7-Eleven Exploitation Scheme Defendants Go to Court

Published in CSP Daily News

Report looks at how franchisees' "plantation system" worked

NORFOLK, Va. -- The 7-Eleven independent franchisee worker exploitation case has moved to court, and more details are also beginning to emerge about the nature of the scheme that the federal investigation has uncovered. A federal judge in Norfolk, Va., overseeing the case is proceeding with added caution before allowing the defendants to return to their U.S. homes until a trial date out concern they may be flight risks to avoid prosecution.

As reported in a Raymond James/CSP Daily News Flash, Judge Lawrence R. Leonard on Thursday ruled that defendant Tariq Rana would remain in federal custody until trial, said an Associated Press report.

Attorneys said that one person from New York involved in the multi-state scheme has already fled back to Pakistan.

For his decision, the judge cited the nature and severity of offenses, size and scope of charges, unaccounted for money and the fact that Rana is facing a 48-year maximum sentence plus deportation, reported WAVY-TV.

And there was a discussion about potential witness tampering, it added. More than 20 people were ready to testify against the defendants, victims of identity theft and exploited workers.

Two brothers accused of being part of a scheme to employ and exploit immigrants at 7-Eleven franchise stores in Hampton Roads and New York waived detention hearings in U.S. District Court in Norfolk, Va., Friday.

The judge said he would sign orders for Shannawaz Baig and Zahid Baig to be transported to New York where the case will be heard.

Erik C. Porcaro, the older brother's lawyer, said after the hearing that his client looked "forward to defending himself in this case in New York."

The federal government on June 17 indicted eight men and one woman from Long Island, N,Y., including Rana, charged with conspiring to commit wire fraud, stealing identities and concealing and harboring illegal immigrants from Pakistan and the Philippines employed at 7-Eleven franchise stores throughout Long Island and Virginia.

Through this scheme, the defendants, who owned, managed and controlled 14 7-Eleven franchise stores during the course of the conspiracies, allegedly hired dozens of illegal immigrants, equipped them with more than 20 identities stolen from U.S. citizens, housed them at residences owned by the defendants and stole substantial portions of their wages.

The investigation leading up to the raids, property seizures and store closures began two years ago, when a 7-Eleven employee approached the New York State Police about not being paid for his work, according to a report by The Opelika-Auburn News. The investigation identified two families with roots in Pakistan and the Philippines who recruited from their own ethnic communities.

In what Loretta E. Lynch, U.S. attorney for the Eastern District of New York, has called a "modern-day plantation system," two houses in the two shabby homes in Islip Terrace, N.Y., on Long Island housed a large number of individuals who would file from the houses to work at the convenience store--one directly across the street--in long shifts and then file back to the houses, detailed a New York Times report.

One of the houses, a former single-family home that now was divided into apartments, housing as many as 10 people. "It's packed in there," a neighbor told the newspaper. "There is a constant, constant overflow of new people coming in. They stay there for a couple of days, then they work in the store, then they gradually disappear."

Through dusty and cracked windows, beds could be seen, pressed up against the living room walls, the paper said. In one house's small garage, an air-conditioner stuck out of the window, and multiple doorbells suggested it was in fact an apartment, or several. The two houses stood out for their dilapidation: balding grass dotted with cars in disrepair, encircled by rusting chain-link fences.

( Click here to view the full New York Times report and photo.)

7-Eleven Inc. has begun reopening the stores closed in the raids under corporate control with corporate managers and employees.

7-Eleven Inc. has a policy of terminating all employees at stores during a changeover process from franchise to corporate when illegal activity is involved, said WAVY. The employees may reapply for employment at that location or any other 7-Eleven location, the company told the news outlet.

Meanwhile, 7-Eleven Inc.--which issued a statement saying that it was not involved in the "alleged wrongdoing by independent 7-Eleven franchisees"--has sent letters to approximately 5,700 franchisees reminding them of their employee eligibility obligations under their franchise agreements. It has threatened termination of the agreement of any franchisee that does not comply. It also is requiring them to conduct an internal review of personnel and to expect a corporate review.

"We have a critical need to protect the integrity and reputation of the 7-Eleven brand, a right to insist upon your compliance with the franchise agreement and to ensure that all franchised stores are being operated in a lawful manner," 7-Eleven executive vice president and COO Darren Rebelez said in the letter.

7-Eleven has also said: "7-Eleven Inc. has cooperated with the government's investigation. All of our franchise owners must operate their stores in accordance with laws and the 7-Eleven franchise agreement. 7-Eleven Inc. will take aggressive actions to audit the employment status of all its franchisees' employees. 7-Eleven Inc. is taking steps to assume corporate operation of the stores involved in this action so we can continue to serve our guests. We continue to cooperate with federal authorities in this matter."

The Dallas-based company--the U.S. subsidiary of Seven & I Holdings, Tokyo--operates, franchises or licenses more than 10,000 7-Eleven stores in North America. Globally, It has approximately 50,000 stores in 16 countries. During 2012, the stores generated total worldwide sales of nearly $85 billion.