IFCO agrees to $20.7 million settlement

12/24/2008 12:00:00 AM
Ashley Bentley

(Dec. 24, 10:50 a.m.) Houston-based IFCO Systems NA has agreed to a $20.7 million settlement with the Department of Justice for employing illegal immigrant workers in its plants.

After the 2006 raid of 40 of the nation’s largest pallet management service company’s facilities by Immigration and Customs Enforcement, the company lost more than a quarter, 1,187, of its then 4,000 employees.

This settlement includes fines for the employment of illegal workers, as well as $2.6 million in back pay and penalties for overtime violations with 1,700 of IFCO’s pallet workers. The other $18.1 million is in civil forfeitures that will be available to support future law enforcement activities, according to an ICE news release.

The settlement does not cover the nine managers who were indicted and have already pleaded guilty to their respective charges nor does it cover four managers who were indicted this year and are awaiting trial. Three of the nine who have pleaded were guilty of felony charges, the others misdemeanors. One, Robert Belvin, former general manager of the Albany, N.Y., IFCO plant, pleaded guilty to two felony charges: conspiracy to transport and harbor illegal immigrants and conspiracy to possess identification documents with the intent to use unlawfully.

Mike Hachtman, senior vice president of IFCO, said the nine managers who have pleaded guilty are no longer with the company. The four who are awaiting trial, Charles Davidson, vice president of new market development; William Hoskins, new market development manager; Thomas Soto Castillo, operations manager for new market development; and Wendy Mudra, human resources manager, are still with the company on paid leave of absence.

In the settlement agreement, IFCO is required to follow several specific practices, at least through 2012. If at that time the company has been in compliance with all of the agreement’s terms and conditions, the U.S. Attorney’s Office agrees not to seek additional prosecutions.

IFCO has already started using Department of Homeland Security’s E-Verify screening program for all new hires, Hachtman said.

“All of our new employees are already screened with the E-Verify system,” Hachtman said. “It’s the most stringent system currently available.”

The company has also hired additional human resource managers, internal auditors and payroll employees, in addition to a vice president for corporate compliance, who will be able to focus more efforts on screening and monitoring hiring.

IFCO is also required to maintain a hotline that will be available to employees for reports of any suspected violations.

The government had been following IFCO since a February 2005 tip to ICE that IFCO employees were observed tearing up their W-2 forms. The April 19, 2006, raid on 40 IFCO pallet plants in 26 states resulted in the detention of workers in each of those states.

Hachtman said virtually all of IFCO’s customers stayed with the company after the raids. There were no significant service interruptions and customers were supportive in allowing changes in delivery schedules and making other concessions to help IFCO fill its orders, he said in 2006.

Steve Fore, national brand manager for produce for Oakland, Calif.-based Sundia Corp., said he never noticed any sort of glitch in IFCO’s business. Sundia worked with IFCO before the 2006 raids and continues to use IFCO’s pallet services today.

“It’s been business as usual,” Fore said. “It’s surprising that they haven’t really had any glitches at all.”

Fore said Sundia plans to continue working with IFCO.

An analysis of IFCO’s payroll information by the Internal Revenue Service and the Social Security Administration suggested as many as 6,000 illegal immigrants were employed by IFCO from 2003-06. The Social Security Administration reported having given IFCO notices as early as 2000 that the company showed irregularities in the social security numbers used for many of its pallet workers.

“This settlement allows us to put this behind us,” Hachtman said. “The difficulty we’re facing day to day is the economy. That is the biggest challenge that is laid before us.”



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