IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA UNITED STATES OF AMERICA, v. CRAIG STANFORD EURY, JR., HARRY LEE WICKER, JR., and KENNETH W. WHITE, Defendants. ) ) ) ) ) ) ) ) ) ) Case Nos. 1:14-CR-39-1 1:14-CR-39-4 1:14-CR-39-5 DEFENDANTS’ MOTION TO SUPPRESS EVIDENCE OBTAINED THROUGH GOVERNMENT MISCONDUCT Defendants Craig Stanford Eury, Jr., Harry Lee Wicker. Jr., and Kenneth W. White, through counsel and pursuant to Fed. R. Crim. P. 12(b)(3)(C) and Local Rule 12.1, respectfully request that this court suppress any and all witness testimony in this case that was obtained through the government’s unlawful investigative tactics. Specifically, the Court should suppress the statements and documents that were coerced from potential witnesses through the use de facto summonses that were issued in clear violation of law, and the irreparably tainted testimony of witnesses who were improperly influenced by government agents through questions designed to suggest they had been harmed by the defendants. BACKGROUND I. The government’s case The criminal conduct relevant to the present motion is the defendants’ alleged scheme to defraud the North Carolina Growers Association (“NCGA”) of sham recruiting Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 1 of 17 fees, through another entity they controlled—Application Services and Administrative Program, LLC (“ASAP”). According to the government, “[p]rior to January 2009, recruiters and agents were [allowed to charge a fee to] foreign workers seeking H-2A or H-2B employment . . . as a condition of an offer of H-2A and H-2B employment in the United States.” (Indictment, Count One ¶ 35).1 Under the law at that time, it was perfectly acceptable for recruiting agencies to require “foreign workers to pay a fee as a condition of their offer of H-2A and H-2B employment.” (Id.) From 2006 to 2009, NCGA did in fact pay Consular Solutions, Inc. (“CSI”), a Mexican recruiting agency, a recruiting fee of approximately $80.00 per worker. (Id. ¶ 37). In January of 2009, the Department of Homeland Security promulgated regulations which made it illegal for recruiters to charge workers a fee as a condition of the offer of obtaining H-2B or H-2A employment. (Id. ¶ 38). The government alleges that, in response, the defendants devised a scheme (the Recruiting Fee Scheme), essentially as a means to continue receiving a percentage of the recruiting fees that CSI had charged to employees as a condition of H-2A or H-2B employment before the law changed. It was to further such a scheme, the government alleges, that the defendants formed ASAP in January of 2009. (Id. ¶ 17). The government alleges that the defendants “directed that NCGA pay ASAP an $80.00 per worker fee purportedly charged by CSI, despite the fact that NCGA was not in violation of the new regulations 1 To avoid confusion, Defendants have cited to the specific counts in the indictment, rather than simply using paragraph numbers, since each successive count of the eighty-seven count indictment begins with paragraph number 1. 2 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 2 of 17 and was already making payments directly to CSI.” (Id. ¶ 69). The crime, according to the government, was a violation of the defendants’ fiduciary duty to NCGA. Specifically, the indictment alleges that the defendants “concealed from NCGA and its members that they [the defendants] would use ASAP to convert approximately fifty percent of fees paid to ASAP by NCGA to their own benefit in violation of their duty of good faith to NCGA and its members.” (Id.) (emphasis added). II. IRS Special Agents’ attempts to bolster their theory of the alleged recruiting fee scheme The government’s theory is creative and, under current law regarding honest- services fraud, tenuous at best. According to the government’s discovery materials, IRS Special Agents Brian Thomas, Paul Backstrom, and Nicholas Hicks have performed a substantial portion of the investigative work in the case, including efforts to bolster the theory that the defendants violated duties to NCGA. Beginning sometime in the spring of 2014, Special Agent Thomas began sending letters, on official IRS stationary, to various members of NCGA (the “Circular Letter” or “Circular Letters”, as the case may be). The Circular Letters unequivocally commanded the NCGA members to appear, testify, and produce documents related to NCGA and ASAP. Each of the Circular Letters stated: You have been called as a witness and a potential victim in an investigation involving North Carolina Growers Association and the preparation of H2A process and petitions for the years of 2008, 2009, 2010, 2011, and 2012. It will be necessary for you to appear before federal agents of the following agencies: Internal Revenue Service Criminal Investigation, U.S. Department of Labor OIG, U.S. Postal Inspection, U.S. Department of State, and Homeland Security investigation, to produce 3 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 3 of 17 documents and to give statements regarding the preparation and filing of these petitions. (Ex. A) (emphasis added). Pursuant to the Circular Letters, Special Agent Thomas conducted at least six official interviews and retrieved relevant documents. The interviews and document retrieval occurred at police stations and in the presence of law enforcement agents from a panoply of federal agencies. The government did not notify NCGA, ASAP, or any of the defendants of these meetings, even though it appears they all were under an official Justice Department referral at the time, defendants Wicker and White were in contact with the government’s attorney through their counsel, and defendant Eury was already under indictment. Perhaps even more significantly, the Circular Letters were not produced to the defendants in the discovery materials for this case. Instead, the defendants only know of them because some of the recipients informed the defendants of their existence. Finally, while the government produced Special Agent Thomas’s reports