Based on our review we identified four common types of nonimmigrant visa fraud or fraud related to the use of visas. First, a person uses fraudulent documents to obtain a legitimate visa. For example, a person improperly obtains letterhead from a U.S. business and creates a letter inventing a false reason for traveling to this country. If the State Department has issued a B–1, or temporary visitor for business visa, the INS inspector on duty has no basis for denying the person entry into the U.S.

Second, a person obtains a fraudulent visa. An individual can attempt to use the passport and visa of a person who has a similar appearance and similar bio characteristics, or the person can purchase an altered document. Accomplished counterfeiters can alter the biographical data and digitized photographs on even the most secure visas in use today.

Third, an individual may not meet the spirit or intent of the specific visa program. For example, the GAO found that 85 percent of individuals requesting religious worker visas are already in the U.S. and are attempting to adjust their status. Many of these individuals are requesting visas through unaffiliated so-called ''store front'' churches whose legitimacy may be open to question.

Fourth, after arriving legitimately, an individual may overstay his or her visa and plan to reside in the United States permanently. The subcommittee is well aware of this phenomenon in light of its hearing in March on nonimmigrant overstays.

In closing, Mr. Chairman, nonimmigrant visa fraud poses a threat to the orderly operation of our immigration system, and both the State Department and Justice Department have vital roles to play in this process. As resources permit, the OIG will continue to conduct investigations, inspections and audits that address some of the key vulnerabilities that exist in the system.

The H–1B visa program is an emerging area of program fraud for us. What we are increasingly seeing are cases where brokers are facilitating production of visas approved for individuals to enter the U.S. on the premise that they will assume a highly technical job only to find that the individuals are low skilled workers, slated for employment as janitors or nurse's aides or store clerks in companies that have handsomely paid the brokers. We found our joint investigations with entities such as INS, the Department of Labor OIG, the Department of Labor, Wage Hour Division, the Bureau of Diplomatic Security and the creation of task forces particularly useful and often necessary when dealing with H–1B visa fraud. We will continue to pursue these productive collaborative efforts to combat consular fraud. Thank you.

Consular sections often use referrals from travel agencies, businesses, universities, and U.S. personnel at post to facilitate visa processing. This allows low-risk applicants to bypass the interview process, thereby relieving consular officers of heavy workloads, facilitating the visa process for host country officials, and allowing officers to help important contacts. These programs, however useful, are extremely vulnerable to fraud and need to be closely monitored for noncompliance and abuse. We have found that posts rarely conduct spot-check verifications to determine whether the applicants remained in the U.S. illegally.

Fraud involving the H–1 visa program often involves large scale and complex operations. Joint investigations and the creation of task forces are particularly useful and often necessary when dealing with H–1 visa fraud. Moreover, the magnitude of the smuggling operations usually associated with these fraud cases requires significant investigative resources.

Mr. PEASE. I am also very much interested in your comments on H–1B fraud, particularly given the tremendous attention that was paid to that in the last year. Has there been any work with or work contemplated with all those companies that came and lobbied us for more H–1B visas to ensure that is what they are actually used for? What I heard you saying, is that is not what they are all being used for.

Ms. WILLIAMS-BRIDGERS. We have not nor do I know if the Department has been working specifically with those companies. Our investigative work with regard to H–1B visa fraud cases has been reactive, reacting to allegations that we have received. We have been increasingly faced with more allegations and cases recently in the H–1B area. For example we have three ongoing cases now whereas in the past 10 years we only had two. Apparently there are a number of reasons why we are seeing more of these types of cases, but we have not had direct contact with companies.

A nonimmigrant is an alien who seeks temporary entry to the U.S. for a specific purpose. The alien must have a permanent residence abroad for most classes of admission and qualify for the nonimmigrant classification sought. Common types of nonimmigrant visas, NIVs, are those issued for specialty and other employees. Nonpetition-based visa fraud occurs when aliens in a specialty occupation, such as H–1B, intracompany transferees and intracompany transferees continuing employment with international firms or corporations overstay their temporary visas in the United States and continue to work at the jobs that they have been recruited to work for by their United States employers.

The student visa fraud category includes academic students and exchange students who sometimes come to the United States with the false intent of studying and continue to overstay their visas.

I am aware, Mr. Chairman that a common type of fraud is to sometimes misrepresent the alien's intention to remain temporarily in the United States and to return to the native country. On some occasions nonimmigrants use false business relationships to gain visas as specialty workers or intracompany transferees. These groups gain employment in the United States by permission, then overstay their temporary visas. Some aliens use their temporary status to begin criminal activities on a prolonged basis.

It has been reported that organized crime enterprises, including those based in Russia, China and elsewhere in the Far East, have set up staged international businesses and successfully obtain L visas to move their operatives into the United States where they engage in drug trafficking, financial crimes and a wide range of other racketeering activities. In some cases the fraud is used simply as a means of smuggling an intended immigrant into the United States through apparently legal means.

