EVERY EMPLOYER SHOULD FIND AMPLE WORKERS IN THIS ECONOMY
December 3rd, 2013
Fruit is rotting on the trees. Tech workers are “unavailable.” Such stories proliferate in coverage of immigration, as if the laws of supply and demand simply don’t work. Nobody doubts that unemployment persists at historically high levels, at least 7%. And the lower down you go in education and skills, the higher the rate is. Unemployment for high school graduates is more like 12%. And in the more sluggishly growing states in the Northeast and Midwest the rates are 3-5 points higher than that. So why do farmers say they can’t find workers to pick their fruit? Economics tells us the wage they offer must be below the market price. In my experience prosecuting RICO cases against employers of illegal workers I have run up against this attitude of entitlement to quasi-slave labor many times. Farmers interpret the non-enforcement of our immigration laws as an implicit acknowledgement that they should go right ahead and hire illegal workers at the minimum wage to do these jobs. Why do I say quasi-slave labor? Because illegal workers are second class members of society. They don’t ”live in the shadows,” like fugitives, as is often reported, because the federal government has announced they will not be deported. But their wages are too low to be even working class. They are effectively modern day serfs, indentured workers tethered to their employer and unable to move.
Any employer paying the minimum wage for hard and demanding labor is violating the laws of economics. Hard and demanding jobs are harder to fill than pleasant ones such as working in a retail store. Any argument to the contrary, as is made by farmers, is economic nonsense. Those tough jobs should be paying a significant premium above minimum. If they did, there would be no labor shortage. The unemployed would line up to take them. Americans are not adverse to working nasty jobs. Sewers are operated by American citizens at market wages. We won’t tolerate anything less than functioning sewer systems staffed by English-speaking high school graduates. But we will tolerate foreigners picking our fruit trees.
If the price of labor is high, it will force employers to automate. Many sewer jobs have been replaced by machines. In the Midwest combines, giant machines, pick corn and soybeans. Yet the fruit farmers still prefer Mexicans, quasi-slaves, because they are cheaper than the research and development of machines to pick the trees. So immigration stifles innovation.
Many technology companies, from the ubiquitous Microsoft and Google to small programmers located in every major city also want more immigrants. Yet there are upwards of a million unemployed tech workers in the country. Why won’t they hire them? Their excuse is that they want the best and the brightest, as if to say the unemployed are not. This is a hard argument to sustain if you are offering a sub market wage. Why would a tech worker interview for a job paying below what other firms are paying for the same work? The federal government has extended unemployment and health benefits indefinitely, and we are told the picture is brightening. Yet the unemployment rate just lingers month after month.
The recent visa fraud scandals involving Indian consulting giant Infosys show why it is so easy to bring in foreign tech workers on H-1B visas. An employer goes to Infosys or one of its competitors, claims it cannot find “qualified” workers at the prevailing wage, and hires the Indian technology consulting company to “solve” its labor problem. As long as the U.S. increases the number of such visas, the “problem” of paying the market wage for labor can be addressed. It’s no surprise that the Senate-passed immigration bill nearly doubles the number of such visas. Doing so during a time of high unemployment is a choice to side with employers and not the unemployed. If the Senate cared about reducing unemployment it would cut the visas to zero.
If I’m wrong, I’d like to be shown a firm which claims it cannot find workers to fill its labor needs. Does anyone know of an agricultural or tech employer that can’t find workers? Would someone please send me the details. What is the name of the employer, which jobs are going unfilled and what wages are offered for the jobs? Let’s see how those numbers stack up against the market data.
DO YOU HAVE A RICO CASE?
November 4th, 2013
When does an ordinary tort case become a RICO case? If there were a simple answer to this question, the federal courts would have enunciated a black letter rule many years ago and reduced their workloads significantly. Since there is no such rule, a plaintiff with a potential RICO case needs to consider several factors. The most difficult of these is the requirement of a pattern of racketeering activity. The law was enacted to redress long-term illegal behavior. A person or business that has been harmed by a single episode of fraud, regardless of how much money is involved, needs to show that the defendant is a serial violator. One way of doing this is to conduct a simple litigation search of the defendant and see if it has been sued before for similar misconduct. If so, then there may be a pattern. But the prior illegal conduct needs to be related to the current misconduct and have occurred within the last decade.
The other important element is the use of an “enterprise” in carrying out the racketeering activity. The enterprise must be a separate entity through which the alleged racketeer does its misdeeds, such as crime family or a legitimate corporation. A person acting alone, as many criminals do, does not violate RICO regardless of how much carnage he leaves in his wake. There has to be an enterprise, and it needs to be used or victimized (infiltrated) for the requisite involvement to be shown.