of the interviews conducted pursuant to the Circular Letters, none of the memoranda disclose the existence of the Circular Letters. Nor do the memoranda disclose the fact that the meetings were not voluntary, but were conducted pursuant to a compulsory command by Special Agent Thomas that the witnesses appear, provide statements, and produce documents.2 2 See, e.g., Ex. B, the April 8, 2014 Memorandum of Interview of Agent Thomas’ s interview with Craig, Audrey, and Thomas West, conducted at the Goldsboro Police Department before Special Agent Thomas and a Special Agent with the United States Department of Labor. Rather than refer to the Circular Letter, the MOI begins as follows: 4 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 4 of 17 At roughly the same time that Agent Thomas was illegally compelling appearance, testimony, and production of documents, Special Agents Backstrom and Hicks were conducting in-person interviews with other NCGA members. During those interviews, Special Agents Backstrom and Hicks posed the following provocative “hypothetical” question to at least four NCGA member-witnesses: SA Backstrom asked, hypothetically speaking, if the directors of NCGA were receiving any profit above their salary, in violation of the NCGA Articles of Incorporation, would he [the witness] consider that a violation of trust. (See Ex. C, D, E, F) (Shugart, Horney, Yates, Deal MOIs). In response to this transparent attempt to prejudice each witness’s view of the defendants, two NCGA members stated they would find the alleged conduct “underhanded” (Ex. C at p. 2, Ex. D at 2) (Shugart, Horney). One of those witnesses allegedly stated: “that if [the defendants] were taking in money in violation of the corporate rules it would appear that they are trying to hide it from the farmer members.” (Ex. C at p. 2) (Shugart). Another witness “declined to comment,” (Ex. D at 2) (Yates), and yet another witness—apparently perceiving the strong implication in Agent Backstrom’s question, stated that he “had a positive relationship with NCGA for 20 years and didn’t feel taken advantage of.” (Ex. E at p. 2) (Deal). On the above date and time, Special Agent Thomas and Foster introduced themselves to Craig West, Audrey West, and Thomas West as special agents with the Internal Revenue Service, Criminal Investigation and U.S. Department of Labor Office of Inspector General. S/A Thomas and Foster displayed their credentials for their inspection. S/A Thomas explained to Craig, Audrey, and Thomas the purpose of the interview and they agreed to answer questions and provided the following pertinent information . . . .” 5 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 5 of 17 Special Agent Thomas acted outside the scope of a carefully crafted statutory regime governing the compulsion of witness testimony in criminal investigations, and then wrote his reports to conceal the statutory violation. Special Agents Backstrom and Hicks, in turn, crossed the line from legitimately questioning witnesses to seeking to prejudice them against the defendants via false innuendo. The fruits of this government misconduct should be suppressed. ARGUMENT I. The Court should suppress evidence derived by government agents through illegal, coercive, and unethical means. A. Legal Standards The Fifth Amendment provides that a person shall not “be deprived of life, liberty or property, without due process of law.” U.S. Const. amend. V. This constitutionally guaranteed “right of an accused in a criminal trial to due process is, in essence, the right to a fair opportunity to defend against the State’s accusations.” Montana v. Egelhoff, 518 U.S. 37, 52 (1996). It is settled that, pursuant to the due process guarantee, government agents must never use coercive interrogation techniques to elicit involuntary confessions from a criminal defendant. As a result, an accused has a right to exclude any involuntary statement as violative of the constitution, due both to the unreliability of the coerced 6 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 6 of 17 testimony,3 and because the underlying government misconduct that leads to an involuntary confession necessarily offends society’s sense of fairness.4 Less settled is the effect of coercion on statements and testimony by third party witnesses: Whether [a constitutional] right extends to allow defendants to object to the admittance of an involuntary statement coerced from a witness is debated by judges across the country and remains unresolved by the Supreme Court. Sheridan, K., Excluding Coerced Witness Testimony To Protect A Criminal Defendant's Right To Due Process Of Law And Adequately Deter Police Misconduct, 38 Fordham Urb. L. J. 1221, 1224 (2011) (citing Samuel v. Frank, 525 F.3d 566, 569 (7th Cir. 2008) (“The Supreme Court has not decided whether the admission of a coerced third-party statement is unconstitutional . . .”)). However, several state and federal courts have found that coerced and involuntary witness testimony can be excluded, based on the same concerns which underpin the exclusion of a defendant’s own coerced statements. Id. at 1254 (citing Valdez v. McKune, 266 Fed. App'x 735, 739 (10th Cir. 2008); United States v. Dowell, 430 F.3d 1100, 1107 (10th Cir. 2005); LaFrance v. Bohlinger, 499 F.2d 29, 35 (1st Cir. 1974); Bradford v. Johnson, 354 F. Supp. 1331, 1336-38 (E.D. Mich. 1972); Raphael v. State, 994 P.2d 1004, 1008 (Alaska 2000); People v. Douglas, 50 Cal. 3d 468, 500 (1990)). These courts interpret the Due Process Clause as “protect[ing] the accused 3 See, e.g., Hopt v. People of Territory of Utah, 110 U.S. 574, 585 (1884) (explaining why involuntary confessions are inherently unreliable). 4 Spano v. New York, 360 U.S. 315, 320-21 (1959). 