Grassley Concerned about Fraud and Abuse in L-1 Visa Program

WASHINGTON – In an effort to root out fraud and abuse from foreign visa programs, Senator Chuck Grassley has asked the Department of Homeland Security inspector general to investigate the L intracompany transferee visa program.  The L-1 visa program permits companies with businesses in both the United States and overseas to transfer employees from their foreign operations to their operations in the United States. 


“I have grown increasingly concerned that loopholes within the L-1 visa program have led to manipulation and broad overreach by those who use the program and have resulted in a great deal of fraud and abuse within the program,” Grassley said. 

The L-1 visa program was last reviewed by the inspector general in 2006.  The report said that the program was vulnerable to abuse.  It appears that the recommendations made in that report were never implemented.

Grassley outlined specific areas of concern in his letter to Acting Homeland Security Inspector General Charles Edwards.  Among those concerns are an unclear number of L-1 visa holders actually in the United States, a broad definition of “specialized knowledge,” a disconnect between the Departments of Homeland Security and State on blanket petitions, and the alleged use of L-1 visas to circumvent requirements of H-1B visas.

As a proponent of legal immigration, Grassley has been working to eliminate fraud and abuse within existing visa programs. He has been a staunch advocate for reform of the H-1B program and has introduced legislation in previous congresses to address the issues found through his years of oversight.

Here is a copy of Grassley’s letter to Edwards.

                                                            March 29, 2011

The Honorable Charles K. Edwards

Acting Inspector General

U.S. Department of Homeland Security

Washington, D.C.  20528

Dear Acting Inspector General Edwards:

I am writing to you regarding my concerns about the L intracompany transferee visa program, and am requesting your office’s help to investigate the fraud and abuse in the program.  The Office of the Inspector General (OIG) completed a report in January 2006 reviewing the vulnerabilities and potential abuses of the L-1 visa.  I believe an updated study is warranted.

The review completed by the OIG in 2006 concluded that the L-1 program was vulnerable to potential abuse because of four main weaknesses: 1) U.S. Citizenship and Immigration Services (USCIS) adjudicators found it difficult to verify that L-1A managers and executives would in fact be employed by the importing U.S. company in a managerial/executive function; 2) the definition of “specialized knowledge” category was so broad as to be meaningless, thus making almost every L-1B petition approvable; 3) adjudicators in the U.S. found it difficult to verify the existence of a firm’s operation abroad; and 4) opportunities for abuse created by new office petitions and self-petitions.  The report also touched on displacement of American workers and the use of “body shops” to transfer workers to third-party sites.

At the time, the OIG had three recommendations for USCIS.  First, the OIG recommended that USCIS establish a procedure to obtain overseas verification of pending H and L petitions by Department of State offices in related countries.  Secondly, USCIS was to explore whether Visa Security Officers could assist in checking the bona fides of L petitions submitted by petitioners in the countries in which the officers are assigned.  Finally, USCIS was to seek legislative remedies after consultation with others in the L Visa Interagency Task Force. 

Unfortunately, many of the recommendations your office made in 2006 have not been implemented or adequately addressed.  An updated report from your office should include the extent to which these recommendations have been fulfilled, or an explanation as to why they were ignored.  I’d like to know why the Department of Homeland Security and USCIS have failed to fully undertake the OIG’s recommendations. 

Serious loopholes continue to exist or be manipulated by foreign nationals and the companies that use the L visa program.  There’s growing concern by many experts that companies are turning to L visas when the supply of H-1B visas are low.  There is also a general consensus that L visas are being used to bring in “rank and file” employees rather than top-level professionals with truly “specialized knowledge.” 

Below are additional aspects, expressed concerns, and questions that remain about the L visa program that need a more thorough review so that USCIS and Congress can improve the way these visas are processed and adjudicated. 

Number of L visa holders currently living in the U.S.
It’s unclear how many L visa holders are in the United States.  The Departments of State and Homeland Security may have separate figures because of their unique roles in adjudicating these visas.  The Department of State, for example, is responsible for adjudicating petitions by applicants for L-1B specialized knowledge visas under an approved blanket petition; it is my understanding these approvals are not necessarily included in USCIS statistics.  Moreover, the program was not created specifically for computer or IT companies, yet they are the biggest users.  From which countries do L visa holders come, and how has the trend changed, if at all, in the past 10 years?  I would like a complete statistical analysis of the numbers, including a breakdown of data by L-1A and L-1B, and by employer.

Specialized Knowledge
Congress defined L-1B “specialized knowledge” in the Immigration and Nationality Act (Section 214(c)(2)(B)) to be “specialized knowledge of the company product and its application in international markets or has an advanced level of knowledge of processes and procedures for the company.”

