In depth The US Citizenship and Immigration Service (USCIS) last October proposed new rules to reform the H-1B visa program following its acknowledgement of widespread fraud in April last year.

At that time, USCIS, part of the Department of Homeland Security, announced it had "undertaken extensive fraud investigations" based on suspicions that certain employers - such as some IT outsourcers - were attempting to abuse the H-1B lottery process by submitting multiple visa applications for the same person.

The USCIS Notice of Proposed Rulemaking (NPRM) issued in October includes measures to modernize the H-1B program, to make it more flexible, and to ensure program integrity through fraud mitigation. The final rule was announced in January.

The H-1B program is intended to allow folks with specialized knowledge to work in the US. The visa is a gold ticket to America for foreigners: among other things, it gives them a runway to apply for permanent residency, and greater freedom, which in turn provides a pathway to citizenship.

The tech industry - which has come to rely on H-1B workers - welcomed the rule revision, citing abuse of the application process.

Intel, in comments filed with USCIS last November, argued that "As is true for other employers, the misuse of the H-1B registration process has undermined Intel's ability to retain critical talent. Since implementation of the electronic registration system, Intel's H-1B selection rates have steadily plummeted, hampering efforts to expand its semiconductor design and manufacturing efforts in the United States. A system meant to help administer the H-1B lottery process has instead become a source of frustration and disappointment."

The changes may not be enough, however.

"I'd say it's insufficient," opined Robert Law, director of the Center For Homeland Security And Immigration at the America First Policy Institute, who served as a senior policy advisor and chief of policy at USCIS during the Trump administration.

Law, in an interview with The Register, suggested policies adopted by the Trump administration that prioritized people by skill might have helped, but were abandoned by the Biden administration. "And really, I don't think the Biden administration has done anything in the H-1B space that puts integrity into the system and accountability."

I don't think the Biden administration has done anything in the H-1B space that puts integrity into the system and accountability

"The new rules are only intended to address one aspect of fraud, which is multiple submissions by the same person," noted John Miano, a fellow with the conservative Center for Immigration Studies, who has testified before Congress about foreign labor. "But that isn't going to do very much at all. There's no tracking of people through the process. The reality is too many people benefit from the fraud so it goes on."

Across the political aisle, the progressive Economic Policy Institute (EPI) expressed similar skepticism about the USCIS proposals.

Responding to the NPRM's solicitation for comments, EPI declared: "[T]he H-1B Modernization rule only tinkers at the edges of improving program integrity, but fails terribly to tackle any of the real problems that have been documented by investigative news reports, government audits, and researchers like ourselves - while simultaneously proposing to dramatically expand the size of an H-1B program that remains vulnerable to rampant fraud and abuse."

The H-1B program was created in 1990, and presently allocates 85,000 spots annually for temporary non-immigrant workers to come to the US - ostensibly to fill gaps in the American labor force. Counting other exemptions like those afforded academic institutions, the program awards about 130,000 visas per year to foreign workers, and renews about 300,000 previously awarded visas - which typically last for three years and can be extended for another three.

The process works as follows: Eligible H-1B applicants, or companies representing them, register to enter the H-1B cap lottery. Some 20,000 advanced degree petitions and 65,000 general petitions get selected. For selected registrants, employers can submit H-1B petitions on behalf of prospective employees. USCIS then processes the selected petitions and those approved can then come and work in the US.

Previously, employers submitted completed H-1B petitions in March and USCIS conducted its H1-B cap lottery at the end of that month to determine which petitions would be processed for the 85,000 slots.

The new process is similar, but applicants must provide a valid passport or travel document during electronic registration - under the new rules, a beneficiary may not be registered under more than one travel document. Also, now all employers and their would-be employees have to have a shared "myUSCIS organizational account" for the registration process. Once registration is concluded, USCIS randomly selects 85,000 registrants from the pool and notifies registering employers that they can file an H-1B petition on behalf of the selected employee.

The goal here is ideally to prevent employers from gaming the lottery system by submitting multiple registrations for a single beneficiary.

As we reported last year, demand for these visas far outstrips supply, with 780,884 applications for FY 2024 (received between March 1, 2023, and March 17). That's up from 483,927 for FY 2023. The FY 2025 lottery concluded on March 25, 2024, after being extended three days to make up for a system outage. The total number of applications has yet to be released - but as before, 85,000 H-1B visas are expected to be awarded.