The H–1B temporary professional worker category benefits American companies by supplying critically needed professional workers, but also presents opportunities for fraud. The typical H–1B fraud involves either individuals who have overstated or falsified credentials, or it involves schemes where nonimmigrants work at companies other than that of the petitioning employer. This occurs both with and without the knowledge of the petitioning employer.

More H–1B visas are issued in India than anywhere else in the world. The American Consulate in Chennai, India process 20,000 H–1 visas last year. A joint effort between the Department of State and INS was initiated approximately a year ago to look into suspected fraud cases. Of the 3,247 cases referred from the service centers to the American Consulate in Chennai, the Department of State was unable to verify the authenticity of 45 percent of the claimed education and experience. In these cases, working with the Department of State, INS issued a notice of intent to deny those petitions providing the petitioners with an opportunity to provide additional evidence. I might add that 21 percent of the cases referred, it was determined that they were fraudulent and INS could move directly to denials in those cases. This joint effort with the Department of State continues.

H1–B Petitions
The H1–B category requires a baccalaureate or higher degree in a specialized field. Currently 115,000 persons are allowed to enter the United States (U.S.) annually under the H1–B classification. The individual must work in the specific job and for the requesting company. INS has received and processed these petitions for many years. Recently, however, annecdotal reports by INS Service Centers indicate that INS has seen an increase in fraudulent attempts to obtain benefits in this category. These fraud schemes appear to be the result of those wishing to take advantage of the economic opportunities available in the U.S. The INS encounters 2 primary types of H1–B fraud: either the fraud on the part of the requesting employer and/or the beneficiary.

Examples of fraud associated with the requesting company include instances where: the company is non-existent and/or operating from a post office box, residence, apartment, or many companies are sharing one of the above. Often the requesting company acts as an employment agency, petitions for the foreign workers, but then attempts to find them other jobs, with associated additional fees, paid for by the intending company. In some cases, an existing company petitions for employees, but terminates them on arrival, enabling an otherwise ineligible person to enter into the U.S. These actions are accomplished both with and without the beneficiary's advance knowledge.

Beneficiary fraud involves the falsification of either the education or prior job experience of the petitioner. This information is difficult for INS to verify as it originates from foreign sources and the format or form for submission by foreign businesses and schools is not standardized. These documents are easily falsified and, currently, the INS must rely on the American Consulate personnel as the means of verification. The employer may not know that the information is false.

As an example, more H1–B visas are issued in India than anywhere else in the world. The American Consulate in Chennai, India (AmCon Chennai) processed 20,000 H1–Bs last fiscal year, more than any other post in India. As early as 1996, AmCon Chennai estimated that a significant percentage of their H1–B petitioners, almost all of whom were computer programmers, were misrepresenting their academic or professional credentials. The INS Service Centers worked with the AmCon Chennai in a joint effort aimed at verifying claimed education and work experience from the petition submitted to the INS. These joint efforts were initiated one year ago. Between the inception of the joint effort and March 31, 1999, of the 3,247 cases referred to AmCon Chennai's anti-fraud unit, they were unable to verify the authenticity of close to 45% of the claims made on the petitions. Twenty-one percent of the work experience claims made to the INS were confirmed to be fraudulent in this investigation. In the cases where we are unable to verify the authenticity of the claims, INS issued an ''intent to deny'' to the petitioner, providing the petitioner with the opportunity to refute or overcome the presumption through countervailing evidence. The investigation and joint effort continues.

There is no doubt that many foreign workers currently in the United States in H1–B and L–1 categories are indeed skilled professionals and experienced managers as envisioned by law. Nonetheless, along with these desired professionals, thousands of marginally qualified applicants are also entering the United States in the H–1B and L–1 categories. To demonstrate this point, I would like to share with you a sample of some of the cases we have seen in the field.

Another example recently reported by the Consulate General in Casablanca illustrates a different problem for H–1B cases. The company that filed the petition turned out to be the doughnut shop owned by the applicant's sister and brother-in-law in the United States. The doughnut shop supposedly needed her skills as a comptroller to direct the financial activities of the company. This applicant was 23 years old and a recent university graduate. The petitioning firm is a bona fide entity, the doughnut shop really does exist, and the applicant does indeed have a bachelor's degree as required under the law. Still, the interviewing consular officer wondered how this was an alien with highly specialized knowledge going to a specialty occupation.

