Texas construction company owners fined $3M in undocumented worker case

UPDATE: Jan. 30, 2020: A few weeks after pleading guilty to illegally employing undocumented immigrants, executives at Texas-based contractor Speed Fab Crete have agreed to forfeit $3 million to the U.S. Treasury for use in promoting law enforcement activities related to immigration enforcement.

The company’s three owners, Carl Eugene Hall, Ronald Alan Hamm, and David Leon Bloxom, are jointly and severally liable for the full amount if Speed Fab Crete does not fulfill its financial obligations under the non-prosecution agreement.

Earlier this month, Hall pleaded guilty to conspiracy to unlawfully harbor illegal aliens, a felony. Mark Sevier, owner of Take Charge Staffing, a temp agency used by Speed Fab Crete, also pleaded guilty to conspiracy to unlawfully harbor illegal aliens. Hamm, Bloxom and Robert Edwin James, Speed Fab Crete's CFO, pleaded guilty to unlawful employment of illegal aliens, a misdemeanor offense.

Hall and Sevier face up to five years in federal prison and Bloxom, Hamm and James are facing up to six months in federal prison. As part of the plea agreements, each individual will be also required to pay a $69,000 fine, equal to $3,000 per alien, the statutory maximum.

According to their plea papers and Speed Fab Crete’s factual statement, the defendants admitted that they attempted to disguise the employment of unauthorized workers by placing them on the payroll of Take Charge Staffing, then lied to the government, stating that the unauthorized workers had been terminated from employment at Speed Fab Crete.

Per the agreement — which requires Speed Fab Crete to cooperate with the government to ensure it will not violate immigration laws in future — the company pledged to continue to use E-Verify, the federal government’s web-based employment eligibility verification system; to comply with new internal verification procedures; to conduct companywide training on immigration compliance; and to discipline those who attempt to employ unauthorized workers.

Dive Brief:

Five North Texas construction executives have been charged with felonies in U.S. District Court in Dallas for their roles in processing undocumented workers through a labor staffing company so that they could then be put to work at a Kennedale, Texas-based concrete company, Speed Fab-Crete Corp. Carl Eugene Hall, David Leon Bloxom and Ronald Alan Hamm were Speed Fab-Crete owners and principals at the time of the offenses, while Robert Edwin James was the chief financial officer. Mark Sevier was the owner of Take Charge Staffing.
Prosecutors said that after an October 2015 Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) audit of I-9 Employer Review and Verification forms at Speed Fab-Crete, the company was found to have more than 41 undocumented employees on its payroll. As part of a settlement agreement, Speed Fab-Crete said that 39 workers had been terminated, with only two securing legal work authorization. However, prosecutors claim that 23 of the undocumented workers continued their employment at Speed Fab-Crete as employees of Take Charge, even though the defendants knew the individuals could not work legally in the U.S.
Hall and Sevier were charged with conspiracy to unlawfully harbor illegal aliens, and, according to their plea agreements, face up to five years in prison, a fine of $250,000 and up to three years of supervised release. Bloxom, Hamm and James were charged with unlawful employment of aliens and, according to their plea agreements, face up to six months in jail, up to a year of supervised release and a $3,000 fine per undocumented worker.

Dive Insight:

It is more common for undocumented workers to participate in projects as independent contractors because those workers do not have to provide the same information — i.e. proof of citizenship or work authorization — that employees do.

And contractors have had to deal with increased government enforcement in this area for some time. ICE audits of I-9 forms are on the rise, according to the National Law Review, increasing in number from 1,360 to 5,981 between 2017 and 2018. The agency sent 3,282 audit notices in July. ICE has also been levying record fines.

In a September 2017 case similar to Speed Fab-Crete's, ICE fined Asplundh Tree Expert Co., based in Willow Grove, Pennsylvania, $95 million after the company pleaded guilty to hiring undocumented workers between 2010 and 2014. Prosecutors said Asplundh also rehired some of the workers it was forced to fire after previous ICE investigations.

Even with the threat of ICE raids, however, some contractors are likely to continue to use undocumented workers in order to realize savings and meet the demand for skilled labor in the midst of an industrywide shortage. According to the 2020 Sage Construction Hiring and Business Outlook Survey, two of the biggest contractor concerns heading into 2020 are worker shortages and the increasing cost of direct labor. More than 80% of those surveyed said they were having a hard time filling both salaried and hourly craft positions.