RICO is both over and under-utilized. Many lawyers file RICO cases not understanding these basic principles. Their cases usually get dismissed right away and we end up with scores of decisions pointing out the same rules about pattern, enterprise and causation( addressed in prior posts). And then there are plaintiffs with legitimate grievances, usually involving fraud or extortion, where RICO could be used effectively if their lawyers thought more strategically, but do not. They have no experience with the RICO, or more commonly, are state court practitioners and are afraid of the federal rules and federal judges. Plaintiffs’ lawyers tend to practice in state courts and one good reason is that according to many studies state judges and juries are more liberal with other people’s money. Yet, today, since only 1% of non-personal injury civil cases go to trial, one wonders if jury considerations should even matter in evaluating a RICO case.
For the same reason, plaintiffs should not salivate at the prospect of triple damages and attorney’s fees, which RICO requires be awarded to a successful plaintiff. (Winning defendants don’t get their attorney’s fees.) Very few civil RICO cases will go to trial no matter how strong they are. The cost of federal litigation, damage experts, and competent counsel are a significant factor in settlement decisions. Triple damages and attorney’s fees are a strong incentive for defendants to settle, and settle earlier rather than right before trial, but nobody should expect to get them at the outset of a case.
The bottom line is that anyone victimized by fraud or other purported RICO violations should evaluate their case with a lawyer who knows RICO.
IMMIGRATION “REFORM” IS ON LIFE SUPPORT
October 2nd, 2013
For the second time in a decade the Senate has passed a huge immigration “reform” (liberalization) bill at the behest of employers and Hispanic activist groups. This happened in 2006, and then as details of the bill became known to the country at large, opposition grew so intense that the Capitol internet crashed. The House refused to go along and reform died. Proponents vowed to exact revenge on the House in that fall’s midterm elections. The Republicans lost control but the proximate cause was the unpopular Iraq war not the failure to enact the immigration bill. Anyone doubting that conclusion would have a hard time explaining what transpired in the next Congress. In 2007 the new more liberal and Democratic Senate failed to stop a filibuster of the “Dream Act” and never took up immigration again during its two-year life.
This was supposed to be immigration summer in Washington, and to some extent it was. The Senate passed the immigration bill in June. Its supporters demanded the House follow. But once again the country learned what was in the bill, or at least realized it would increase the levels of legal immigration and give illegal immigrants a path to citizenship, and then Republican House members decided to do nothing. Senator Marco Rubio notwithstanding, there is a significant difference between the two parties on immigration. Republicans are rhetorically opposed to illegal immigration realizing it’s anathema to everything the party represents. And beyond opposing illegal entry, Republicans seem unenthusiastic about legalizing those who are here illegally. Perhaps this also means they tacitly agree with the concept of self-deportation, the idea that if we make it impossible to work here, illegal immigrants will leave. I say tacit because few Republicans will say this openly. While there is no support for legalization, there is no fervent demand for active deportation either.
Republicans also like the concept of making employers use E-verify to check the status of new hires online. Yet, there is a basic disconnect in putting the onus of immigration enforcement on employers, the beneficiaries of illegal labor. We cannot expect them to resist the urge to hire cheap illegal workers who will never file workers’ comp or Title VII claims, join a union or seek a raise. The Reagan administration introduced the concept of employer sanctions- and then made the fateful decision not to enforce it. That and the bad Mexican economy brought on the biggest wave of illegals since Texas was independent and being colonized. The Clinton administration had no more of an interest in enforcing the new law than did its Republican predecessors. The wave continued to flow until the 2008 recession.
The House Judiciary Committee, with jurisdiction over immigration, has approved bills to employ more border agents and require employers to use E-Verify, which most employers oppose. These enforcement bills, and possibly one allowing some of the “Dreamers,” illegals who entered the country with their parents as minors, will come to a vote in the House. But that’s it. If the House votes on immigration, this would be the extent f it.
But there is a strong minority of republicans led by Steve King of Iowa who oppose any immigration bills. They fear that even a modest bill will end up in a conference with the Senate bill and be inflated into a vast “reform” pushed through both Houses under intense media pressure to “get something done.”
But the clock is running down. It will soon be 2014, an election year, meaning Congress is very unlikely to pass anything controversial. If the unemployment rate remains stubbornly high the argument for legalization of millions of new job seekers appeals only to employers and Hispanic activists . This will turn out much like it did in 2006. Proponents of reform will try to whip up the public about the callousness of “doing nothing” on immigration but most people will not care. That may be the best thing we can hope for in this Congress.
NATIONWIDE RICO CLASS ACTION UPHELD
September 3rd, 2013
Federal courts have been making it harder to certify class actions for years. To get certified as a class a case needs to meet the criteria of Federal Rule of Civil Procedure 23, which was written in 1966, at the dawn of the class action era and used vague concepts that seemed to make sense in a theoretical sort of way, but in reality are utterly opaque. The Rule requires a class action to have “common questions” and those “questions” need to “predominate” in the litigation. What is a common question? Does every RICO case involve “common questions” because an enterprise and pattern of racketeering activity are required to be proven? And does that mean those common questions “predominate?” If it were that easy, every RICO case would get the approval sought by the plaintiff’s lawyer. But it is not.
