A gang of illegal migrants from Ukraine supplied illegal labor to hotels and bars in the Florida Keys for 14 years, according to a federal indictment.
The Ukraine-based criminal conspiracy apparently excluded thousands of young Americans from resort jobs while allowing hotel investors to profit from compliant and cheap migrants.
“[Mykhaylo] Chugay and his co-conspirators also defrauded the IRS out of more than $25 million in income and Social Security and Medicare taxes that should have been collected and paid over in connection with the employment of these workers … [and] sent checks and wires totaling more than $11 million in proceeds from the illegal scheme to conspirators in Ukraine and elsewhere,” said an August 26 statement from the department, which announced a 24-year sentence for one of the traffickers.
The unpublicized federal indictment from July 2020 is silent about the scale of the operation. Instead, it focuses on the illegal export of criminal proceeds to Ukraine and on just one example of illegal employment in 2018.
But an August 2021 report from KeysWeekly.com outlined the scale of the Ukrainians’ labor trafficking, which may have supplied labor to “dozens” of hotels:
As a result of the indictment, the targeted staffing companies — and others concerned about similar legal actions — shut down, leaving hundreds of illegal workers without income and often without their employer-provided housing.
…
A mid-level hotel manager of one of the Marathon resorts said nearly 95% of the employees at the Marathon resort were contract laborers, and another property is probably down 40% of its employees. “I know I will be cleaning toilets tomorrow,” that person said.
The situation has left dozens of Keys hotels without housekeepers, dishwashers and other crucial positions, prompting a string of increasingly negative reviews on travel websites such as TripAdvisor.
The Ukrainian firms reportedly also supplied staff to condominiums.
A local employer rationalized the cheating to KeysWeekly, just after the Ukrainian gang was indicted:
“But it’s a bad situation that’s absolutely necessary,” Jodi Weinhofer, president of the Lodging Association of the Florida Keys & Key West, told the Keys Weekly on Aug. 20. “I know that during COVID, two local contract labor companies left the Keys or moved to the mainland. And I heard today that another contract labor company is leaving or out of business. This couldn’t possibly come at a worse time. Between losing contract workers and COVID, I don’t know how businesses are doing it.”
Former ICE enforcement official Joe Feere declined to sympathize with the hotel employers:
These employers are discovering that relying on illegal labor is not a good business model. All they had to do was offer decent wages in order to attract a lawful workforce and they could have avoided all of this, including the negative reviews from vacationers.
“It’s great to see HSI [Homeland Security Investigations] and the IRS working jointly to target this unlawful activity,” said Feere, adding:
But they need to expand investigations and speed them up. HSI leadership agreed with me that their investigations oftentimes go on for way too long and that multiple, smaller investigations with quick resolutions are oftentimes more effective at discouraging unlawful employment than a singular, larger investigation that takes years to get across the finish line.
The IRS involvement shows how routine tax rules can be used to expose and prosecute traffickers, said Feere, who now works with the Center for Immigration Studies.
The Social Security Administration “knows which employers are the greatest contributors to his fraud, and yet they’re not doing much about it,” he said. “Tolerating this abuse creates real victims.”
The Ukrainians exploited loopholed visa laws to displace Americans with illegal workers for blue-collar jobs in bars, hotels, and restaurants for 14 years. Those visas include the J-1, B-1/B-2, and E-2 visa programs. Many of their employees were paid just $11 per hour, according to one report. The low wage would require six workers — excluding children — to pool their wages for a two-bedroom apartment in the area.
On September 2021, the Washington Post’s Greg Jaffe reported on the resulting American poverty in high-migration, low-wage Florida:
[Rose’s] grandmother suffered a heart attack and the family income shrank to about $2,000 a month, the sum total of her mother’s and grandmother’s disability checks. Home became a series of motel rooms. Rose celebrated her 15th birthday at the Duo Boutique Hotel. Her parents couldn’t afford a present that year so her stepfather, an amateur tattoo artist, offered his services as a gift. “Don’t get anything stupid, and don’t get it where anyone can see it,” Rose’s mother warned.
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She stared out her window at the piles of rotting trash, roving pit bulls and the long-abandoned swimming pool. Her brother dashed outside to meet a church bus that was giving away free lunches in the motel’s circular driveway. The heat was stifling. Rose mopped her face with her T-shirt. “Damn,” she said. “We’re stuck.”
