Michael Maiello and Susan Kitchens, Forbes Magazine, June 7
The millions of illegal aliens working in the U.S. don’t just happen into jobs. Middlemen make it their very lucrative business to put them there.
Victor Zavala Sr. was in a panic. His sons and daughter-in-law had just been arrested by the U.S. Department of Homeland Security’s immigration division, part of a sweep last October of 250 illegals who held cleaning jobs at Wal-Mart stores in 21 states. Zavala waited on a call from Kenneth Clancy, who had put him and his family to work at the giant retailer in Old Bridge, Piscataway and Toms River, N.J., and would get them out of this horrendous scrape. Clancy did phone, says Zavala. But it was to tell him to put together a new crew to clean that evening.
The case has focused on Wal-Mart. A federal grand jury is trying to determine how much executives knew about illegal aliens working in their stores. What has grabbed little attention is a more pervasive problem: the thousands of middlemen, sometimes illegals themselves, who entice foreigners to come to America, hook them up with menial jobs and take a substantial cut of their livelihoods, often for years, as the immigrants work off their debts. Companies like Wal-Mart rarely deal directly with such illegals--or with the shadowy contractors who hook them up with service companies that offer cheap labor to corporate America. (Wal-Mart says that these decisions were made by individual store managers and that it has now given up outsourcing its cleaning crews.)
In the U.S. there are an estimated 9 million to 11 million illegal immigrants from all over the world, according to a Central Intelligence Agency analysis of the 2000 Census. Many arrived on tourist visas and simply stayed; others came smuggled in boats or hustled across the border with Mexico. They’re the very people President Bush had in mind when, back in January, he outlined a plan to give this population legal status as temporary workers, but not full citizenship--a plan quietly shelved after noisy opposition from members of his own party.
Most undocumented laborers melt into society. They generally lead anonymous lives, doing faceless jobs--janitorial work during the midnight-to-8 a.m. shift at, say, a Target store or a Dunkin’ Donuts; making beds at a Best Western or Clarion hotel; washing dishes in a Chinese restaurant. They are prey for the middlemen who sometimes arrange their passage, find them cramped living quarters and low-paying jobs and feed off their wages, siphoning off a large fraction for themselves.
The system thrives partly because traffickers in human cargo are highly mobile, relying on little more than a phone and an occasional office front. They can set up shop one day, disappear the next and reappear in an entirely new incarnation days later. They leave few traces or paperwork, and deal mostly in cash. Many of them emerged during the economic boom years of the 1990s, thanks to the plethora of low-wage jobs, says David Kyle, a sociology professor at the University of California at Davis and editor of the book Global Human Smuggling.
These underground entrepreneurs rarely come under federal scrutiny. Authorities were seldom interested before Sept. 11. These days, the Immigration & Naturalization Service (now known as Immigration & Customs Enforcement) and the Federal Bureau of Investigation are focusing on smoking out terrorists. There are exceptions. A federal indictment for trafficking in illegal aliens still stands against Petr Pospisil, a Czech-born illegal immigrant who ran a job-placement ring for mostly other eastern Europeans, and showed monthly profits of $100,000. Then there is Cheng Chui Ping, known as Sister Ping, who is cooling her heels in a cell in Brooklyn, N.Y. and facing charges of smuggling illegal aliens into the U.S. Sister Ping is believed to have earned more than $30 million over 15 years of shuttling thousands of people from her native Fujian province in southern China to the promised land, where she exacted extraordinary payments through a series of New York gangs. (Ping has pleaded not guilty to all charges.) Extradited from Hong Kong last summer, she is due to appear in court this summer.
The exploitation of illegal immigrants is a racket that takes on myriad forms, according to region and tradition. The China connection relies on human smugglers, who have feet in both continents and maintain control of their clients through agents in the U.S. Hispanics have a well-worn path into the U.S.--so-called coyotes conduct them across the border, a $500 million-a-year business--and rely on other intermediaries once they’re in the States to find housing and jobs. The situation for eastern Europeans is something of a combination of the two: Agents there frequently place ads in the dailies of Prague, Budapest and Sofia, say, and hook up illegals--who must find their own way to America--with situations after they arrive.