Class actions allow cases with large numbers of plaintiffs seeking the same relief, either an injunction to stop illegal discrimination or a small sum of money as damages, to have their cases heard in a single action. But as with many other laws, Congress wrote the Rule without defining its terms. Federal judges have differed as to what they mean with more “liberal” judges usually favoring certification, and “conservatives” usually opposing it. Adding to the problem was the prohibition on appealing class certification orders because they are “interlocutory,” i.e., do not finally dispose of the case, until 1999 when Congress allowed them to be appealed if the appellate court chooses to hear them. Since then we have generally seen Rule 23′s criteria imposed much more stringently. In the recently completed Supreme Court term the Court agreed to hear three class actions, and it affirmed the refusal to certify two of them. In Wal Mart v. Dukes (2011) the Supreme Court decertified a nationwide class action alleging gender discrimination at the nation’s largest retailer because, in the majority’s view, there were no common questions. The four- justice minority vehemently disagreed and would have allowed the case to proceed to trial.
A key stumbling block is persuading a court that the “common questions” in a case “predominate” over individual questions. As I’ve said, this is vague and is often in the eye of the beholder. But we generally know claims for fraud, the making of a false statement to induce the victim to part with his or her property, is quite difficult to certify as a class action. Fraudulent statements may vary from victim to victim, and unless the district court can nail down one particular statement that was used on all members of the class, such as, “this car only has $10,000 miles on it,” the case can’t be decided in one efficient trial. If each class member has to testify as to what was said to him or her that was fraudulent, and how it induced reliance on the false statement, then there is no efficiency in creating a single class action.
Last week the Second Circuit Court of Appeals, one of the most influential of the twelve federal circuits, has affirmed the certification of a RICO class action involving fraudulent statements made to 75,000 customers of U.S. Foodservice Inc., the second largest food distribution firm in the country. In re Foodservice Inc. Pricing Litigation, _ F. 3d.__, (2d Cir. August 28, 2013). The plaintiffs are restaurants, schools and other large institutions which by wholesale food for resale. They were billed on a supposed “cost-plus” basis by U.S. Foodservice. That means they were relying on the wholesaler to accurately represent its true cost for the food and then add a small percentage markup, its profit. According to the Complaint, the company falsely inflated its costs, thereby inflating its profit as well, above what was represented in its invoices. It mailed or emailed the invoices to its customers each month. (The use of the US Postal Service or interstate email to perpetrate fraud is a federal crime and a RICO predicate offense.)
The Second Circuit concluded that everytiime a class member paid a fraudulent invoice it had relied on the false statements contained in the invoices was sufficiently common across the huge class so that fraud could be proven efficiently at a single trial, i.e., a common question “predominated.” Thus, a single nationwide class of 75,000 purchasers from all over the country was properly certified by the district court in Connecticut. It does not matter that the laws of each state may vary as to what constitutes fraud because the RICO claim depends on proving fraud pursuant to federal law, mail and wire fraud, which is uniform. The Court also rejected US Foodservice’s argument that these customers were sophisticated and knew they were paying a markup thus vitiating the element of reliance on a false statement. The Court believed they were unaware of the precise nature of the fraud, which necessitated the use of shell companies which allegedly “sold” the food to US Foodservice but were really owned by it, thus were used to mask the markups
The Second Circuit also upheld the certification of a class under state contract law because those laws were uniform, governed by a single provision of the Uniform Commercial Code, which is basically the law in every state, supplementing contract law, with only minor differences.
As far as I k now, this is the first appellate decision upholding a nationwide class under RICO. And having been issued by the Second Circuit, it should be followed by other courts. (I have succeeded in getting RICO wage depression cases certified in several district courts, but those orders were not appealed.) Plaintiffs with good fraud cases that are predicated on uniform written commercial contracts can make a strong argument for certifying them as class actions, if of course, they also satisfy all of the other elements of a RICO claim. While the federal courts have made it more difficult to certify class actions, this decision and a few recent antitrust cases from the Seventh Circuit here in Chicago, make it clear that they can go forward. Class actions are alive.
CAN D.H.S. FORGIVE DREAMERS?
