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The L-1 Visa Program: Economy-Booster or Opportunity for Fraud?

Congress has noted that nonimmigrant visas, such as the L-1, have enhanced trade and accommodated the useful movement of people and products.[1] However, opponents of the L-1 visa program feel that L-1 visas have a negative affect on the U.S. economy and American workforce. These opponents allege that the L-1 visa program drives down salaries, reduces employment opportunities for domestic technology workers, and allows unscrupulous petitioners to exploit the foreign beneficiaries.[2] Still others have expressed concern that employers may use the L-1 visa program, which has no numerical limit, as a way to avoid the H-1B program requirements.[3]

Allegations of widespread misuse of the L-1 program lead Senator Charles Grassley to request that the Department of Homeland Security (DHS) Office of Inspector General examine the potential for fraud or abuse in the L-1 visa program.[4] In response, the Office of the Inspector General observed DHS personnel and Department of State consular officials process L-1 petitions and visas, and interviewed 71 managers and staff in DHS and the Department of State.[5]

Were the skeptics about the L-1 visa program correct in their suspicions? Well, yes and no. When it comes to using the L-1 visa program to avoid more stringent H-1B program requirements, the data simply did not support allegations of misuse. After conducting the above-mentioned observations, the OIG found that the data reviewed provided “no conclusive evidence that the L-1 visa program is being used to avoid H-1B restrictions.”[6] In fact, since fiscal year 2008, the report states, the ratio of H-1B to L-1B submissions has actually increased.[7] But that doesn’t mean everything is clear in the area of L-1 visas. The report goes on to describe how some understaffed, underfunded, or even inactive companies are abusing the program. One such pattern of abuse described is that of an L-1A manager hiring family members and pretending to manage them in order to substantiate their claim to be a manager in accordance with the requirements of the L-1 program.[8]

What is do be done about such fraudulent practices? One way for the government to prevent fraudulent applications is to visit the sites of alleged L-1 businesses in the U.S. to ensure their veracity. To this end, the USCIS Fraud Detection and National Security Directorate expects to begin conducting post-adjudication domestic L-1 compliance visits in the First Quarter of Fiscal Year 2014.[9] Another important measure in ferreting out fraudulent L-1 visa applications is a relatively new tool called the Validation Instrument for Business Enterprises, or VIBE for short. This web-based tool, launched in 2010, uses commercially available data to validate basic information about companies petitioning to employ alien workers. Immigration Service Officers (ISOs) can use the information from VIBE to verify the petitioner’s qualifications by obtaining information about a petitioner’s business activities, financial standing, number of employees, relationships with other entities, and so on.[10] Thus, if a petitioner is seeking L-1 status for a beneficiary, VIBE will help adjudicators confirm that the petitioner has a foreign affiliate (a requirement for granting L-1 status). This system enables ISOs to rule out fraud.[11]

These recent practices will likely make it even more difficult to get L-1 visas, a development that will not please international firms, which have already complained about the effect of stringent L-1 visa regulations on business. Last year, 50 international firms including US IT giants such as Microsoft and Oracle wrote to President Obama complaining that USCIS was turning down requests to transfer vital employees, saying that it was damaging the US economy.[12] Unfortunately for these firms, recent legislative trends appear to be leaning towards even more strict regulations; Senate Bill 744 includes several measures to make it more difficult for companies to employ individuals on H-1B and L-1 visas. In the years to come, we will likely see the scale tip back and forth before an adequate balance is established between allowing companies to use the L-1 in a way that helps grow the economy without being vulnerable to fraud and other types of misuse.

[1] 1990 U.S.C.C.A.N. 6746.

[2] “4 Fundamental Flaws in the H-1B Visa Program” David Butcher, Thomas Net News: October 20, 2010, available here.

[3] “L visas” Federation for American Immigration Reform: 2011, available here.

[4] OIG Report at 1.

[5] Id.

[6] OIG Report at 5.

[7] Id.

[8] OIG Report at 21.

[9] OIG Report at 30.

[10] Responding to Fraud (VIBE) – Validation Instrument for Business Enterprises Program, available here (accessed July 30, 2012).

[11] Id.

[12] “Indian, U.S. firms urge Obama action on visas” ComputerWorld News: March 23, 2012. Accessed on November 19, 2013, available here.

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