Much of the Zavala family came to the U.S. from Sonora, Mexico after hiring a coyote who led them on a daylong hike through the Arizona desert in October 2000. Once they arrived at a Phoenix safe house the Zavalas phoned a cousin in Red Bank, N.J., whom they identify only as El Caballito (“The Rocking Horse”), who wired $4,000 to their coyote. The two younger Zavalas, Victor Jr., 28, and Julio, 24, flew to Red Bank and set to work as part of a cleaning crew at a Wal-Mart in Manahawkin, 50 miles to the south.
Rocking Horse hadn’t told the Zavalas everything about the Wal-Mart job. At the Manahawkin store, the younger Zavala met a Colombian national named Roberto who told him he worked for Facilities Solutions, a janitorial contracting firm run by Kenneth Clancy, 53, and his wife, Bonita, 51. Get together with the Clancys, Roberto suggested, and you can become the head of a cleaning crew at a different store, making a lot more money. The Zavalas met with Clancy and struck a deal. “No applications, no Social Security numbers--it was great,” the elder Zavala recalls.
Crew chiefs make $500 a week, compared with $350 for most crew members. That wasn’t the only advantage. Under Clancy’s system, crew chiefs could pick their own crews, so the entire Zavala family could soon be put to work. Soon Zavala padre y hijos were running separate cleaning squads at Wal-Mart stores in Old Bridge, Piscataway and Toms River. Victor Jr. hired his wife and his brother Arturo to work on his crew.
And what were the Clancys making? They aren’t talking. According to a government forfeiture complaint against a different contractor who hired illegal workers for Wal-Mart Stores in Pennsylvania back in 2000, cleaning contracts are worth about $100,000 a year, suggesting that Clancy’s five operations generated revenues of $500,000 annually. Based on average salaries, wages for a four-person cleaning crew handling one store come to $83,000 a year, leaving Clancy with an estimated profit of $84,000 a year from his Wal-Mart contracts after paying wages. Clancy’s profits might have been higher--Wal-Mart says that it paid $260,000 a year for such services at some of its stores. According to the elder Zavala, Clancy usually paid with checks, but didn’t scruple about workers’ compensation insurance, payroll taxes or overtime. Clancy certainly had deals with firms other than Wal-Mart. In 2002 he held a maintenance contract for the municipal building of Millstone Township, N.J., where he also served as chairman of the town planning board.
Clancy apparently had advance warning of the raid on Wal-Mart. According to the first complaint in a lawsuit filed against the chain by its illegal workers, Clancy received word in August 2003 from a Wal-Mart manager that the government might soon inquire about the immigration status of its janitors. Clancy, the suit alleges, then distanced himself from the potential problem by hiring Felipe Soto’s JWM Commercial Cleaning to manage the Zavalas and then Raul Tijerino’s RT Cleaning to manage Soto and handle weekly payments to the laborers.
Zavala the elder says he grew nervous after Soto and Tijerino told the family they needed to buy fake identification documents in New York. Clancy, Zavala alleges, even offered to drive him to the city in order to procure papers, but Victor Sr. refused, fearing that he’d compound any trouble he might get into.
After the raids, Zavala had what he thought was his last contact with Clancy, who at one time made weekly visits to his rented home. He gathered a new crew, as Clancy asked, after his family members had been arrested (Zavala escaped detention because he’d taken the night off). A few days later, Zavala says, he met with Felipe Soto to pick up the family’s final paychecks. He called Clancy numerous times after that, asking his old boss for legal help in order to keep his family members from being deported. Clancy, he says, never returned the calls. Zavala’s relatives are out of jail, and their deportations have been stayed for a year. Meantime the family has supported itself by finding day labor--raking leaves, cutting grass and the like. Victor Jr. is the lead plaintiff in a class action that holds Wal-Mart responsible for conspiring to hire illegal immigrants, denying them benefits and overtime and creating hazardous working conditions. Desperate for work earlier this year, Victor Sr. called a number for a cleaning job with ShopRite. Who answered the phone? Zavala says it was Ken Clancy.
