02/23/2007

Probe that began at resort nets hundreds

Charges filed against owners of cleaning service

By Bill O'Brien

bobrien@record-eagle.com

TRAVERSE CITY — A nationwide investigation into illegal workers rooted in an employee raid at the Grand Traverse Resort & Spa led to charges against three top officials at a national cleaning service and netted hundreds of illegal immigrants in 17 states.

Authorities charged Rosenbaum-Cunningham International Inc. co-owners Richard M. Rosenbaum and Edward Scott Cunningham, and company controller Christina Flocken, all of Florida, with criminal fraud, immigration and tax charges in a 23-count indictment unveiled Thursday in Grand Rapids.

Authorities also said Juanita "Janie” Schlagel, of Williamsburg, earlier pleaded guilty to a two-count indictment of trafficking in means of identification as part of the probe.

Schlagel, a former worker for the Michigan Department of Labor and Economic Growth at the Michigan Works office in Traverse City, allegedly sold Social Security numbers and other alien registration documents before federal investigators searched her home and office in 2005.

RCI, based in Nevada, provides cleaning and grounds maintenance workers to the hospitality sector across the country. The investigation, led by U.S. Immigration and Customs Enforcement, began 20 months ago, spurred by concerns about cleaning crews at the Grand Traverse Resort & Spa in Grand Traverse County.

"The charges ... allege that these corporate officers took advantage of illegal workers to enrich themselves and established their own underground economy that violated numerous laws created to protect the legitimate workforce,” said Maurice Aouate, a special agent with the IRS criminal investigation unit.

Federal customs and immigration service officials raided the resort in Acme last February and found 20 illegal, undocumented workers.

The probe led to a two-count indictment against a former Traverse City man, Santiago Echaniz, who was employed by RCI between 2002-06 to supervise the company's employees at the resort. He acknowledged in court that in November 2004, at the company's direction and expense, he helped the workers obtain fraudulent immigration documents to comply with the resort's demand for proof that the employees were not illegal aliens.

The resort terminated its relationship with RCI last March and cooperated with the federal investigation. Echaniz is scheduled for sentencing in federal court next month.

RCI contracted with the resort between June 1997 and March 2006, according to the indictment. Between 2002 and 2006, the resort paid RCI over $3 million for grounds and maintenance services, kitchen cleaning and housekeeping duties.

According to the indictment, the company between 1999 and March 2006 knew that "almost all” of the RCI employees at the resort were illegal aliens. In 2003 the company allegedly paid an RCI supervisor more than $4,400 to reimburse and reward him for obtaining fraudulent green cards for resort workers.

Court records also indicate that Cunningham in 2004 purchased a $129,700 residential property in Fife Lake to be used as housing for RCI's resort workers, and he purchased a $3,000 van used to transport the employees to work.

The company also was involved in a federal labor department probe at the resort in 2004 after employees were denied approximately $95,000 in overtime and holiday pay. Although RCI later distributed the back pay, it included deductions for employment taxes that the RCI trio allegedly kept for themselves.

Authorities also allege RCI failed to pay employment taxes on its nationwide operations, defrauding the government of more than $18.6 million. RCI also did not require its workers to show proof of legal U.S. residence as required by law, authorities said.

Investigators allege the defendants used approximately 63 percent of those funds to pay RCI's operating expenses and shared the other 37 percent.

RCI workers were swept up early Thursday in 63 locations nationwide. An estimated 250 illegal immigrants working as janitors were caught up in the probe.

A forfeiture count included in the indictment seeks a judgement $54 million from the three RCI officials, plus various bank accounts and real estate.