7 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 7 of 17 against pretrial illegality by denying to the government the fruits of its exploitation of any deliberate and unnecessary lawlessness on its part.” LaFrance, 499 F.2d at 35. Aside from constitutional guarantee of due process, the government’s conduct is also subject to the court’s supervisory powers “to preserve the integrity of the judicial system.” United States v. Omni International Corporation, 634 F. Supp. 1414, 1438 (D. Md. 1986). The supervisory power has been used by federal courts to remedy prosecutorial misconduct in a variety of contexts. See, e.g., United States v. Samango, 607 F.2d 877, 884 (9th Cir. 1979) (dismissing indictment where cumulative effect of prosecutorial misconduct produced a biased grand jury); United States v. Stein, 495 F. Supp. 2d 390 (S.D.N.Y. 2007) (dismissing indictment pre-trial based on government’s misconduct in threatening to indict defendants’ employer if employer paid defendants’ legal fees). A court may exercise its supervisory power “‘to implement a remedy for the violation of a recognized statutory or constitutional right; to preserve judicial integrity by ensuring that a conviction rests on appropriate considerations validly before a jury; and to deter future illegal conduct.’” United States v. Chapman, 524 F.3d 1073, 1085 (9th Cir. 2008) (citation omitted). B. IRS Special Agent Brian Thomas issued illegal summonses to coerce witness testimony and production of documents. The powers of the Internal Revenue Service and its agents are carefully regulated. The particular statute governing IRS requests for examination and testimony from thirdparty witnesses is IRC Section 7602 (26 U.S.C. § 7602). That statute provides the 8 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 8 of 17 Congressional authorization for, and limitations on, the IRS’s ability to examine books, records, and witnesses. As the Ninth Circuit Court of Appeals has explained: Section 7602 provides three separate means of . . . inquiry. Section 7602(a)(1) provides for an informal, noncompulsory means of inquiry. If an informal inquiry proves inadequate, Sections 7602(a)(2) and 7602(a)(3) provide mechanisms for the formal compulsion of the production of documents and testimony. Speck v. United States, 59 F.3d 106, 108-109 (9th Cir. 1995). Courts have recognized that a “circular letter”–which can request a voluntary interview and the production of documents from a third party—is a legitimate form of request under Section 7602(a)(1) for cooperation with the government. Speck at 108109. Such a letter is not a “summons,” and given the voluntary nature of the request, it is not subject to being quashed. Id. The recipient can either comply with the request or not, in his or her discretion, with no risk of punishment for the failure to comply with the request. Id. However, as one federal appellate court has cautioned: This is not, of course, to say that so long as a communication from the IRS is labelled “circular letter,” the statutory restraints on summonses do not apply. A letter mailed out purportedly under the authority of Section 7602(a)(1), but appearing to make response mandatory, or to threaten IRS action against the recipient if response is not made, would require us to consider whether, as the Specks urge, the letter amounted in practical effect to a summons under Section 7602(a)(2). Speck v. United States, 59 F.3d 106, 108-109 (9th Cir. 1995). In Speck, the Court found that the circular letter at issue was not a de facto summons subject to the strictures of the IRC’s notice and motion to quash practice, since 9 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 9 of 17 the letter in that case stated that the Special Agent “would appreciate [a] response to the questions attached to this letter.” Id. Additionally, in Speck, “a number of recipients elected not to respond, evidently understanding that response was voluntary.” Consequently, the Speck Court was not required to consider the implications of a de facto summons dressed in the thinly-veiled cloak of a circular letter. In this case, however, the IRS engaged in the very misconduct that the Speck panel feared. The letter Special Agent Thomas sent to at least six NCGA members—not only during the criminal investigation, but while the original Indictment was pending—was unambiguously compulsory: You have been called as a witness and a potential victim in an investigation involving North Carolina Growers Association and the preparation of H2A process and petitions for the years of 2008, 2009, 2010, 2011, and 2012. It will be necessary for you to appear before federal agents of the following agencies: Internal Revenue Service Criminal Investigation, U.S. Department of Labor OIG, U.S. Postal Inspection, U.S. Department of State, and Homeland Security investigation, to produce documents and to give statements regarding the preparation and filing of these petitions. (Ex. A) (emphasis added). Although the letters were purportedly sent under the authority of IRC Section 7602(a)(1), which requests informal and voluntary cooperation from a witness, the letters’ express statement that “it will be necessary for you to appear” and be interviewed by federal agents, “appear[ed] to make response mandatory.” See Speck, 59 F.3d at 108109. It follows that the letters were de facto summonses—not requests for informal cooperation. 