Let me explain how this can happen. All employment visa petitions are adjudicated by the INS based upon a paper review. All applications are often filed by professionals who take care to package their clients in a way that will fit the requirements of the category. The INS officer will be buried in certifications and attestations as to how the beneficiary's degree and accounting experience in a prestigious firm entitles her to be qualified as a specialty occupation employee. The doughnut shop will never be referred to as just that, but always as the corporate body or petitioning firm. INS will approve the petition based on documentation included and send it to the consular officer for visa issuance. If a picture is worth a thousand words, I wonder how much an interview is worth? When the applicant shows up at the visa interview, the real picture becomes clear. The consular officer learns that the comptroller does not speak English and that her employment experience had really been an internship..

There is no doubt that many foreign workers currently in the United States in H1–B and L–1 nonimmigrant employment visa status are indeed skilled professional workers and experienced managers of multinational companies with operations in the United States, as envisioned by the law. Nonetheless, along with these desired professionals, thousands of marginally qualified applicants are also entering the United States in the H1–B and L–1 categories.

.Just to give you a couple of examples of some of the cases; and I will go, Mr. Chairman, into some of the questions asked Mr. Yates a while ago. I will go specifically to a case we are investigating now in the Dallas area.

It involves an H–1B scheme where this guy is actually bringing people in that do not have jobs. He is acting as a job broker for them. They do not have jobs when they arrive, but this is not the case in all the situations. We have 700 petitions filed by this person here. Out of that 700, unless we go to each one individually and look at it, some of these are legitimate people. Some of these people are working for him.

You asked about how many—how many visa refusals we have based on fraud. We don't actually break our statistics out that way. We refuse probably out of those eight million applications probably about 18 or 19 percent. Some of those would have been refused for fraud, others for different reasons. Inevitably, the bulk are refused for what we call 214B, the individual just couldn't demonstrate a tie abroad that would return them home at the end of a visit.

B. AREAS OF FRAUD AND ABUSE IN H–1B AND L VISAS.

The best known sources of ''employment'' visas are the H–1B and L visas. This subcommittee is quite familiar with the debate over H–1B visas. L visas, by which overseas employees of multi-national firms come to the U.S. for up to 7 years to gain experience in the U.S. office, fulfill a very useful function for both U.S. and foreign corporations. They have enjoyed a highly positive and well deserved reputation for many years.

Both visa categories have experienced fraud, however, simply because, for those in the business of moving aliens to the United States, H and L are prime ''people movers''. Both categories have been misused, for example, by Chinese alien smugglers and Russian organized crime figures.

1. Collapsible corporations.

In China, the method of operation has remained fairly constant for more than a decade. Small, essentially sham companies are set up, in the US and in China or the targeted foreign country. The US and foreign corporations which facilitate these transactions are usually nothing more than a P.O. box, an abandoned building or a fictitious address and a single telephone number, often shared by dozens or even hundreds of these collapsible corporations. An H or L visa petition is filed by the US company requesting that a visa be granted to the foreigner who is to be smuggled. The petition is routinely approved, and the alien gets his visa from the local US embassy or consulate.

A similar system of small, shell corporations was and apparently continues to be used in Russia as well. Because many of the Russian underworld figures had ties to major business corporations, it was also possible to use those corporations and their U.S. and Canadian ''subsidiaries'' as the source of petitions and visas for some Russians.

2. Manipulable criteria.

The press commonly refers to holders of H–1B visas as ''high tech workers,'' but in fact many of them are relatively low-tech workers. That is because the rather broadly written and flexible criteria for qualification make the H–1B visa a vehicle to bring to the U.S. almost anyone with a college degree, often in entry- or low-level jobs. An au pair care giver with a college degree, for example, may become an H–1B ''household manager.'' A degree-holder in physical education can be brought to the United States—often by a relative—as a tennis coach or a soccer coach.

3. Staffing ''job shops.''

In recent years, we have seen the growth in the U.S. of ''job shops'' or ''job contractors,'' who import foreign workers in large numbers and then sell their services as temporary workers to other corporations, either as replacements for existing workers or as a means of outsourcing of work previously done internally. Anecdotal evidence is that these contractors utilize up large quantities of H–1B visas, and are thus major contributors to the overcrowding in the H–1B category.

Because job contractors tend to be larger business enterprises, they commonly have offices in both the United States and the country that is the source of their labor supply. In that way, the local office can hire the alien in the foreign country, and employ him or her there, and then move the alien to the US by either the H–1B or L–1 route when the circumstances require it. If the H–1B category is unavailable, L–1 may become the preferred status, since it carries no numerical limit and provides for multi-person admissions through the ''blanket L'' visa procedure.

Adjudication of H–1B visas needs to focus on the core definition of the H–1B ''specialty occupation.''

In the H–1B category, the problem is more one of misuse and insufficiently specific standards than outright fraud. The rather loose standards for qualification as an H–1B have resulted in apparent overcrowding in this category, even when the numerical limitation has been nearly doubled in the past year.

