Monday, April 19, 2010

Steak House Chain May Have Engaged in Racketeering Scheme to Violate Immigration Laws

This posting was written by Mark Engstrom, Editor of CCH RICO Business Disputes Guide.

Former employees of a Ruth’s Chris Steak House franchise in Birmingham, Alabama, sufficiently alleged that the franchisor, the franchisee, and the owner of the franchise had engaged in a racketeering scheme to violate federal immigration laws, the U.S. Court of Appeals in Atlanta, Georgia, has ruled.

According to the plaintiffs, the restaurant knowingly hired illegal aliens, allowed them to work under assumed names, and gave them Social Security numbers that belonged to former employees.

Alleged Immigration Violations

The plaintiffs alleged that the defendants had violated Immigration and Nationality Act (INA) provisions that made it a federal crime to: (1) knowingly hire ten or more illegal aliens during a twelve-month period; (2) conspire to commit—or to aid and abet—the unlawful importation, transportation, or harboring of illegal aliens, or the inducing of illegal aliens to enter or reside in the U.S.; (3) encourage or induce an alien to enter or reside in the U.S., with knowledge or in reckless regard of the fact that doing so would be illegal; and (4) knowingly or recklessly conceal, harbor, or shield an illegal alien.

Allegations that the defendants violated the first INA provision were insufficiently pled, the court determined, because the plaintiffs failed to allege that the defendants knew they were hiring employees that were brought into the U.S. illegally. Violations of the second INA provision were insufficiently pled because the relevant allegations were conclusory.

Successful Pleadings

Regarding the third INA provision, the court ruled that district court had improperly held that knowingly hiring illegal aliens—and then supplying them with fraudulent Social Security numbers that facilitated their employment—did not encourage or induce illegal aliens to enter or reside in the U.S.

Under RICO, the terms “encouraging” and “inducing” were broadly interpreted to include the act of “helping” illegals to enter or reside in the U.S. Although the district court had concluded that the “mere employment” of illegal aliens was not enough to encourage or induce them to enter the country or reside here, the plaintiffs had alleged more than mere employment. They alleged that the defendants had facilitated the employment of illegal aliens by giving them Social Security numbers that belonged to former employees.

This was sufficient to plead a RICO predicate act based on the INA provision that prohibited encouraging or inducing.

Finally, knowingly providing an illegal alien with employment, an assumed identity, an assumed Social Security number, and cash-based pay—all for the purpose of concealing, harboring, and shielding them from detection—was sufficient to establish a RICO predicate act based on a violation of the fourth INA provision.

The text of the April 9, 2010 decision in Edwards v. Prime Inc. will appear at CCH RICO Business Disputes Guide ¶11,835.

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