10 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 10 of 17 As de facto summonses, the Circular Letters in this case are subject to specific, rigid limitations. In particular, under IRC 7602(d)(1), “no summons may be issued under this title . . . if a Justice Department referral is in effect with respect to such person.” Here, however, it is apparent that a Justice Department referral was in effect at the time with respect to ASAP, NCGA, and the defendants—one of whom was already under indictment. Consequently, the letters were illegal under Section 7602(d)(1). In addition to Section 7602(d)(1), there are other “[s]pecial procedures for thirdparty summonses” under IRC Section 7609 that Special Agent Thomas disregarded in this case. In particular, Section 7609 required notice of each summons to the defendants, NCGA and ASAP, and gave them an express statutory right to intervene and institute proceedings to quash the summonses. IRC 7609(a) & (b)(1); see also United States v. McLaughlin, 126 F.3d 130, 137 (3d Cir. 1997); Boyd v. United States, 2002 U.S. Dist. LEXIS 15891 (E.D. Ky. 2002). As described above, however, Special Agent Thomas not only failed to give the required prior notice—depriving the defendants, NCGA, and ASAP of their intervention rights and ability to quash the letters—but he also covered up his actions by failing to provide the letters in discovery or disclose their existence in his Memoranda of Interviews (“MOI”). During the meetings compelled by the Circular Letters, Special Agent Thomas plumbed the witnesses’ knowledge regarding a broad range of topics pertaining to NCGA, ASAP, and the defendants. He also collected documents. And, during some of the meetings, he implemented a pattern of questioning plainly designed to (1) coerce 11 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 11 of 17 responses favorable for the government’s theory of the case, and (2) project prejudicial impressions of the defendants in the minds of the witnesses. The MOI regarding an interview with NCGA members Phillip Neal Aycock and Robert Broadway is a representative example of the type of prejudicial projection employed in the meetings with NCGA members. The MOI states that: Aycock and Broadway were provided and asked to review various sections of the articles of incorporation for NCGA. In NCGA’s article VI it states “No part of the net earnings of the corporation shall inure to the benefit of any officer, director or member of the corporation.” Both Aycock and Broadway replied “I had no idea that this existed.” Aycock and Broadway confirmed that they have never received or been granted access to review any of the NCGA minutes, accounting records, bylaws, or written communication. Approximately eight or nine years ago, Aycock recalled voting on a topic at the annual meeting, but that was the last time. After reviewing the articles of incorporation, Aycock stated “It appears the executive members of NCGA had a duty and responsibility to keep the members informed.” (Ex. G at p. 2) (Aycock & Broadway MOI). It is plain that, in interviewing the NCGA member witnesses, Special Agent Thomas was less concerned with extracting information than he was with confirming his own theories and poisoning the witnesses’ opinions of the defendants. The Court should suppress the fruits of government agents’ coercive and illegitimate tactics, pursuant to de facto summonses that were issued in clear violation of law. C. Special Agents Backstrom and Hicks suggestively interrogated NCGA members in an effort to prejudice the witnesses’ impressions of the accused. Special Agents Backstrom and Hicks similarly overstepped the bounds of acceptable investigatory conduct by unlawfully persuading at least four witnesses to 12 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 12 of 17 believe that they had been harmed by the defendants’ alleged conduct in this case. Their persistent effort to influence the witnesses by suggestive questioning demands the exclusion of the witnesses’ testimony. There is a “fine and difficult” line between a government agent’s legitimate questioning of a witness to a crime before trial, and the agent’s suggestively questioning a witness and crystallizing evidence in the witness’s mind. See State v. Earp, 319 Md. 156, 171 (Md. 1990). That line must be respected in order to safeguard the accused’s constitutional rights and to uphold the integrity of the courts and their judgments. To that end, a prosecuting attorney’s duty, and the duty of those operating at his direction, “is to extract the facts from the witness, not to pour them into him; to learn what the witness does know, not to teach him what he ought to know.” In re Eldridge, 82 N.Y. 161, 171 (N.Y. 1880). Attorneys and their agents, therefore, are well-advised to always remember that: [I]n the interviews with and examination of witnesses, out of court, and before the trial of the case, the examiner, whoever he may be, layman or lawyer, must exercise the utmost care and caution to extract and not to inject information, and by all means to resist the temptation to influence or bias the testimony of the witnesses. State v. Papa, 32 R.I. 453, 80 A. 12, 15 (1911). In this case, Special Agents Backstrom and Hicks failed to comport themselves with these fundamental ethical standards. They conducted interviews of at least four NCGA members—all of whom were potential witnesses in this case—in the spring of 2014, around the same time Special Agent Thomas was interviewing other NCGA 13 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 13 of 17 members pursuant to unlawful, compulsory summonses. In each of the four interviews, they posed the following provocative, “hypothetical” question to the witness: SA Backstrom asked, hypothetically speaking, if the directors of NCGA were receiving any profit above their salary, in violation of the NCGA Articles of Incorporation, would he [the witness] consider that a violation of trust. (Ex. C, D, E, F) (Shugart, Horney, Yates, Deal MOIs). Given the suggestiveness of Special Agent Backstrom’s question, it is no surprise that two of the witnesses “stated that [they] thought that would be ‘underhanded.’” (Ex. C at p. 2, Ex. D at 2) (Shugart, Horney). There was no legitimate law enforcement purpose behind the agents’ “hypothetical” line of questioning. Their questions were an attempt to telegraph to the witnesses—with no attempt at subtlety—that they had been defrauded and harmed by the defendants. Under the circumstances, Defendants are entitled—at the least—to a taint hearing to determine whether the witnesses have been improperly influenced by the Special Agents’ suggestive interviewing techniques. “Such a hearing is not unusual.” Bennett L. Gershman, Witness Coaching By Prosecutors, 23 Cardozo L. Rev. 829, 859 (2002). Indeed, [i]t has been authorized in many instances in which police or prosecutorial conduct has placed