August 9th, 2013
A federal judge in Dallas has dismissed a lawsuit brought by an Immigration and Customs Enforcement (I.C.E.) agent challenging the constitutionality of the administration’s directive forbidding the agency from removing (deporting) young illegal immigrants (known by their preferred designation “DREAMERS”). Agent Christopher Crane alleged the directive put him in an untenable situation. He is under oath to enforce the Immigration and Nationality Act (INA) as written, which requires officers to remove any alien they encounter not “clearly and beyond a doubt entitled to be admitted.” 8 U.S.C. 1225(b)(2)(A). The President and the head of the Department of Homeland Security (D.H.S.), Janet Napolitano, directed I.C.E. agents to use discretion (theirs) in enforcing this mandate. But where does this discretion come from? After all, if Congress wanted to exempt DREAMERS from the INA, it would have said so. But it wrote the law more broadly and did not see fit to allow D.H.S. (or I.C.E., a part of it) to write a different law. A President who gets to use his “discretion” not to enforce laws he dislikes or dislikes in part is not carrying out his constitutional oath to enforce the laws, the job of the Executive. If I.C.E. doesn’t have enough resources to remove illegal immigrants it should ask Congress for more money, not arrogate to itself the selection of which ones to remove.
Agent Crane believed his bosses were exceeding their authority to tell him what to do as an I.C.E. agent and sued. He sought an injunction barring I.C.E. from enforcing the new discretionary rules. The district judge agreed that he was likely to win his case,as the new policy was not authorized by the Act. But it also found that he is required to pursue his claim pursuant to the Civil Service Reform Act, which has its own remedies and cannot be pursued in a federal court. He will need to go before a hearing officer in Washington, and it is not clear that the officer has the power to enjoin the D.H.S. and the President from enforcing the directive. So if this decision is affirmed on appeal, the rule of law will have been stymied.
We are always being told this is a country of “laws not men” when the men are conservatives (think of Watergate and Iran-Contra). The sanctimonious law professors and columnists are silent now, perfectly happy to see Agent Crane not get his day in court. Even the judge believed his hands were tied and justice was not being served in this case. It should prompt congressional debate and hearings about executive power. After all, this is immigration summer in Washington. Congress is fixated on the topic. It should care about the question of who gets to enforce the Act that it passed. But it is not. The decision is nothing but a footnote in law-oriented websites and has not made it into the mainstream media. Suppose the case were the inverse, and an agent was arresting DREAMERS in defiance of the Directive. The administration would fire the overzealous employee and I can imagine the firestorm of media coverage about I.C.E. vigilantes taking the law into their own hands.
The only good aspect of this decision is that it is unprecedented. The opinion does not cite any authority in support of its holding that Agent Crane’s only remedy is through the the Civil Service. Other federal judges may reach the opposite conclusion. I hope there will be more cases like this one elsewhere around the country.
THE SENATE IMMIGRATION FANTASY
July 1st, 2013
The Senate has passed an “immigration reform” bill which does not reform our immigration system. It makes the problems caused by our immigration “system,” de facto amnesty for millions of uneducated and unskilled workers at a time of high unemployment, worse. It does so in two ways: 1)the border will not be enforced, and 2)illegal immigrants will stay in the labor force and consume more public benefits than they pay in taxes.
The proponents of the bill succeeded in pushing through the Corker-Hoeven amendment, which supposedly adds 40,000 new border guards and other tools to secure the Mexican border. This sounds good, but will it happen? The history of border enforcement suggests no. To cite but one recent example, in 2006 Congress enacted the Secure Fence Act which mandated construction of “at least two layers of reinforced fencing” along 650 designated miles. Only 40 miles have been built. And in 1986 the Immigration Reform and Control Act, very much along the lines of what the Senate has passed, gave amnesty to all illegal immigrants then in the country in exchange for workplace enforcement. Employers would be required, for the first time, to verify that their new hires were legally authorized for employment. Theoretically, this concept would have “dried up” the insatiable demand for cheap labor. But the I.N.S. (now D.H.S.) barely enforced the law, and soon the major employers of illegals were back hiring whom they pleased with impunity. Then Congressman Charles Schumer even tried to repeal the employer sanctions after they were enacted. Now he is the chief sponsor of the Senate bill. Does he really want enforcement? Or is he counting on 8 million new Democratic voters once they obtain citizenship? (Hispanics voted 71% for President Obama last year and constituted a record 10% of the voters. Romney won 59% of the white vote. http://elections.nytimes.com/2012/results/president/exit-polls Therefore, in 13 years, when the illegals will obtain citizenship under the Senate bill, something like 8-9 million new Democrats will be enfranchised making it impossible for a Republican to ever win a presidential election.)
Private citizens cannot sue DHS for violating the Secure Fence Act. Contrast that with an act of the executive branch which actually injures private citizens, such as by conducting a warrantless arrest or snooping of one’s email. Those acts can be instantly redressed by a civil rights 1983 suit against the federal official who committed the unconstitutional act. But nobody has standing to challenge the failure to build a border fence in federal court.