Much of the labor trafficking for white-collar jobs is delegated to Indian executives, often living legally in the United States, and often via the loopholes in the H-1B, OPT, L-1, J-1, TN, B-1/B-2 visa programs. In February 2022, SanJoseInside.com reported:
Namrata Patnaik of Saratoga and Kartiki Parekh of Santa Clara face federal visa fraud charges, plus accusation of conspiracy to commit visa fraud in a $7 million H-1B visa scheme announced by federal prosecutors.
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The indictment charges that from 2011 through April 2017 Patnaik and Parekh submitted fraudulent H-1B visa applications for foreign workers sponsored by PerfectVIPs and that Patnaik later laundered the proceeds of the visa fraud. The indictment charges that from 2011 through April 2017 Patnaik and Parekh submitted approximately 85 fraudulent H-1B visa applications for temporary nonimmigrant workers sponsored by PerfectVIPs.
Foreign nationals are well positioned to run criminal enterprises in the United States, partly because they can build extensive networks of home-country associates and can run much of their business in foreign jurisdicti0ns. Often, they can also elude extradition to the United States.
These groups are aided by business-backed progressives in the United States. On August 27, for example, the Colorado Sun posted an article urging mass migration: “Throughout history, America has welcomed individuals from all over the world who have helped to define and shape our democracy. Thus, the question is not whether to welcome immigrants. It is imperative to act now.”
The Ukrainian labor-trafficking ring involved six people, said federal documents. The August 26 justice department statement admitted:
Chugay conspired with others to encourage some workers to enter the United States and remain in the country, in violation of immigration laws. Chugay and others sent checks and wires totaling more than $11 million in proceeds from the illegal scheme to conspirators in Ukraine and elsewhere.
The 2021 agency statement says:
According to the indictment, Mykhaylo Chugay, Oleksandr Morgunov, Volodymyr Ogorodnychuk and others owned and operated a series of labor-staffing companies in southern Florida, including Paradise Choice LLC, Paradise Choice Cleaning LLC, Tropical City Services LLC, and Tropical City Group LLC, between August 2007 and July 2021.
The indictment –found at 4:21-cr-10008-JEM — provides more information about six of the Ukrainians:
O.O. was born in the Ukraine and camee to the United States on an exchange visitor non-immigrant visa in June 2004. He overstayed his visa and petitioned to adjust his immigration status in August 2004.
U.O. received authorization to work in the United States in November 2004. He resided in Florida from approximately August 2004 until April 2013.
O.Y . was born in Ukrain and came to the United States on an exchange visitor non-immigrant visa in May 2007. He overstayed his visa and petitioned to adjust his immigration status in May 2011. O.Y. received authorization to work in the United States in July 201 1. He resided in Florida from approximately October 2007 until March 2016.
Defendant MYKHAYLO CHUGAY was born in Ukzaine and came to the United States on a temporary non-immigrant work visa in November 2007. The defendant overstayed his visa and petitioned to adjust his immigration status in September 2010.Defendant CHUGAY received authorization to work in the United States in October 2010, became a permnent resident of the United States in December 2010, and resided in Florida since that time.
Defendant OLEKSANDR MORGUNOV was born in Ukraine and came to the United States on an exchange visitor non-immigrant [J-1] visa in July 2006. The defendant overstayed his visa and later petitioned to adjust his immigration status in January 2011. Defendant MORGUNOV received authorization to work in the United States in January 2011, became a permanent resident of the United States in April 2011, and resided in Florida since that time.
Defendant VOLODYMYR OGORODWCHUK was born in Ukraine and came to the United States on an immigrant work visa in February 2012. The defendant became a naturalized U.S. citizen in April 2019. Defendant OGORODNYCHUK resided in Florida from approximately February 2012 until October 2020.
The leaders of the Ukrainian gang escaped back to Ukraine during the slow-motion investigation from 2013 onwards. The indictment says:
On or about April 16, 2013, after learning that he was under criminal investigation, O .O. left the United States and retarned to Ukraine, a country that has no no extradition treaty with the United States. Since leaving, he has remained outside the United States.