the integrity of the fact-finding process into question and there is a need for the procedural protection of a pretrial hearing to exclude from a potential prosecution the prejudicial effects of tainted evidence. Thus, pretrial hearings have been employed to determine the admissibility of in-court identification testimony because of pretrial suggestiveness, statements of children in sexual abuse cases, hypnoticallyrecalled in-court testimony, breathalyzer evidence because of prior falsified 14 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 14 of 17 police breathalyzer reports, and evidence following police investigatory misconduct. Id. at 859-860 (citations omitted). Agents Thomas and Hicks asked loaded, provocative questions to several NCGA members, in a blatant attempt to influence their upcoming testimony in the government’s favor. Their questions have now been crystallized in the minds of the NCGA member witnesses in a way that is likely to prejudice the Defendants and deny them a fair trial. The Court should exercise its inherent authority under the supervisory powers doctrine to exclude evidence that has been irreparably tainted through Agents Thomas and Hick’s suggestive questioning. CONCLUSION The government and its agents play a special role in our system of justice. By necessity, courts and defendants rely on the government fulfilling its responsibilities with integrity, and in the overwhelming majority of cases the government does so. The government’s “obligation to govern impartially is as compelling as its obligation to govern at all; and [its] interest, therefore, in a criminal prosecution is not that it shall win a case, but that, justice shall be done.” Strickler v. Greene, 527 U.S. 263, 281 (1999) (quoting Berger v. United States, 295 U.S. 78, 88 (1935)). The agents in this case not only failed to act impartially, but engaged in resultoriented, prejudicial, and illegally coercive tactics. The integrity of the investigation was compromised, and fairness to the defendants was undermined. The fruits of the government’s misconduct should be suppressed. 15 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 15 of 17 Respectfully submitted, this the 21st day of January, 2015. /s/ Kearns Davis Kearns Davis N.C. State Bar No. 22014 kdavis@brookspierce.com /s/ Wade Smith Wade M. Smith N.C. State Bar No. 4075 wsmith@tharringtonsmith.com /s/ Lisa S. Costner Lisa S. Costner N.C. State Bar No.14308 costner1@triad.rr.com /s/ Wes J. Camden Melissa Hill Wes J. Camden N. C. State Bar No. 14130 N. C. State Bar No. 33190 mhill@ tharringtonsmith.com wcamden@brookspierce.com Brooks, Pierce, McLendon, Humphrey, & Leonard, L.L.P. P. O. Box 26000 Greensboro, NC 27420-6000 (336) 373-8850 Fax: (336) 378-1001 Tharrington Smith, LLP 150 Fayetteville Street Suite 1800 Raleigh, North Carolina 27602 (919) 821-4711 Fax: (919) 829-1583 Lisa S. Costner, PA 407 Summit St. Winston-Salem, NC 27101 (336) 748-1885 Fax: 336-722-9981 Counsel for Defendant Craig Stanford Eury, Jr. Counsel for Defendant Harry Lee Wicker, Jr. Counsel for Defendant Kenneth W. White 16 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 16 of 17 CERTIFICATE OF SERVICE I hereby certify that, on the date below, I electronically filed the foregoing document with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following: Frank Chut, Esq. This the 21st day of January, 2015. /s/ Wes J. Camden Wes J. Camden 17 Case 1:14-cr-00039-JAB Document 66 Filed 01/21/15 Page 17 of 17 Exhibit A Case Document 66-1 Filed 01/21/15 Pace 1 of 3 DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE WASHINGTON, o.c. 20224 Criminal Investigation - March 28? 2014 Wester Farms Attention: Dorothy Wester 798 White Level Road Louisburg, NC 27549 . Dear Sir or Madam: haveubeenhcalled as a witness and a potential victim in an investigation involving North Carolina GroWers Association and'the preparation of H2A process and petitions for the years of 2008, 2009, 2010, 2011, and 2012. it will be necessary for you to appear before federal agents of the following agencies; internal Revenue Service Criminal Investigation, US, Department of Labor OIG, US. Postal lnspection, US Department of State, and Homeland Security Investigation, to produce documents and to give a statements regarding the preparation and ?ling of these petitions. You are scheduled to meet with the federal agents at the following: Date: Tuesday, April 08, 2014 Time: Place: Rocky Mount Police Department 330 South Church Street Rocky Mount, NC 27802 Please bring the following records relating to the above?listed years regarding the North Carolina Growers? Association: newsletters, letters of correspondence, payments, e?mail correspondences, and any solicitations invotving Application Services and Administrative Program Please call Kristen Daughtery (US. Department of State) at (336) 478?9768 upon receipt of this letter to con?rm your appearance at the scheduled date and time. If you have other questions pertaining to the investigation, please contact Special Agent, Brian G. Thomas at (336) 574?6277. - Sincerely, ?g?m Brian G. Thomas Special Agent lRS-Criminal Investigation THE 93:60 moans/90 Case Document 66-1 Filed 01/21/15 Pace 2 of 3 . - . 1 . . .4 "is? aw [sqPmcasncxeammp 0F ENVELOPETO THE mam . . A: - . . in OF THE RETURN ADDRESS. FOLD AT DOTTED LINE .- I Luaenu?mii igne? IRS- Criminal Investigation 4905 Koger Boulevard Suite 102- Stogi 03 57 Greensboro, NC 27407 1. . . I w! "4 Officiai Business I Penalty forPrivate Use. $360- I 7?mawaha?'