Will the DHS be more aggressive about building the fence now than in 2006 when it was controlled by a Republican? Or to put the question in pragmatic terms, does the Obama administration really favor a secure border? Reflecting popular sentiment, the President and his DHS Director say they they do and favor whatever measures are deemed necessary to enact the bill. But in practice they have done nothing to comply with the Secure Fence Act. No fence has been built since Obama came to office. And the DHS has granted extra-legal work permits to young illegal immigrants who entered the country as minors as well as decreeing that the agency would not deport illegals unless they committed a violent crime. Can an administration proclaim to be against illegal immigration while legalizing illegal immigrants? The question is Orwellian and we skeptics who judge by actions rather than words should not feel appeased by all of the tough talk.
The most obvious way to pass a law which tries to execute conflicting objectives (securing the border and giving illegals legal status) would be to do part one first and only implement part two when that is done. But this has been rejected in favor of a mere certification from DHS that the border is basically secure. Then, legalization is implemented. Again, DHS has every incentive to wiggle out of a sincere certification so that part two gets underway as quickly as possible.
The second issue is the economic effects of allowing the illegal immigrants here to obtain legal status. They are overwhelmingly poorly educated, unskilled and come from Mexico (Pew Hispanic Center). As I’ve written last month, admitting millions of low-skill workers into the labor market means they compete with Americans with high school educations for jobs resulting in lower wages and higher unemployment. Why do we want this? If we are to have immigrants, they should contribute skills to our economy and not become public charges. The Congressional Budget Office’s study, which has been cited by proponents of the bill, concludes it will depress wages for lower skilled workers and raise unemployment until 2020. http://www.cbo.gov/sites/default/files/cbofiles/attachments/44346-Immigration.pdf The good news is that the Bill’s increased level of legal immigration for high skilled workers will “generate additional technological advancements” thereby raising productivity. But to reiterate, there is no upside to increased low-skilled immigration.
Proponents of the Senate bill have nothing to say about this except nostalgia. Senator Lindsay Graham stated: “One of the critics of this bill…said the average illegal immigrant has a tenth grade education. Well, all I can tell you is you’ve got a United States Senator who came from parents that didn’t have a tenth grade education.” Senator Graham is ignoring the demographic data indicating that uneducated immigrants are a net drain on the treasury, costing the federal government billions more each year than they pay in taxes. http://www.cis.org/High-Cost-of-Cheap-Labor. How does he think they will fit into the information age economy, which is not the one his parents faced as high school drop outs? He cited no empirical data for his optimism.
Senator Flake of Arizona, who’s arguments for the bill were also steeped in nostalgia, offers a reminder that the demand for illegal labor will continue. Recalling his youth in Arizona, he stated: “we worked alongside migrant labor, undocumented migrant labor, largely from Mexico, who worked harder than we did under conditions much more difficult than we endured.” As long as this remains true, American employers will crave illegal Mexican labor. Senator McCain pointed out that the Senate bill eventually requires all employers to use the E-Verify system to check the employment authorization of new hires. But that requirement is phased in over five years. Why? (Could it be that employers don’t want to raise their labor costs? When was the last time any employer voluntarily agreed to unionize its employees?) But McCain simply overlooks reality. The current law also requires all employers to check the documents of new hires. If that isn’t working, why will E-Verify? He simply elides the real problem: does the nation have the political will to punish employers who cheat? Nothing we’ve leaned in this debate indicates they do or we are any more serious now than in 1986 and 2006 about enforcement.
IMMIGRATION AND I.Q.
June 3rd, 2013
Recently the Heritage Foundation, the most prominent conservative Washington, D.C. think tank, released its study of the proposed immigration bill. It concluded the costs of adding 11 million mostly unskilled and poorly educated immigrants would cost the taxpayers an enormous $6.3 trillion over a decade. http://www.heritage.org/research/reports/2013/05/the-fiscal-cost-of-unlawful-immigrants-and-amnesty-to-the-us-taxpayer. But much of the media’s attention was diverted by the fact that the co-author of the study, Dr. Jason Richwine, had written a doctoral dissertation concluding that Hispanic immigrants have, on average, lower IQ levels than other groups. The relationship of ethnicity and IQ is politically incorrect if, as occurred here, minorities under-perform whites. So Dr. Richwine was excoriated by left-of-center critics, the same people who attack conservatives and Republicans for “denying science” about global warming. The critics were, if Richwine is correct, denying science.
Heritage does a lot of politically incorrect work, and it should have stood by the right of scholars to do politically incorrect work regardless of whether it endorses the results (which it didn’t). Unfortunately, when the controversy arose, it made the fateful decision to sack Dr. Richwine rather than stand by him even though his controversial thesis had been written years before he joined the organization.
Here is one of the key conclusions from Dr. Richwine’s 2009 Harvard University dissertation:
“Mexican immigrants average in the mid-80′s [on IQ tests], other Hispanics are in the low 90′s, and Europeans in the upper 90′s, and Asians are in the low 100′s. IQ scores go up slightly in the second generation, but the scores of Mexicans and other Hispanics remain well below those of whites, and the differences persist over several generations.” Jason Richwine, IQ and Immigration Policy (Harvard University 2009).