If we want to make H–1B a source for truly high-tech workers, as I think we do, and at the same time relieve the overcrowding in this category, we should try to avoid having so many of the available numbers sopped up by persons with a college degree and a bit of artful packaging. We need to return to the core definition of the H–1B ''speciality occupation'' in section 214(i) and give it a sharper, more tightly-connected focus, so that adjudicators will have a clear picture of the eligibility boundary lines for this category. Specifically, we should require that:

the applicant have a college degree;

the degree must be in the field in which he will be employed in the U.S.;

the occupational field must be one in which a bachelor's degree is required for entry and which requires application of a body of highly specialized knowledge (and I think adjudicators particularly need guidance in this latter area: it is simply too broadly defined and open to varying interpretations).

In addition, policy-makers need to address such questions as, 1) to what degree should we allow H–1B visas to be used for entry-level positions, and 2) do we want to put any limits on their use by job contractors.

3. To relieve overcrowding in the H–1B category, further review of the standards may be necessary.

Our goal should be to upgrade the current skill level in the H–1B category. To do that, policy makers should insist that, if we are to accord the alien such a high priority over U.S. workers as H–1B permits, the alien possess a bachelor's degree in the field he will be working in, and not a high school or a 2-year vocational degree and several years of experience.

Specifically, to relieve the current overcrowding, Congress should examine whether section 214(i)(2)(C), permitting equivalents to the H–1B educational requirements, does not significantly undermine the core definition of ''specialty occupation.'' I believe that allowing educational equivalents contributes to the lowering of the skill level in H–1B and its use for relatively low-level positions.

Some may well object that removing the equivalency language would bar entry to various great talents who do not have a degree in their field. I would note, however, that such non-degree persons would not be lost to us, but would simply be asked to qualify for ''O'' rather than H–1B visas, which the highly talented workers would be quite likely to do. Alternatively, those without college degrees in the field could be required to show some of the indicia of outstanding accomplishment current required for ''O'' visas. This is therefore not such a dramatic proposal as it might at first appear, and in my view, given the desirability of both upgrading the skill level and relieving the overcrowding in the category, a policy option definitely worth considering.

WHY DOESN'T THE CURRENT SYSTEM WORK?

The current system for investigating and determining fraud, while laudable, has many significant problems that adversely affect the millions of bona fide nonimmigrants that apply each year. These problems include: (1) no clear definition of what constitutes fraud; (2) low-level administrative personnel determine complicated issues of fraud with no access to review or appeal; and (3) resources are directed toward broad-stroke fraud investigations that result in a relatively small number of actual fraud determinations but significant hardship and disruption to legitimate visa petitioners and applicants.

1) Fraud is not Easily Defined or Determined

As stated above, what constitutes ''fraud'' is not necessarily clear. There is no definition of ''fraud'' or ''misrepresentation'' in the Immigration and Nationality Act. Those terms have been defined over the years through various court and administrative decisions, the leading administrative case being Matter of S&BC, 9 I&N Dec. 436 (1960), which determined that fraud is to be defined ''in the commonly accepted legal sense''.

Most discussions focus on the most egregious and obvious cases of fraud—those that are objectively determinable, such as fake documents and false answers to immigration or consular officers on an application form. That type of fraud must be investigated and, if appropriate, prosecuted, and is a relatively easy matter to be adjudicated.

And the consequences of a determination of fraud or misrepresentation can be lifelong for a foreign visitor. First are the immigration consequences—an individual who has been determined to have committed ''fraud'' or a ''misrepresentation'' is barred for life from entering the United States, unless granted one of the very limited discretionary waivers available. In addition, there are criminal consequences as well—potential prosecution for perjury or under the False Statements Act, as well as new criminal penalties imposed by the 1996 Immigration Reform Act for preparing a ''falsely made'' document, and other criminal penalties for attempting to enter the United States by willful misrepresentation. Individuals removed from the United States for fraud or misrepresentation under the ''expedited removal'' provision find themselves subject to the same penalties.

2) Difficult Legal Determinations of Fraud are Made by Low-level Officers

Given the complexity just to determine what fraud is, and the significant consequences to an applicant of such a determination, it is imperative that a judgement not be entered lightly, or without significant due process protections. Some of these protections are missing from our current immigration system, especially when fraud determinations can be made by low-level officers. Further, as noted earlier, in most cases these determinations are not reviewable or appealable, even to an administrative law judge.

As to H–1Bs, I think the definition is malleable and that we need to return to what I would call the core definition of the ''specialty occupation.'' Specifically, we should require that the applicant have a college degree; that the degree be in the field in which he will be employed in the United States; and that the occupational field be one in which a bachelor's degree is required for entry and which requires, as the statute now says, application of a body of highly specialized knowledge. But I think it is in this area in particular that adjudicators need some guidance and some help.