?nda ?Wester Fafm?ls?l 2 Attention; Dor'othy?W'ester 798 White LeVel Read NC 27549; ?evaga'a: 23438 XVEI fzi?? Case Document 66-1 Filed 01/21/15 Pace 3 of 3 Exhibit Case Document 66-2 Filed 01/21/15 Pace 1 of 5 DEPARTMENT OF THE TREASURY Internal Revenue Service Criminal Investigation Memorandum of Interview Investigation #2 1000233619 Location: Goldsboro Police Department Investigation Name: Craig Stanford Eury 204 South Center Street Date: 041082014 Goldsboror NC Time: 3:35 -4:20pm Participant(s): Waitus ?Craig? West, Witness Audrey Howell West, Witness Thomas Bradley West, Witness Brian G. Thomas, Special Agent Sharon Foster, Special Agent, DOL OIG 1. On the above date and time, Special Agent Thomas and Foster introduced themselves to Craig West, Audrey West, and Thomas West as special agents with Internal Revenue Service, Criminal Investigation and US Department of Labor Office of Inspector General. SIA Thomas and Foster displayed their credentials for their inspection. SIA Thomas explained to Craig, Audrey, and Thomas the purpose of the interview and they agreed to answer questions and provided the following pertinent information: 2. Name: DOB: SSN: Residence: Telephone: Name: Audre Howell West DOB: SSN: Residence: Telephone: Name: Thomas Bradle West DOB: SSN: Residence: Telephone: 3. Craig, Audrey, and Thomas are owners and operators of West Family Farms (WFF). WFF is a partnership with each member of the partnership owning 1i3 share of the company. For the past 14 or more years, WFF has been a member of the NORTH CAROLINA ASSOCIATION (NCGA). The Memorandum Page 1 old US. Treasury Criminal Investigation Case Document 66-2 Filed 01/21/15 Pace 2 of 5 last time they spoke to a representative of NCGA was approximately one week prior to the interview (March 30, 2014). Craig stated hasn?t done anything wrong and you need to get your own attorney?. 4. Craig, Audrey, and Thomas were shown photographs and asked to identify STAN EURY, KENNETH WHITE, and LEE WICKER. Craig and Thomas have met EURY, WHITE, and WICKER at annual meetings. They assumed EURY, WHITE, and WICKER were executive board members of NCGA. NCGA is comprised of executive board and an advisory board. The advisory board is comprised of the executive board members and several growers from the various regions of the state. According to Craig, Thomas Shillington, a farmer in the Kinston area, is on the advisory board. The primary point of contact for NCGA was James Hill. 5. As a member of NCGA, WFF pays annual dues to the association. Craig and Thomas were aware of the entity classification of NCGA. All individuals were presented and asked to review the North Carolina Secretary of State (NCSS) information pertaining to NCGA. According to the articles of incorporation filed with NCSS, NCGA is a non-profit. As a non-profit, NCGA is supposed to provide the following information to its members: Minutes of all meeting of members Minutes of all meeting of board of directors Appropriate accounting of records A list of current members Current bylaws All written communications to the members within the past three years. 6. Craig, Audrey, and Thomas were provided and asked to review various sections of the articles of incorporation for NCGA. In article VI it states ?No part of the net earnings of the corporation shall inure to the benefit of any officer, director or member of the corporation?. All three individuals replied that they did not know that this existed. Neither Craig, Audrey, and Thomas confirmed that they have never received or been granted access to review any of the NCGA minutes, accounting records, bylaws, or written communication. 7. WFF join NCGA because the organization assists them in getting immigrant workers under the H2A program. WFF pays NCGA to prepare the necessary papen/vork to legally obtain immigrant workers. NCGA charges WFF a ?flat rate? per worker. Craig, Audrey, nor Thomas was aware of the actual breakdown of the flat rate. 8. Prior to the workers arriving in Vass, NC, WFF receives an invoice from NCGA. The invoice shows the number of workers requested which is multiplied by the flat rate. For example, WFF usually requests 19 to 24 workers with a flat rate charge of $956. The total cost to WFF would be $22,944 for 24 workers. Craig, Audrey, and Thomas assumed the flat rate covers the following expenses: Memorandum Page 2 of 4 US. Treasury Criminal Investigation Case Document 66-2 Filed 01/21/15 Page 3 of 5 0 Transportation (From and to Mexico) 0 Application costs (Government Fees) 0 NCGA overhead expense. 9. When the immigrant workers arrive in Vass (NC), NCGA handles the processing. The workers usually arrive in April and leave sometime in November (Prior to Thanksgiving). When the workers arrive at WFF, they are provided housing and transportation. WFF does not deduct any fees or taxes from the immigrant workers? paychecks. 10. If WFF has any issues with a worker, the point of contact with NCGA is Jay Hill. If a worker absconds, WFF is instructed to contact Hill. 11.WFF relies on the knowledge and expertise of NCGA representatives to prepare the necessary papen/vork to get legal H2A workers from Mexico. NCGA sends WFF an application.? Contained within the application are the following documents: 0 Checklist Signed and Competed NCGA application (General information about the farm) 0 Signed NCGA Policies DOL H2A Regulations Acknowledgement Grower Assurance of Compliance (Signed) Contacting Former US Workers (Completed and signed) 0 Form l-129 Supplement (Pg 15 of l-129; Asked to sign in blue ink, but do not date) 0 Proof of Worker?s Compensation (Star Insurance Company). 12. Craig, Audrey, and Thomas were provided with a blank form l-129. Thomas asked them ?Have you seen or been provided a completed l-129?? Each of them replied ?No, we signed page 15 and it?s blank?. Craig, Audrey, and Thomas do not know the actual number of workers requested on the H29. 13.WFF usually request 19 to 24 workers per year. In some yearstheir workers. Either Craig or Thomas would call NCGA and they would transfer some workers from another location to WFF. The requests are all handled verbally to NCGA. Neither Craig nor Thomas recalled filling out any transfer papenivork. 