The dissertation was accepted by three faculty members at the University’s Graduate School of Arts and Sciences and Richwine was awarded his doctorate of philosophy degree. (One of the three was Prof. George J. Borjas, one of the nation’s preeminent labor economists who specializes in studying the effects of immigration. He is an expert in some of our cases.) Critics immediately denounced Dr. Richwine as espousing racist ideas, as if the entire question of IQ and immigration is taboo. A Google search of “Jason Richwine racist” yields over 100,000 hits.
I have no idea if Dr. Richwine’s conclusions are correct. But the idea that we should take IQ into account in our immigration policy is absolutely correct. As I’ve written here many times, American immigration policy needs to be based on labor economics and long-term consequences. This means we put aside the myth of America as the refuge for the world’s uneducated and unskilled masses. This was our national immigration policy from 1887-1923 when the industrial revolution transformed the nation and the need for unskilled labor far outstripped our supply of workers. Since 1923, immigration policy has looked at each potential immigrant on a case-by-case basis and assessed whether the person has relatives here (not a good basis for admission, in my opinion) or the person’s skill level is high enough to be attractive to employers. If it is “racist” to look at IQ then it must also be “racist” to consider one’s skills. The skills recognized by our immigration laws are those acquired through formal education, and formal education tends to favor more affluent groups at the expense of minority applicants. The purpose of skilled immigration is to benefit the American economy. So consideration of IQ is not so outrageous a concept. Do Dr. Richwine’s critics want us to admit boatloads of immigrants without regard to their effect on unemployment rates, crime rates, and the likelihood they will go on public assistance?
Human beings may be born equal but when it comes to adult immigration, they are inherently unequal. Some are productive and contribute more in taxes than they consume in benefits. Some will become public charges. This is the premise of the Heritage Foundation Study. It concludes: “The children of unlawful immigrants, on average, will become net tax consumers rather than net taxpayers: the government benefits they receive will exceed the taxes they pay.” What Dr. Richwine did is to explore why this is true. We need to know why.
OUR SUICIDAL IMMIGRATION SYSTEM ON FULL DISPLAY
May 1st, 2013
By now, everyone knows the general outlines of the Tsarnaev family’s migration from the former Soviet Union to Cambridge, Massachusetts, to the Boston Marathon bombing. But the details exemplify most of the major flaws with our immigration system: we are too hospitable to refugees, we allow family members to reunite once one is here, and we still refuse to face the truth about young Muslim males.
Asylum is the status given to refugees, people seeking protection from persecution by their native country because of race, religion, ethnicity or “membership in a social group.” According to media reports, Anzor Tsarnev, the father of the bombers, entered the U.S. on a 90-day tourist visa in 2002, and then, when it had expired, sought asylum. Thus, his visa was obtained by fraud. He used the pretext of tourism to gain entry to the U.S. so he could make his asylum claim at a later time. Had the U.S. embassy in Russia known his true intentions, it would have been precluded from issuing him a tourist visa.
For some as of yet unknown reason, Mr. Tsarnaev, a Muslim, was granted asylum in 2002. Recall that was just months after 9/11, and we had severely curtailed all immigration by Muslims. (This episode demonstrates that it still unsafe to admit any young Muslim men to the U.S. because we simply cannot and will not monitor their lives to screen out radical jihadists.) Moreover, he was not really a refugee. Muslims were not “persecuted” in Russia. Tsarnaev was born in Kyrgyzstan, then part of the Soviet Union, and now an independent country with a Muslim majority. So he could have returned there, and did so after he married. And he apparently also had a Russian passport which would have enabled him to live in that country’s Muslim regions of Chechnya (where his family was originally from) or Dagestan, where his wife was from.
Somehow, Mr. Tsarnaev also managed to obtain asylum for his wife and two sons (their two other children did not enter the country, suggesting they lived safely back in Russia and undermining the entire claim for asylum). Over the years, they had brushes with police in Massachusetts and, as we are learning, obtained generous welfare benefits from that state and the federal government (food stamps), despite the U.S. law prohibiting public assistance to immigrants. (The law was enacted in 1996 to prevent precisely what occurred here, making our welfare state a magnet for refugees and other immigrants.) Mrs. Tsarnaev was arrested for shoplifting dresses from Lord & Taylor. Her legal defense was likely financed by the taxpayers. She absconded, returning to Dagestan, before trial. Son Tamerlan was arrested for assault and battery on his girlfriend in 2009.
His younger brother, Dzhokhar, actually obtained U.S. citizenship, but Tamerlan’s application was denied. Yet he was apparently given lawful residency (perhaps even a green card), despite this entire history of fraud, criminality and, as we know, incubating jihadism, which federal authorities should easily have detected by the simple fact that Tamerlan’s American-born wife converted to Islam, became estranged from her family, and began to dress in traditional Muslim garb.
