News Flash: Cloudgen LLC Pleads Guilty to H-1B Fraud
According to the U.S. Attorney’s Office for the Southern District of Texas, the Houston consulting and strategic solutions company has pleaded guilty to committing ongoing H-1B visa fraud for over seven years.
Details of the H-1B Fraud
The fraud was perpetrated from around March 2013 through December 2020. Cloudgen LLC admitted to recruiting Information Technology workers from India and falsely obtaining H-1B visas for them to enter and work in the U.S.
The H-1B visa is the most widely used work visa in the U.S. It is a nonimmigrant work visa that allows U.S.-based employers to employ international workers in “specialty” occupations for up to three years. The visa can be extended once for a second three-year period.
“Bench and Switch” Scheme
The scheme used by Cloudgen to fraudulently obtain H-1B visas is being referred to as “bench and switch.” According to the Department of Justice news release concerning this case:
“The company would file documents with the Departments of Labor (DOL) and Homeland Security (DHS) containing fraudulent statements about the availability of work at third-party national employers. Cloudgen would then submit forged contracts stating each third-party company had a job for the individual Indian national. Next, based on those false documents, Cloudgen would submit paperwork to get an H-1B worker’s visa for the Indian nationals. When granted, they would use that visa to allow the Indian nationals to enter the United States.”
Yet because the purported jobs were nonexistent, the Indian nationals who were now physically present in the U.S. on fraudulent H-1B visas had to be housed at different locations throughout the U.S. until Cloudgen could find actual jobs for them. In this way, Cloudgen created a competitive advantage for itself. The company had a steady supply of workers sitting on the sidelines, the theoretical “bench” in this case, with H-1B visas ready for immediate hire at companies all over the U.S.
Unlike other talent sourcing companies who would start the H-1B process only when a real job opportunity became available in the U.S., Cloudgen bypassed this step by already having workers lined up, waiting to take those jobs.
The “switch” came when the Indian national workers were accepted for employment at an actual U.S. employer, who would then file new immigration paperwork. They “switched” from a nonexistent job to a real one to make the entire process seem legitimate.
Cloudgen also extended the H-1B visas to allow the workers to stay and work longer in the U.S. Cloudgen then charged a “fee” for this service by taking a certain percentage of each worker’s wages. In total, the company made a profit of around $493,516.28 throughout the seven years it ran this scheme.
The Department of Justice stated that “Chief U.S. District Judge Lee H. Rosenthal will impose sentencing Sept. 16. At that time, the company could have to pay up to $500,000 or the greater of twice the gross gain or twice the gross loss as well as a maximum five years of probation.”
“The Department of State’s Diplomatic Security Service conducted the investigation with the assistance of DOL and DHS. Assistant U.S. Attorneys Richard W. Bennett and Jay Hileman are prosecuting the case.”
About Cloudgen LLC
According to the Texas Comptroller’s Taxable Entity Search database, Cloudgen LLC is located at 1001 South Dairy Ashford Rd., Suite 100 in Houston, Texas. The company was registered in Texas in 2011. The company’s representative is listed as Sasidhar Pallempati, who is the president of the company according to its own website. The company website does not list the Houston location, but does list its other locations in Manassas, Virginia; Hyderabad, Telangana; Canada; and Romania.
For more information, please refer to the full Department of Justice news release.
Sam Shihab & Associates Can Help
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