15. On or about May 2016, after learning that he was under an investigation, O.Y. left the United States and returned to Ukraine. Since leaving, he has remained outside the United States.
16. After leaving the United States, O.O. and O.Y. continued to exercise control over the Defendants’ labor staffing companies.
17. On or about October 28, 2020, after learning that he was under criminal investigation, defendant OGORODNYCHUK left the United States and returned to Ukraine. Since leaving, he has remained outside the UnitedStates.
The indictment says the smuggling operation was run from Ukraine. This statement suggests that the gang recruited many of their workers in Ukraine, and got them into the United States on legal B-1/B-2 visitor visas. Once in the United States, the gang — and the employers — could pretend the workers were on J-1 summer work visas.
Many apparently respectable companies, including Fortune 500 firms, use staffing firms to recruit illegals, including white-collar workers imported via fraud. The distancing tactic is safe because the legal liability only falls on the company that directly pays the illegals.
The stock value of the hotel industry has grown rapidly since 2008 amid the government-created cheap labor bubble. Payroll can be half of a hotel’s cost, so the payroll reductions created by migrant labor can dramatically boost a hotel chain’s stock value. Unsurprisingly, investors in the hotel industry spend heavily — and lobby the GOP — to preserve the inflow of compliant and cheap labor into the United States.
Court documents, including a 2017 lawsuit, name several businesses linked to the Ukrainian gang. They included La Concha, Pier House, and Southernmost House.
The entire story of labor trafficking, visa loopholes, excluded Americans, corporate complicity, and slow federal investigations “is gross on multiple levels,” Feere said.
Extraction Migration
It is easier for government officials to grow the economy by immigration than by growing exports, productivity, or the birth rate.
So Washington, DC, deliberately extracts millions of migrants from poor countries and uses them as extra workers, consumers, and renters. This extraction migration policy both grows and skews the national economy.
It prevents tight labor markets and so it shifts vast wealth from ordinary people to investors, billionaires, and Wall Street. It makes it difficult for ordinary Americans to advance in their careers, get married, raise families, or buy homes.
Extraction migration slows innovation and shrinks Americans’ productivity, partly because it allows employers to boost stock prices by using stoop labor and disposable workers instead of the American professionals and productivity-boosting technology that would allow Americans and their communities to earn more money.
This migration policy also reduces exports by minimizing shareholder pressure on U.S. companies to build up beneficial and complementary trade with people in poor countries.
Migration undermines employees’ workplace rights, and it widens the regional economic gaps between the Democrats’ cheap-labor coastal states and the Republicans’ heartland and southern states.
An economy fueled by extraction migration also drains Americans’ political clout over elites, alienates young people, and radicalizes Americans’ democratic civic culture because it gives an excuse for wealthy elites and progressives to ignore despairing Americans at the bottom of society, such as drug addicts.
This economic strategy is enthusiastically pushed by progressives who wish to transform the U.S. from a society governed by European-origin civic culture into an economic empire of jealous identity groups overseen by progressive hall monitors. “We’re trying to become the first multiracial, multi-ethnic superpower in the world,” Rep. Rohit Khanna (D-CA) told the New York Times in March 2022. “It will be an extraordinary achievement … We will ultimately triumph,” he boasted.
But the progressives’ colonialism-like economic strategy kills many migrants. It exploits the poverty of migrants and splits foreign families as it extracts human resources from poor home countries to serve wealthy U.S. investors.
Progressives hide this extraction migration economic policy behind a wide variety of noble-sounding explanations and theatrical border security programs. Progressives claim the U.S. is a “Nation of Immigrants,” that migration helps migrants, and that the state must renew itself by replacing populations.
Similarly, establishment Republicans, media businesses, and major GOP donors hide the skew towards investors by ignoring the pocketbook impact and by touting border chaos, welfare spending, migrant crime, and drug smuggling.
Many polls show the public wants to welcome some immigration. But the polls also show deep and broad public opposition to labor migration and the inflow of temporary contract workers into jobs needed by young U.S. graduates.
This “Third Rail” opposition is growing, anti-establishment, multiracial, cross-sex, non-racist, class-based, bipartisan, rational, persistent, and recognizes the solidarity that American citizens owe to one another.