14. NCGA has not provided Craig, Audrey, or Thomas with any DOL forms or recruiting reports. Craig stated that is what WFF pays NCGA to do. Supposedly, NCGA handles all of the newspaper ads, interviews, and hiring of American workers. Craig and Thomas stated if an American worker shows up at the farm, WFF will hire that individual. Craig stated ?we have been told, if a guy comes up to my door step, we have been instructed to hire that person and to notify Memorandum Page 3 of 4 US. Treasury Criminal Investigation Case Document 66-2 Filed 01/21/15 Page 4 of 5 15. Craig and Thomas attempt to attend every annual meeting. Craig and Thomas do not recall any mention of a company called ASAP. Craig stated ?we are not aware of any company in Virginia receiving recruiting fees from Audrey reiterated, WFF has not any paperwork, advertisements, or legal briefing regarding recruiting fees. 16. Craig and Thomas believe if NCGA told them that he needed to pay a government or recruiting fee, those fees would have been deducted from the total payments. When asked Craig, Audrey, or Thomas have never heard of the following individuals or companies: Mike Bell Amanda Wright SARAH FARRELL Man Powers of America CONSULAR SOLUTIONS INCORPORATED (CSI). 18. Craig, Audrey, and Thomas were asked ?Why a bus company was potentially paying several members of the executive board of They replied ?We don?t know. We are told when and where to pick up the workers?. 19. WFF has a workmen?s compensation policy with Star Insurance. Craig, Audrey, and Thomas were asked ?Do you know why Star Insurance would be paying money to executive board members?" Craig replied ?No, I'm starting to see a pattern here?. WFF has filed several claims with Star Insurance and WFF received payment. I prepared this memorandum on April 11, 2014, after refreshing my memory from notes made during and immediately after the interview with Craig West, Audrey West, and Thomas West 754%? Brian G. Thomas Special Agent a Double click here to sign Sharon Foster Special Agent, DOL OIG Memorandum Page 4 of 4 US. Treasury Criminal Investigation Case Document 66-2 Filed 01/21/15 Page 5 of 5 Exhibit Case Document 66-3 Filed 01/21/15 Pace 1 of 3 SBU ENFORCEMENT Greensboro Resident Office IMS Report of Investigation DS Case Number: Case Title: ROI Type: Report Date: VF-201D-00076 Operation Hammerlock CASE INTERIM 04i17i2014 Case Type: lnvesti ative Program Type: Date Investigated: CRIMINAL VISA 04i07i2014 Case Impact: Case Status: Open Date: HIGH OPEN Investigation 1' Analysis Ongoing 01i22,?2010 Memorandum of Interview On April 7, 2014 Special Agent (SA) Paul and SA Nicholas Hicks interviewed Alex SHUGART of Shugart Farms at his farm located at? The interview was previously arranged by a phone call from Internal Revenue Service-Criminal Investigations Division (IRS-CID) SA Brian Thomas. SA and SA Hicks presented their credentials for Mr. inspection. SHUGART stated that he grows approximately 500 acres of tobacco and uses 20-25 H2A visa workers each year. He stated that he had been a member of the North Carolina Growers Association since he went into business in the mid-90s SHUGART stated that to his knowledge NCGA was a corporation and was unaware of their status as a 501 non-pro?t organization. SHUGART was shown pictures of Stan EURY, Lee WICKER and Kenneth WHITE and recognized them from the photos. SHUGART stated that he had met EURY, WICKER, and WHITE in the past but did not routiner deal with them. He stated that he normally spoke with a ?Barbara? at NCGA but on occasion had dealt with WICKER and WHITE. SHUGART stated that NCGA had a board made up of NCGA member farmers and he thought he might have even been a board member at one time but he never attended any meetings, performed any work in that capacity, or received any compensation for his service. SHUGART stated that NCGA provided him with ?legal workers". He stated that he relied on NCGA to handle all of the paperwork and logistics involved with bringing in H2A visa workers. At the end of each season he ?lls out a NCGA packet detailing the number of workers he would need for the following year and the dates he would need them. He stated in the past they would send in a ?preferred worker list" of workers that they had used that year and wanted to have back for the next season. He stated that now they would automatically receive the same workers uniess they provided documentation on any individual they didn't want back and would have to provide a reason. SHUGART stated that he would keep a photo copy of the workers visa and the l-9 but didn?t recall ?lling out a ETA-9142 or l-129. SHUGART stated that on the rare occasion that a worker absconded he would immediately report it to NCGA. SHUGART stated that he did not deduct anything from the worker?s pay for housing, transportation, uniforms, or food. He Reporting Of?cial: Distribution: Paul Approving Official: Taylor, John This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 1 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Secun'ty Service. SBU ENFORCEMENT Case Document 66-3 Filed 01/21/15 Pace 2 of 3 VF-2010-00076 SBU (LAW ENFORCEMENT SENSITIVE) Oc?ostlliilgg??w: 04117t2014 stated that they did withhold for taxes per his accountants instructions. His workers are paid weekly by check and they do maintain a payroll ledger. SHUGART stated that he paid an annual membership fee to NCGA of $200 and paid ?about $1000 per worker?. He stated that he had seen an itemized invoice at one time but the current invoices just had a non-itemized per-worker amount. SHUGART stated that he didn?t know what exactly the fees were for and wasn't that concerned as long as he got his workers. He stated that he generally got the same workers year after year and that some of his workers had been with him for over 20 seasons. He stated that at the end of the season he returned a "preferred worker list? to NCGA. SHUGART stated that he didn't recall ever voting on anything related to NCGA and he had never reviewed any NCGA records or books. SHUGART had a ?le of documents that he had received from NCGA which he showed to the agents. SHUGART stated that he was unaware of what NCGA had to pay to any other entity and he had never heard of Manpower of America, MILPA, Consular Solutions lntematicnal. or Mike Bell. SHUGART stated that he might