Exploited

The H-1B program has been criticized for various reasons. EPI, for example, notes that American employers do not have to recruit US residents before hiring foreign H-1B workers, that it's legal for US employers to underpay H-1B workers, relatively speaking, and that H-1B workers are often exploited and lack job protection and mobility, among other issues.

Then there's the fraud. "For years, the H-1B program has been riddled with large-scale fraud yet the agency failed to take adequate fraud-prevention measures," the EPI argued. "The integrity efforts proposed in the NPRM are welcome, but even if fully implemented, would address only a fraction of the fraud."

"The system is entirely written to promote fraud," asserted the Center for Immigration Studies' Miano, noting that while the H-1B statute dictates workers are supposed to be paid a prevailing wage for their role and industry, employers get to determine that prevailing wage, and neither the US Department of Labor nor USCIS can really challenge the listed figure.

One form of H-1B fraud involves companies colluding to file multiple petitions on behalf of the same foreign worker. This serves to give the IT consultancies involved in trying to bring this worker to the US a greater chance of having their applicant selected, and of collecting a commission. As above, that's supposed to be more difficult under the new system.

A 2017 report [PDF] from the DHS Office of the Inspector General noted that many technology consulting firms submitted petitions for workers with the intent of contracting them out to a third party, and that "in many cases, the projects provided within the petition are non-existent."

"When I was at USCIS," explained Law, "you would have registrations or petitions with very common names. The belief from some of the fraud folks was that some of the common names were inserted in there and then these businesses, after they won the lottery, would then go out and actually find somebody [with that name] as opposed to having a real candidate in place."

Indentured

The fraud extends beyond gaming the visa lottery.

A source familiar with the Indian IT community in the US - who asked not to be identified out of concern for retribution - described a culture of corruption through which technology consultancies, working with larger firms that turn a blind eye to abuse, exploit the lack of H-1B oversight for financial gain.

"It's not just that multiple visa applications are put in for one person to obtain a H-1B visa," our source explained. "Once the visa is obtained, that student then works off the cost of that visa (illegal but more common than not) - usually in a 70/30 split favoring the student at whatever tier they were hired in at. The higher tier you get recruited at, the better off you are with pay. They will also have indentured servant-like debt as the prize for getting to America."

They will also have indentured servant-like debt as the prize for getting to America

Foreign students studying in the US who didn't win the visa lottery may play a role in further fraud. We're told some consultancies tap up foreigners to work for clients illegally using the identities of legit citizens or green card holders.

"That's where the true scam is and the real money is at," our source explained. "These people, recent IT grads, will do almost anything to stay in the US and work an IT job. The visa scam is small potatoes compared to what happens to the losers.

"They are offered jobs paying fractions of a dollar, to live with six people in a one bedroom apartment to manage costs. These people number in the thousands each year, compounded over decades."

"Their job is to impersonate a green card holder or US citizen to receive 30 percent of the pay," with 70 percent going to the people organizing the fraud, our source continued. "Why? Because it’s still more money than their family back home could dream about.

"The winner is the consultancy … This scam is decades old and is becoming a massive problem in the IT market. And quite frankly, it's a major national security threat since it's a large exploitable population with access to sensitive American data."

These problems extend to other guest worker programs such as the Optional Practical Training (OPT) scheme, which allows foreign students to work in the US for 36 months. In Senate budget committee testimony [PDF] last September, Ronil Hira, an EPI researcher and associate professor in the department of political science at Howard University, described OPT as an unauthorized guest worker program that isn't policed because Homeland Security insists that it's merely a training program.

"OPT workers directly compete with, and substitute for, US workers," argued Hira. "I know at least one worker who unwittingly trained his OPT replacement. When he filed formal complaints to ICE and the Department of Justice, the agencies told him tough luck."

Then there's the fraud that happens after the visa selection process, in which IT consultancies for large clients create work for themselves, to boost billable hours. For example, our source recounted an incident from years past involving an individual who worked for a healthcare firm under another green card holder's name.

"Whenever he wanted overtime, he would just bring down the servers and cause a P0 [high-priority trouble ticket] to come through," we're told. "You know, he and his team would get paid. And that meant that they would maybe get like 10 to 12 hours of overtime, all the while knowing how to solve the problem. They created extra income for themselves."