The Yeung Sun restaurant at 47 East Broadway, in New York City’s Chinatown, is indistinguishable from thousands of such eateries. That’s just as Sister Ping, 54, wanted it: Anything more high-profile, and it’s doubtful the grandmotherly woman could have carried out her businesses for so long. A federal indictment alleges that she ran a restaurant and travel agency, smuggled workers from China and operated a money transfer service. The “mother of all snakeheads,” as she is known, got very rich as the organizer of trips in which hundreds of undocumented Chinese immigrants entered this country, according to court documents. Some 25,000 people make the trip by boat to the U.S. from Fujian province every year, each illegal paying an average $60,000 for the illicit transit, says Ko-Lin Chin, a criminal justice professor at Rutgers University. But the job could not have been done without the help of subcontractors--often gang members--on the ground in New York and other cities in America.
The subs act as protectors of the snakehead’s newly landed human cargo, doubling as guides and debt collectors. Often they are thugs--the Vietnamese Born to Kill gang has frequently been tapped, says Peter Kwong, professor of Asian-American studies at Hunter College in New York City. Typically, “they only have to work a few times a month,” earning $2,000 to $3,000 per immigrant, reports Steven Wong, head of Lin Ze Xu Foundation USA, a Chinatown-based immigrant advocacy group.
Newly arrived illegals are herded into what veterans call “hell houses.” They’re not allowed to leave until they pay off the snakehead. For those who haven’t brought the cash with them, it means a phone call or two to relatives back in China who must raise the money and send it immediately. Toughs do everything they can to get paid--threatening the relatives of illegals back home and subjecting the migrants to torture and interest rates of up to 5% a month. Immigrant rights activist Wong, a former investigator with the U.S. Coast Guard who participated in raids, recalls seeing people with burns from cigarettes. Some had bloody bruises on their heads, apparently from hammer blows. But Wong says these are extreme cases; 85% of illegals in these circumstances pay up within three weeks, then spend years at below-minimum-wage jobs as dishwashers and sweatshop workers to reimburse their relatives.
Chinese gangs sometimes participate in a cat-and-mouse game of transporting illegals once they get to this country. One notorious group, called the Fuk Ching, has admitted to the FBI that it has taken part in extortion, robbery, gambling and the smuggling of undocumented aliens. According to a complaint filed in support of a warrant for her arrest, Sister Ping, in a $3.8 million smuggling deal, paid 20 or so members of the Fuk Ching as much as $450,000 to carry human cargo from Boston to New York. The deal was arranged in a ramshackle apartment building on the edge of New York City’s Chinatown and the Lower East Side, when a high-ranking member of the Fuk Ching, who cooperated with the FBI, met with Wang Kong Fu, a smuggling accomplice of Sister Ping.
Here, according to the complaint, is how it went down. A fellow gang member traveled to Pensacola, Fla., and helped two Vietnamese co-conspirators buy an 80-foot-long boat. On a 16-hour journey, they sailed from Florida to Massachusetts, where they met another boat that was carrying 130 or so illegal aliens. The immigrants had each agreed to pay $29,500 upon arrival in the U.S. The gang member and the Vietnamese conspirators ordered the aliens to jump from one boat into the other. But when too many began jumping at once, the Fuk Ching member brandished a .38-caliber handgun and fired into the air to settle them down. When he ordered them to go below and hide in the hull, some resisted--until he threatened to kill them. Once onshore near Boston, several Fuk Ching members waited with three U-Haul trucks. Gang members drove the immigrant-loaded trucks to the Yoan Wah warehouse, at 365 Ten Eyck Street, in Brooklyn. Also as part of the deal, the Fuk Ching members guarded the immigrants, whom they later divided up, delivering some by van in front of the Sun Sing theater at 87 East Broadway in Chinatown. Fifteen who were supposed to be delivered to an apartment in Woodside, Queens couldn’t be packed in there, so they were held hostage for four days in an undisclosed location.
As Sister Ping sits in jail the Fuk Ching and other gangs are still active in Chinatown. Often illegals themselves, these young men in their late 20s and 30s have become slightly lower-profile these days. “They’re into big money,” says Detective David Yat from New York City’s 5th precinct in lower Manhattan. “So they stay more hidden.”