In 2011, the Russian government, detecting links between Tamerlan to jihadist groups, took the unusual step of warning the U.S. government about the aspiring citizen. Both the F.B.I. and C.I.A. investigated him and found nothing awry. Yesterday, the President said he stood by the job the agencies had done. Even the brief narrative I have laid out here should have given the F.B.I. cause to suspect Tamerlan of harboring jihadist sympathies. And as a non-citizen, he could have been removed without a criminal conviction or even proof he may have convicted a crime. It’s not a crime to associate with extreme Muslim groups, but it certainly ought to result in the end of one’s asylum status or temporary residency. Technically, the law allows summary removal of asylees if a condition for their asylum is no longer present or they are a national security threat. Both were evident in Tamerlan’s case in 2011.
Anyone who believes, as the President does, that the immigration system served the nation well with regard to the Tsarnaev family has some explaining to do. How did the U.S. benefit from letting these people into the country? I think the entire immigration system failed us and our adherence to hospitality for supposed refugees and their civil liberties is verging on the suicidal. If “immigration reform” is needed, it should be constructed around preventing this case from recurring.
JUDGES HAVE MUCH DISCRETION IN INTERPRETING RICO
April 2nd, 2013
Two years ago, I expressed skepticism that Chevron Corp.’s RICO claim against New York City attorney Steven Donziger and his co-conspirators could survive (March 2011 blog). I was wrong. Judge Lewis A. Kaplan of the Southern District of New York has denied Donziger’s motion to dismiss the RICO complaint, alleging he is engaged in a massive scheme to extort vast sums of money from the giant oil company by having procured a $15 billion judgment against it in an Ecuadoran court. The Complaint reads like a novel, detailing the machinations Donziger undertook to convince an Ecuadoran judge to rule in his clients’ favor (the clients being Ecuadoran citizens whose property had been contaminated by Chevron and Texaco’s pollution over several decades). The alleged corruption includes influencing the judge, ghostwriting the court-appointed expert’s report which detailed the environmental contamination, organizing protests outside the courthouse, planting false stories about Chevron in the media, etc. One cannot read it and not believe Chevron has suffered a grave injustice (the judgment has since been affirmed on appeal by the Ecuadoran court system), but is there really a RICO case here?
Ordinarily, absent the staggering sum of money involved here and the attendant publicity, this case would have been dismissed. First and foremost, Chevron’s only injury to date is the payment of attorney’s fees in having to bring an action to stay enforcement of the Ecuadoran court’s $15 billion judgment. It successfully did so, meaning it has not paid a dime of it and will not be required to do so until an international tribunal gets to decide if it was procured by fraud. So has it really been damaged by a RICO predicate offense, as is required? The courts are divided as to whether the payment of attorney’s fees in order to defend frivolous litigation is “damage” for purposes of 18 U.S.C. § 1964(c), RICO’s civil damages provision. The Seventh Circuit has held such damage is “speculative, but Judge Kaplan ruled in favor of Chevron on this question without much evident difficulty.”
Secondly, a RICO plaintiff must allege a pattern of racketeering activity in order to state a claim (even though the plaintiff need only be injured by one violation, not the whole pattern). The pattern in this case is attempted (not actual) extortion from Chevron. If the Ecuadoran proceedings were such a sham that it amounted to a nonjudicial scheme to extort money from the company, then perhaps the lawsuit would amount to extortion dressed up as the judicial process. But generally, the courts have held that frivolous lawsuits are not a form of extortion for purposes of RICO. And the other predicate acts are nothing more than bad-faith litigation tactics which, unfortunately, go in many cases, i.e., manufacturing false evidence and “holding out the [expert] report as independent and neutral when it was not.” If that is the basis for a RICO suit, then the federal courts may be hearing a lot of disgruntled litigants filing RICO cases to effectively appeal their losses.
Yet, Judge Kaplan saw no particular problem with allowing these tactics to be pleaded as “mail fraud” and used as RICO predicate acts in this case. Third, RICO cannot be predicated upon “extraterritorial” (foreign) conduct. Yet, here, too, Judge Kaplan sided with Chevron despite a decision from the Second Circuit which would have allowed him to dismiss the case.
I’m not saying Judge Kaplan’s rulings are wrong. I am saying he is using every bit of his considerable discretion in Chevron’s favor to allow its RICO case to proceed. He has also ruled against Donziger on discovery orders, requiring him to turn over some of his correspondence with a law firm that is ordinarily privileged, invoking the “crime-fraud” exception to the attorney-client privilege. Federal judges are rarely so generous to RICO plaintiffs. Judge Kaplan plainly believes RICO is appropriately used in this case, despite the fact that Chevron has other legal remedies (it also pleaded common law remedies of fraud, tortious interference with its business and civil conspiracy). This underscores that discretionary nature of RICO, and other vaguely worded statutes.
