior to opening them up to H-2B guestworkers, but the ads more frequently resemble legal notices than real enticements and are often specifically designed to attract as little attention as possible.

In sum, what Eury and daughter have been indicted and face serious jail time for, albeit illegal, sounds pretty much like business as usual in the world of H-2Bs. Another Seminara “Key Point” nails it home:

Many of the businesses filing H-2B petitions for foreign workers are “body shops” that have no actual “seasonal or temporary” need for labor. Body shops can petition for large numbers of workers and then essentially sell them off to companies that either could not get their own H-2B workers or did not know how to do so. Given the fact that H-2B has an annual numerical cap, critics of body shops argue that they “hoard” workers and then drive up the price for everyone else.

Even worse, as we have noted, they could cause some big companies that had been counting on H-2B workers to be frozen out completely because the quota was reached prematurely because of the fraudulent techniques of the “body shops.”

So what big companies might Stan Eury have run afoul of? At the top of the list of the major H-2B users in Seminara’s Table 3 is the national landscaping company, The Brickman Group. Brickman also heads up the list of H-2B users who contribute to Senator Barbara Mikulski of Maryland, as we see in Table 5. Mikulski, like Brickman, is a big advocate of the H-2B program. With friends like the “liberal” Democrat, Mikulski, American labor hardly needs enemies.

Here is a verbatim online complaint by one of Brickman’s competitors. I’m leaving out the “sics.”

"Just wanted to share my wonderful day. I found out today that the brickman group came in and took $185,000.00 of our commercial maintenance contracts this week. Some how they promised 3 of Buckinghams apartment complexes like 14grand worth of spring flowers and about 10k worth of mulch for free and cut throat prices on snow removal. Idk how they do this but i hope it {expletive}ing runs tem inthe ground. I hope people quit buying their stock. And I hope every dam one of their horror stories ive heard from their customers is true and that they do the same with buckingham. 

So were about a month away from the mowing season and we went from 6 days of mowing with 5 guys on the crew down to about 2 days. And we just bought 2 new mowers. Spent all day on the phone and drove all over gods creation trying to get some contracts signed and everybody is already {expletive}ing signed. "

Seminara’s entire article is well worth reading for anyone who may have bought the notion that we really need this H-2B guest worker program to bring in people for jobs that Americans won’t do. Seminara also addresses the alien smuggling angle in his section “Guestworker or Intending Immigrant?” The key passage—much understated—is this one: “Sadly, we have no way of quantifying how significant the H-2B overstay problem is because DHS still has no reliable entry/exit tracking system. Anecdotal evidence, however, indicates that the H-2B overstay problem is significant…”

Justice, or Muscle?

We are reminded by the following account from a contact who used to be in the landscaping business in the Washington, DC, area, that the federal government may have a lot of rules and regulations, but what’s on paper and the reality of the situation might well be very different things:

When I started my landscape maintenance company in the early 1980s I also had considered janitorial service too.  Being near Washington and always hearing about government contracts I decided to try to secure a maintenance contract with the federal government.

There was a lot of information on how to do business with the government and agencies sent me packets of information on how to proceed.  I read all the instructions and eventually attended a pre-bid conference for a job.  There were about a dozen other contractors present and everyone was given a packet with instructions.

Everything that was expected was listed in detail.  Every service to be provided was written like a military manual with how many times per day, week, or month, the service was to be done.   One thing I never encounter working in the private sector was that the hourly wages of workers was established by the government.  They called it "the prevailing wage" for the Washington area.  And they told us what it was.  I do not remember the exact numbers but the minimum wage may have been $5.75 and the bid packet stated we must pay a "prevailing wage" that may have been set at $9.75.

It made it easy to figure out the bid price because one only had to do the math.  Everything was spelled out, how many hours and how many people and what was to be done.  They left one line blank for your profit, but suggested you add in 10-20%.

One thing in the bid packet I found disturbing.  There was a paragraph that stated if for any reason my company was unable to perform the agreement or if my company service was cancelled by the government for failure to perform the service I agreed that the government could secure another contractor to complete the job AND I WOULD HAVE TO PAY THAT CONTRACTOR for their service.