Petr Pospisil built up a tidy business as a middleman, according to the federal indictment against him. But his real business was in recruiting people from his native Czech Republic on the promise of great jobs in America, which he himself would provide. He cut the paychecks, but neglected to tell his recruits that he took as much as $2 an hour from every worker he placed.
How the undocumented illegals got here was their business. Many were lured by ads placed by “travel agents” in newspapers like Annonce, which promised contacts and employment in the U.S. Such agents helped them get tourist visas. Some legitimate Czech agencies work as freelancers for employment firms in the U.S., taking a flat fee of about $1,000 a head, says Richard Krpac, the Czech Republic’s chief consul in Washington, D.C.
But many workers were met by Pospisil’s partners after they landed in the States. According to the indictment against him, when Monika Zbrankova arrived in Miami in October 1999 she called Pospisil, who told her to take a bus to St. Augustine, Fla. where, within days of her arrival, she began work as a maid at the Clarion Hotel. Between October 1999 and June 2000 she did jobs at six companies, including a Best Western motel and Dunkin’ Donuts. (All three companies insist contracting decisions are made by individual franchisees.) While these companies contracted to pay $5 to $8 an hour, Pospisil handled her wages, typically keeping $1.50 to $2 an hour for himself.
That didn’t include the deductions he made for rent and utilities for the cramped quarters he provided. “You might find yourself sharing a two-bedroom apartment with 16 people,” says Krpac of the Czech consulate. Pospisil operated under a variety of names--Gulf Coast Cleaning, South Proffi Cleaning and Emerald Coast Cleaning among them. He kept overhead low: He didn’t need to own or maintain equipment (supplied by the businesses who bought his labor) and, according to the indictment, he falsified documents that supported his contention that he offered liability and workers’ compensation insurance for his employees. None of the restaurants or hotel chains he contracted with inquired further. Nor, apparently, did they bat an eye at the typo-ridden, ungrammatical bids he offered. His prices were right, and his workers earned a reputation for reliability. Some were so fluent in English, says FBI agent Terry M. Wetmore, that they were assigned to the front desks of various hotels.
That the FBI got wind of Pospisil’s operations was a total fluke. In 1999 a bank manager in Jacksonville Beach, Fla. called the agency to complain about large numbers of Czech workers showing up to cash their paychecks. Complaints from other banks kept rolling in through the fall of 2000. By the time Pospisil was indicted a year later he had apparently disappeared, and couldn’t be arrested. One bank manager fingered an American, Matthew McKinney, who had asked that the business’ $120,000 account be frozen.
Wetmore started grilling McKinney, who had allowed his name to be used on some of Pospisil’s checking and cell phone accounts and rental agreements. After months of interrogation McKinney revealed that Pospisil had been murdered around July 30, 2000 by his business partner, a man named Vladimir Janko, who also went under the alias Larry Young and had been indicted alongside Pospisil. McKinney, who says he was with Janko when the murder occurred, brought the FBI to Pospisil’s body, buried in Seminole, Ala. near the trailer of McKinney’s brother. McKinney ended up charged with the murder. Maintaining his innocence throughout the trial, McKinney was convicted in February and is serving 21 years in a Florida prison. As for Janko and two other partners, they disappeared after the indictments with $1 million. They’re all back in the Czech Republic, where the U.S. government says it is pursuing their extradition.
Still, most middlemen don’t have to pay much for their crimes. Miriam Klackova Facemyer was originally recruited from the Slovak Republic in 1997 and worked as a low-wage janitor cleaning Wal-Mart and Target stores in the Richmond, Va. region. But her recruiters quickly saw better uses for the multilingual, quick-witted and ambitious worker. First they put her in charge of the work crews. Then, thanks to her family connections in the U.S., she was asked to provide temporary housing to new illegals. Finally she took charge of cleaning crews and four stores and began recruiting her own workers to fuel a growing cleaning business. At one point, her contracts were worth as much as $180,000 a year, involving 110 undocumented workers. She also extracted $300 from each worker for phony driver’s licenses and Social Security cards. Pleading guilty to recruiting, harboring and employing illegals, Facemyer served just three months in prison. Her attorney, John B. Gately, says she was allowed to keep her six-figure earnings and to remain in the country. She currently resides in Florida.
The middleman business is going to be hard to stop--or even to slow down.