All of this goes to show that federal judges can sustain many RICO cases if they believe the plaintiff has been grievously wronged. Precedents can be distinguished to death, legal rules can be stretched, and consequently, the federal courts will be the forum to hear what otherwise would be big, but fairly typical, state-court litigation. A RICO lawyer pleading a case should use every opportunity to present his client’s case to make the injustice clear and irresistible.
DID LANCE ARMSTRONG VIOLATE RICO?
March 1st, 2013
Lance Armstrong has confessed to using banned performance enhancing substances for several years in order to win the Tour de France bicycling competition. This entailed the use of testosterone and other “controlled substances” banned by federal law. This might have violated the Travel Act (18 USC § 1951), which prohibits using the facilities of interstate commerce to commit certain federal crimes which include the use of controlled substances and bribery. The first is now established. Armstrong has not admitted to bribery, but the head of the U.S. Anti-Doping Agency (USADA) alleged on 60 Minutes that Armstrong made a $100,000 “donation” to the International Cycling Union (UCI), the organization with jurisdiction to enforce the rules against doping for the Tour de France and other events it oversees. Such a “donation” by a regulated person to the regulator is a plain conflict of interest putting UCI in the untenable position of overseeing, and perhaps disciplining, a benefactor. When USADA was closing in on Armstrong last year, he did the same thing, offering a “donation” to the organization, which this time was properly rejected out of hand. So we have one allegation of bribery made to influence a foreign entity and an attempt to bribe a law enforcement entity. These are two potential RICO violations in addition to the myriad of controlled substance violations. But there are many more.
In order to carry out years of illegal doping, Armstrong would have had to enlist the aid of other people. He employed a “doping doctor” to accompany him on tournaments and finesse the administering of the narcotics as efforts to detect them varied from place to place. Armstrong also employed assistants who handled the logistics of his of the doping with the doctor wherever he was racing (not just in France). This type of organization requires lots of communication among the participants. Those would have been made by e-mail and phone calls across state lines and in foreign commerce. Such uses of the wires were, in RICO-speak, made to execute a “scheme to defraud” the UCI and Armstrong’s competitors.
So he has likely, given his confession, committed a pattern of RICO violations. Moreover, he did so while participating in cycling teams and other business entities he has created, so there are several RICO “enterprises” involved. Taken together, there are two of the elements of a RICO violation, a pattern of racketeering and the use of an enterprise.
Yet, the U.S. Attorney who investigated him has decided not to prosecute Armstrong. Absent an explanation, we can only speculate why no RICO indictment (or for any crime) was brought. So the issue becomes what about those who have been harmed by his illegal conduct? For starters, can his his fellow cyclists who unsuccessfully competed against him in the Tour de France and other races sue him on the theory that they would have won had he not cheated? This might be possible because courts have allowed RICO cases where the plaintiff complains of losing a valuable chance to win something, such as bidding for a contract, because the defendant competes illegally. A statistician could estimate the likelihood of a losing cyclist having won a tournament if Armstrong was not competing, i.e., creating a new legal race, at least on a computer. The answer will not, of course, perfectly recreate the race and is dependent on some conjecture, but damages don’t have to be exact, and a case could proceed all the way to the jury on such a theory of damages. (I am assuming the plaintiff cyclist would have been clean, perhaps not a realistic assumption given what we know about the sport).
We also know that Armstrong has a history of intimidating those who squeal on him. This occurred during his races and in the last two years as USADA took sworn statements from fellow cyclists about his doping. This is witness tampering, another RICO offense. However, the damages such acts cause are likely to be emotional trauma rather than loss of money, which RICO requires. (Cyclist Tyler Hamilton offered a fist hand account of Armstrong’s threat on his life after he testified to USADA on 60 Minutes.) Yet, some witnesses may have lost business opportunities because they were intimidated by Armstrong’s tactics. Any such people may have RICO claims and can easily establish a pattern of related acts.
I have no way of knowing about others who have been victimized by Armstrong over the years. He has a reputation for employing posses of tough lawyers to threaten anyone who gets in his way in and out of cycling. For example, his Livestrong Foundation, which does good works in helping fight cancer, is a trademark bully. Its lawyers file objections to anyone in the country trying to register any trademark using the word “live” or ”strong.” The Foundation fought a woman’s request to register a trademark for her small business, “Live the Beauty,” which had nothing to do with fighting cancer. There was no risk that people interested in Livestrong Foundation would not find its website because they were confused by a company selling sports equipment called “Live the Beauty.” Unable to afford a lawyer to fight the Foundation in the Patent and Trademark Office, she just gave up. This may well have been a totally frivolous objection to her trade name. If so, it could have been yet another use of the federal mail and wires to defraud someone who allegedly stood in Armstrong’s way.
All in all, it’s a sordid picture of illegal behavior over many years. All of the elements of a RICO violation seem to be here. I hope justice is done.