When I read that I thought I'd better bid enough to do this job or I could be in trouble.    

When the day came to open the bids I was surprised at how low the winning bid was since I had studied the numbers.   I could not understand how the hours and workers and prevailing wages mandated by the contract could be paid with such a low bid.  

I asked the government official after the meeting how this low bid could pay the wages mandated.  He glared at me and asked if I was accusing someone of illegal activity, with a how-dare-you attitude.  He added that if I knew of anyone underpaying workers I should take my case to the Department of Labor.

I left for the private sector and never tried for another government contract.

The Justice Department is supposed to enforce the laws that govern the H-2B program, but as we have seen, they haven’t been enforcing them all that vigorously up to now. One really has to wonder if Stan Eury might have stepped on the toes of someone like that outrageously low bidder for the big federal janitorial contract.

Legal H-2B Use Still Harms U.S. Workers and Employers

Returning to the Seminara article, we are not surprised to learn that large companies are much more likely to avail themselves of H-2B workers than small companies are. The companies that compete with them using American labor are put at a disadvantage in more ways than we might have imagined. We see from Table 3 that in FY 2008 Brickman’s wage for H-2B landscapers ranged from $6.65 to $9.68 an hour. We can easily understand that competing with a company with such low labor costs would be quite difficult, but there’s more to it than that. Here, once again, are the words of the former owner of a small landscape company who competed with Brickman in Maryland:

One disadvantage I had as an American employer of legal American workers was in the area of unemployment insurance.  The seasonal business employed people for 10 months and in the winter I only retained a few employees for snow removal and paid them even if it did not snow.  The laid off employees drew unemployment insurance until they returned to work.   When claims for unemployment are made the unemployment tax rate on the employer rises and the bottom line is, over time, the employer pays for the unemployment compensation drawn by his employees.

And if you have good employees, as I did, you want to retain them and naturally they want an increase in pay every year, and even small increases add up over time. But I cared about my employees and wanted to treat them fairly for their hard work and loyalty to me.

Employers who are not concerned about people, perhaps some large corporations, simply discard people every year and continually hire new people at the lowest possible wage.  And if those workers come across the border and agree to return across the border they are not going to be drawing any unemployment so the unemployment tax always remains at the legal minimum for those companies.

The unemployment tax is a percentage on the wages paid.  So in my case I got hit hard as I paid my employees more and the unemployment tax rate was high.

There are two unemployment taxes on wages, federal unemployment tax and the state unemployment tax.  The state tax is the most punishing.  Last year the MD tax ranged from 2.2 % to 13.5 % of the first $8,500 an employee earns.  I would have been in the 13.5% bracket on the first $8,500 I paid my employees.  For ten employees that would be $11,475 or 13.5% of $85,000.  And there is the federal tax on top of that.

I think most people think unemployment is paid by the government.  It is, sort of, but the government gets all that money from the employers.  It is a burden on businesses making it harder to survive, especially when unemployment is high.  In times of high unemployment I remember Maryland adding a temporary surtax on top of the normal tax when the state funds got low.

And the big companies have the resources to subsidize the politicians to keep the deck stacked in their favor.

Playing to Type?

However harmful his activities might have been to American small businesses and to American workers, Stan Eury would never have been looking at jail time had the government continued to agree that he was playing by the rules. But he has been on the wrong side of the law before. He first became familiar with the possibilities in agricultural labor contracting working for North Carolina’s Employment Security Commission as a state employee matching farm workers with farm employers. At the same time he saw the possibilities in a lucrative form of illicit agriculture, marijuana growing. He and an ESC co-worker were caught watering his plot. Pleading no contest, he was sentenced only to 200 hours of community service. The ESC also fired him, probably more for the fact that he was doing the watering on company time than anything else, and he then went full time into labor contracting.

Whatever or whoever is behind this current indictment, a no contest plea this time is hardly likely to result in such a light tap on the wrist.

David Martin

February 27, 2014

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