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Sunday, November 22, 2009

Maricopa County prosecutors file first employer sanctions case

By JJ Hensley and Michael Kiefer
Nov. 19, 2009
The Arizona Republic

Nearly two years and 26 business raids after the state's employer-sanctions law took effect, county prosecutors on Wednesday filed the first case against a business owner they say knowingly hired illegal workers.

Michelle Hardas, owner of Scottsdale Art Factory, has been named in a civil complaint in Maricopa County Superior Court.

The complaint alleges she knowingly violated the Legal Arizona Workers Act when, according to prosecutors, she hired a subcontractor who was actually her employee and whom she knew to be in the country illegally.

"It's the first time a case like this has been brought any place in the United States," County Attorney Andrew Thomas said. "It's the first time a state law has been used to try to suspend or revoke a business license of an employer who had hired illegal immigrants."

In the suit, the County Attorney's Office asks that any illegal workers be fired and that the company's business license be suspended for at least 10 days. A hearing is scheduled for next week.

Hardas denies any wrongdoing.

The case focuses on a Mexican national named Hilario Santiago Hernandez, who was arrested during a Jan. 29 immigration raid by sheriff's deputies at Scottsdale Art Factory, a custom-furniture and cabinet business on Greenway Road.

Acting on a tip

Santiago Hernandez was voluntarily deported. But, according to the court filing, he was back in Phoenix by April and filed paperwork with the Arizona Corporation Commission to start a company called Santiago Homemade Furniture.

Investigators believe he and Hardas then tried to sidestep the employer-sanctions law by claiming Santiago Hernandez was an independent contractor and not a full-time employee, because the law does not hold general contractors responsible for verifying the legal status of a subcontractor's employees.

Acting on a tip, investigators sent another man to the Scottsdale Art Factory to act as if he were seeking work.

That man was wired with an undercover video camera, and he recorded Hardas as she counseled him - in Santiago Hernandez's presence - on how to set up his own company, file the paperwork and pay the taxes.

Hardas said Wednesday that the paperwork for Santiago Hernandez was in order but that she was not in the position to check the status of employees at Santiago Homemade Furniture.

Hardas added that she used E-Verify to confirm the status of employees Scottsdale Art Factory hired since the January raid.

"Absolutely, every employee that we have hired has been E-Verify," she said. "There has been no question."

Scottsdale Art Factory registered with the Corporation Commission in 1997, and investigators believe there are fewer than 20 employees.

The Legal Arizona Workers Act was designed to help law enforcement target business owners instead of the employees typically ensnared during workplace raids.

When the law took effect on Jan. 1, 2008, it followed months of debate about the impact the measure would have on the state's economy and a legal challenge that was ultimately rejected in federal court, though the U.S. Supreme Court could still consider the challenge this year.

And then nothing.

There were more than two dozen raids that netted 327 arrests, but none of the busts resulted in charges against employers, which law-enforcement officials blamed on provisions in the law requiring prosecutors to prove business owners had knowingly hired an illegal immigrant after the law went into effect.

Thomas has said the law is weak, and he wants the Legislature to consider strengthening the powers of investigators with the ability to subpoena business records.

Proving intent

As written, the law requires investigators to spend months comparing employee files with data from the Department of Economic Security, but the comparison does little to help prove the intent of the business owner when the worker was hired.

A ruling against Hardas could result in the suspension of Scottsdale Art Factory's business license for 10 days; another violation within a year would mean the loss of a business license.

Either would be a victory for Thomas and Sheriff Joe Arpaio, who have consistently tried to deflect the perception that the employer-sanctions law is just another method to target illegal immigrants.

"It's an important day, not only in Arizona but nationally, and we thought it was important that we try to do it right, and I believe we have," Thomas said.

Those undercover recordings and Hardas' version of events should end up in court soon.

Shortly after the Legal Arizona Workers Act was passed, the state Legislature also passed laws to ensure that such cases would be fast-tracked. The Scottsdale Art Factory case has a hearing set for next Wednesday before Superior Court Judge Sam Myers, and the company will be expected to have an attorney by that date.

The tapes will be a key piece of evidence.

"It's like having a real business . . . even though we're just using it to put the money through," Hardas is heard saying on the video recording.

But she also states that she worries about what other company employees will think because "maybe somebody doesn't like the fact that I'm hiring you guys and trying to get around the system."

Her fear turned out to be well-founded.

On the recording, Hardas worries that if the sheriff's deputies return, those employees might say the undocumented workers are there every day.

She then counsels the undercover job applicant to say that he is a subcontractor and just comes in occasionally to drop off work.

When reached for comment, Santiago Hernandez said that he no longer works for Scottsdale Art Factory but that he was an employee there about three years ago. He admitted he has a company called Santiago Furniture but claimed he no longer does business with Hardas. He declined to answer if he was in the country illegally.

Santiago Hernandez also said that he knew nothing about the civil lawsuit filed against Hardas.

Thomas said he does not believe Hardas is the only business owner violating the law.

"It is an attempt to game the system," he said. "But we held this company accountable today, and it's an important step forward to fight illegal immigration."

http://www.azcentral.com/business/articles/2009/11/18/20091118employer-sanctions-ON.html