Our source opined that while IT outsourcing of this sort is supposed to reduce costs, the consultancies providing these services are organized to do the opposite.

"They inflate the cost by doing these types of things, making things more difficult than they need to be. And it's not like any one person is ever doing it. But it is a culture that is causing it. They're not trying to actually make things easier, faster, more affordable, more reliable, and so on. They're just doing whatever will to cause enough roles to be created so the consultancy is warranted."

Outsourcing

During his testimony Hira described how the H-1B program evolved.

"More than twenty years ago, Cognizant, Infosys, and Tata Consultancy Services (TCS) pioneered the H-1B-outsourcing business model, which was so profitable it quickly came to dominate the IT services industry. They offer customers a way to cut costs by outsourcing their US IT work to a team of on-site (in the US) and offshore workers."

The ratio of on-site to offshore workers, said Hira, was commonly 30/70, because a portion of jobs could not be shipped overseas.

"Rather than hire US workers to perform the onshore work, these firms hire large numbers of H-1B and L-1 visa workers to fill the jobs in America," Hira explained to the Senate committee. "Exploiting the visa programs enables them to drive revenue growth and increase firm profitability. Hiring visa workers instead of US workers offers advantages. The H-1B guest workers are controllable, indentured, and are paid less than the US workers, and they facilitate the transfer of work to offshore teams in India."

USCIS last year highlighted its "extensive fraud investigations" and "referrals for criminal prosecution." Yet, a year later, it has added just two orgs to its Willful Violator list: Bonzer, LLC and BER-IT, Inc. If there is a fraud crackdown underway, it's not particularly visible.

American workers are being sidelined, overlooked and their wages are being suppressed

Law believes the primary concern is the impact the H-1B program has on the economy.

"American workers are being sidelined, overlooked and their wages are being suppressed because of H-1Bs," he argued. "Whether it's IT outsourcing firms or major companies like Microsoft, IBM, Facebook, Apple, and so on, the way the law was drafted and is currently being applied, all of these companies are legally allowed to pay less than market wages."

In 2021 rulemaking, the US Department of Labor estimated that employers were underpaying H-1B workers to the tune of $15 billion per year.

Since December, 2023, according to the Wall Street Journal, at least 22 former employees of TCS, India's largest IT consultancy by revenue, have filed complaints with the US Equal Employment Opportunity Commission. They allege the firm illegally discriminated against them based on race and age by firing them and giving their jobs to lower paid Indian tech workers on temporary work visas.

The EEOC investigation is ongoing, and may or may not result in a formal complaint, but TCS has denied any wrongdoing.

While the US Justice Department has had some success going after visa fraud, it doesn't always prevail. In 2017, former TCS employee Anil Kini filed a whistleblower lawsuit against TCS alleging the company "violated the False Claims Act (FCA) by failing to obtain H-1B visas for, and pay the proper H-1B wage rate to, employees who were engaged in H-1B visa work, as well as retaliating against [him] for investigating the scheme."

In February the case, which had been taken over by US government prosecutors, was dismissed because the judge determined TCS "did not have an 'obligation' under the FCA to pay its employees higher wages" and because Kini's investigation was not a protected activity under the FCA. That decision has been appealed.

Law asserted that the biggest outrage is staffing companies, and pointed to Disney's replacement of US workers with H-1B workers several years ago.

"Many of these fired American tech workers are forced to sign various nondisclosure agreements or they can only get a severance package if they shut up, and things like that," he alleged. "Pretty much the entire tech industry has determined that H-1Bs are part of their business model."

Law doesn't expect the H-1B rule changes to have much impact on fraud.

"You're seeing a far more brazen attitude by those who have made it a business of their own to help people game the H-1B system," he lamented.

"The fact that a quick Google search can find you a chat room - or Discord server or Reddit thread or whatever the case may be - about how to do things that are not above board, the H-1B context just goes to show that there are not currently really any repercussions for doing those things. So until the Department of Homeland Security, Department of Labor, [and other agencies involved in this] get serious about it, you're going to continue to see [fraud] happen on a very large scale." ®

https://www.theregister.com//2024/04/09/h1b_visa_fraud/