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Feds: NY, Va. 7-Eleven stores raided because they exploited immigrants

By Tom Hays

Associated Press

Published: Monday, June 17 2013 5:39 p.m. MDT

Graphics depicting the locations of 7-Eleven stores involved in a federal indictment are shown after a news conference at the U.S. Attorney's office, Monday, June 17, 2013, in the Brooklyn borough of New York. United States Attorney Loretta E. Lynch has announced the indictment of nine individuals involved in a multi-state scheme to conceal the systematic employment of illegal immigrants and steal their identities. (AP Photo/John Minchillo)

John Minchillo, AP

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NEW YORK — Nine owners and managers of 7-Eleven stores across Long Island and in Virginia were charged Monday with making tens of millions of dollars by exploiting immigrants from Pakistan and the Philippines, in part by paying them using the stolen Social Security numbers of a child and three dead people while stealing most of their wages.

Most of the defendants were arrested early Monday as federal authorities raided 14 franchise stores. Immigration and Customs Enforcement agents were executing search warrants at more than 40 other stores across the country suspected of similar infractions, authorities said at a Brooklyn news conference.

"These nine defendants created a modern-day plantation system, with themselves as overseers, with the immigrant workers as subjects, living in their version of a company town," U.S. Attorney Loretta Lynch told a news conference in Brooklyn.

Four defendants who hold both U.S. and Pakistani citizenship belong to a family that has participated in social events with Pakistan's former military ruler Pervez Musharraf, prosecutors said in court papers as they highlighted foreign ties while successfully arguing against bail for most defendants. Another defendant is a citizen of the Philippines. The government said the defendants pocketed tens of millions of dollars in the scheme, hiding some money.

Federal indictments naming eight men and one woman allege that since 2000 they employed more than 50 immigrants who didn't have permission to be in the U.S. They tried to conceal the immigrants' employment by stealing the identities of about two dozen people — including those of the child, the dead and a Coast Guard cadet — and submitting the information to the 7-Eleven payroll department.

When 7-Eleven's headquarters sent the wages for distribution, the employers stole up to 75 percent of the workers' pay, authorities said. The defendants also forced the workers to live in houses they owned and pay them rent in cash, they added.

"This case came to light because some of these defendants, despite their lack of legal status, came forward to report the exploitation," Lynch said.

Lynch said stolen identifications were "recycled from store to store and state to state" in a case driven by greed among defendants who bought big houses.

The government seized the franchise rights of 10 stores in New York and four stores in Virginia. The stores will remain open under the parent company's operation. Authorities said the stores had generated $182 million in profits shared by the defendants and 7-Eleven.

In a statement, 7-Eleven, Inc. said it has cooperated with the investigation and will take "aggressive actions" to audit the employment status of all its franchisees' employees. It said it was also taking steps to assume corporate operation of the stores involved in the action.

Immigration officials detained 18 workers, including some who first notified authorities about the alleged fraud in 2010. Lynch said the workers would be processed through the system, with some who served as whistleblowers being able to remain in the country while the case is prosecuted.

The defendants appeared in court on Long Island and Norfolk, Va., facing wire fraud conspiracy, identity theft and alien harboring charges. They face up to 20 years in prison if convicted of conspiracy and other charges.

Three men arrested in Virginia were ordered held until a Thursday bail hearing.

Robert Del Col, attorney for Malik Yousaf, the general manager for 14 7-11 stores on Long Island, said his client denies the charges.

"To allege this systematic conspiracy, I don't think it's borne out in the documentary evidence," he said after his client pleaded not guilty and was detained after an appearance in federal court in Central Islip. "These people came in looking for jobs."

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