Despite this definition, there’s concern that USCIS may be interpreting “specialized knowledge” to include someone highly skilled or someone with specialized knowledge of certain products, but not necessarily relating to the petitioning company.  Moreover, it appears that the definition has loosened up over time and that USCIS and the Department of State may now interpret the definition differently.  Recently, on January 11, 2011, the Department of State issued new guidance to consular officers on how to adjudicate visas under the specialized knowledge category.  I have attached the guidance for you.  Has USCIS updated any guidance on this issue for its adjudicators?  USCIS stated in its November 9, 2010, response to the USCIS Ombudsman’s 2010 Report to Congress that the USCIS Administrative Appeals Office (AAO) “is working to publish a precedent decision or series of decisions on specialized knowledge” that would be published “in the near future.”  I am interested in knowing if USCIS should act immediately on the AAO’s decisions, and if the OIG has any recommendations in this area. 

Using the L visa to set up a new branch office
Under regulation, those establishing a new office in the United States have one year to prove that they have, in fact, established a new branch or office.  The petitioner must provide evidence of business plan implementation, including wages paid to employees and the businesses’ financial statements, in order for his or her L-1 visa to be renewed.

Are the existing regulations for this category sufficient?  Are adjudicators doing the necessary follow-up a year after the fact to make sure the new business or office is doing what the petitioner said he/she would?  Do officers have the expertise or training to know if the financial data provided to them is accurate, or do they take it at face value?  What more can be done to root out abuse or potential abuse in this category of the L visa program?

Also, under current law, spouses of L visa holders are eligible to work.  Some fraud officers have said that L-1A managers/executives coming to the U.S. to start up a new (usually very small) office, oftentimes hire their own spouses, insert them into the organizational structure of the new office, and then claim to manage them in order to substantiate their claim to be an L-1A “manager.”  Does USCIS tolerate this practice, or do they ever revoke/deny L visas upon learning of this practice?  Should spouses of L-1 visa holders be eligible to work for new offices in such situations? 

Blanket Petitions
The Immigration and Nationality Act allows an employer to file a “blanket” petition, which was intended to streamline the process for multinational firms and reduce the processing times for employees that fall under the petition.  The blanket petition is approved by DHS, but the Department of State does the adjudication of individual petitions under the blanket.  It appears that there’s a substantial disconnect between the two departments – i.e. DHS doesn’t exactly know the names of the aliens approved under the blanket or the number of petitions approved. 

Are the two agencies working together, or are there lapses in information sharing?  Is there potential for abuse or fraud in the blanket?  Should the blanket petition process be maintained, or are there improvements needed to the program?  For how long is the blanket petition valid?  Is there any linkage between those approved for blanket petitions and those being investigated for fraud/abuse?

Also, the regulations stipulate that a blanket petition can be approved if, among other things, they fit the below criteria. 

The petitioner and the other qualifying organizations have obtained approval of petitions for at least ten “L” managers, executives, or specialized knowledge professionals during the previous 12 months; or have U.S. subsidiaries or affiliates with combined annual sales of at least $25 million; or have a United States work force of at least 1,000 employees. 

Do these criteria automatically lead to approval, or are other factors considered when adjudicating a blanket petition?  Should these standards be updated?

Wage Rates, Lengths of Stay and Outsourcing
First, because the L visa program does not have any wage requirements associated with it, many observers believe that companies are using the L instead of the H-1B visa.  Wages for L-1’s are tied to their home country, not the prevailing wage in the United States.  I would like to know what the L-1 salaries are, relative to co-workers’ salaries.  Can the OIG audit or do a random sample of the actual W-2 wage rates of L visa holders?  What happens to the Social Security earnings of L-1 workers?  How do employers pay for, and how much do they pay for, housing and other allowances?

Second, because there’s concern that companies are using the program to import hundreds of workers at one time, then take the knowledge and the job back to their home country, it’s important to know how the L visa is being used and for how long they are using them in the United States.  The law allows 5-7 years for workers to stay in the country, but it’s unknown if companies are using the program for short term assignments (as was intended) or as an avenue to permanent residency.  Data on length of stays would be beneficial to understanding how companies are truly using the program. 

Finally, section 214(c)(2)(F) of the Immigration and Nationality Act requires the L visa holder to be controlled and supervised principally by the petitioning employer.  Has this change in law from 2004 helped reduce the abuse of employers to “outsource” or place their L visa workers at third-party sites?

L visa worker recourse/enforcement
Every petitioner is required to pay a “fraud detection” fee of $500.  The fee is then provided to the Departments of State and Homeland Security to investigate fraud and abuse.  How are these fees being used?  What enforcement efforts are being made specifically to L visas?  How many fraud charges have been brought against L-1 employers?  What is the process by which L-1 workers can complain to the feds?  Are additional protections for visa holders and American workers warranted?

Again, the Congress and the Department of Homeland Security would benefit from an updated and independent assessment by your office on the L visa program.  I would appreciate your attention to the issues raised in this letter and make an official request for your office to issue an updated report on the abuses of the L visa program by the end of the year.  Thank you for your attention to this matter and I look forward to hearing from you.



                                                            Charles E. Grassley

                                                            United States Senator