have heard of ASAP but couldn't remember when or in what context. SHUGART stated that he established the number of workers he needed each year based upon his experience of over 20 years in the tobacco industry and projected amount of acreage for the upcoming season. SHUGART stated that he did have adequate housing for his HZA visa workers and he does not charge them for this housing. SHUGART stated that the North Carolina Department of Labor inspected his worker housing prior to the start of each season. He stated that he didn?t recall any ?spot inspections" but that he had heard from other farmers of it being done. SHUGART was unaware of how the fees he paid to NCGA were disbursed and he had no idea if ASAP was in any way involved. SA asked, hypothetically speaking, if the directors of NCGA were receiving any pro?t above their salary, in violation of the NCGA Articles of Incorporation, would he consider that a violation of trust and he stated that he thought that would be underhanded. He stated that he was unaware that NCGA made any claims to be a ?non- pro?t" and he assumed that EURY and the other members of the executive board were making a pro?t. He stated that if they were taking in money in violation of the corporate rules it would appear that they are trying to hide it from the farmer members. SHUGART loaned the box of correspondence he received from NCGA to the agents with the intention that they be copied and returned. On April 11, 2014, SA and SA Brian Thomas of IRS-CID returned the original documents to SHUGART at his farm. SA Thomas asked if SHUGART obtained workers compensation insurance from Star insurance or Pioneer Insurance. SHUGART said that he got his insurance from another company but that he had periodically received correspondence from Pioneer Insurance seeking his business. SHUGART stated that he compared their prices with his current insurance provider and decided to remain with his current provider as they had better rates. SHUGART stated that he had never been pressured by NCGA to change to Star Insurance or Pioneer Insurance. SHUGART stated that he would be willing to answer further questions in the future. This report is the property of the US. Department of State, Diplomahc Security Service. Neither the report nor its contents Page 2 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU ENFORCEMENT SENSITIVE) Case Document 66-3 Filed 01/21/15 Pace 3 of 3 Exhibit Case Document 66-4 Filed 01/21/15 Pace 1 of 4 SBU (LAW ENFORCEMENT SENSITIVE) Greensboro Resident Office IMS Report of Investigation DS Case Number: Case Title: ROI Type: Report Date: VF-2010-00076 Operation Hammerlock CASE INTERIM 05/05/2014 Case Type: Investigative Program Type: Date Investigated: CRIMINAL VISA FRAUD 04/07/2014 Case Impact: Case Status: Open Date: HIGH OPEN Investigation /Analysis Ongoing 01/22/2010 Memorandum of Interview On April 7, 2014 Special Agent (SA) Paul and SA Nicholas Hicks interviewed Matthew HORNEY of Triple Services at the Boone Police Department at 1500 Blowing Rock Road, Boone, NC. 28607. HORNEY con?rmed that his business address was PO Box 639, Newland NC, 28657 (phone 828-737-0403). Also in attendance at the interview was his mother, Peggy HOWELL, who also works with the company part time and is familiar with the NCGA program from her previous employment with Graham Farrell Better Service/Christmas Greens who also uses H2A visa workers. The interview was previously arranged by a phone call from Internal Revenue Service-Criminal Investigations Division (IRSCID) SA Brian Thomas. SA and SA Hicks presented their credentials for Mr. inspection. HORNEY stated that he primarily grows Christmas trees but also raises ?some corn and some nursery stock? and uses 20-25 H2A visa workers each year with an additional 10 workers at ?harvest time?. He stated that this year he brought in 34 or 35 workers in March that will stay until December 10. HORNEY stated that he had been a member ofthe North Carolina Growers Association (NCGA) since 2006. HORNEY and HOWELL both stated that they originally thought that NCGA was a part ofthe North Carolina Department of Labor but later thought NCGA was a corporation and was unaware oftheir status as a non-profit organization. HORNEY was shown pictures of Stan EURY, Lee WICKER and Kenneth WHITE and recognized them from the photos. HORNEY stated that he had spoken to EURY, WICKER, and WHITE in the past but did not routinely deal with them. He stated that he normally spoke with a ?Debbie? at NCGA but on occasion had dealt with WICKER and WHITE. HORNEY stated that NCGA had a board made up of NCGA member farmers and he had attended one board meeting in the winter of2012. HORNEY stated that he had never been a member of the board and didn?t know much about its purpose or function. HORNEY stated that NCGA provided him with ?legal workers?. He stated that he relied on NCGA to handle all of the paperwork and logistics involved with bringing in H2A visa workers. At the end of each season he ?lls out a NCGA packet detailing the number of workers he would need forthe following year and the dates he would need them. He stated in the past they would send in a ?preferred worker list? of workers that they had used that year and wanted to have back forthe Reporting Official: Distribution: Paul Approving Official: Taylor, John This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 1 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU (LAW ENFORCEMENT SENSITIVE) Case Document 66-4 Filed 01/21/15 Paoe 2 of 4 VF-2010-00076 SBU (LAW ENFORCEMENT SENSITIVE) CASE INTERIM: 05/05/2014 04:00 AM GMT next season. He stated that now they would automatically receive the same workers unless they provided documentation on any individual they didn?t want back and would have to provide a reason. HORNEY stated that he would keep a photo copy ofthe workers visa and the l-9. HORNEY stated that he thought he had seen a l-129 but it may have been in conjunction with the HZB workers they get via a company in Idaho. HORNEY stated that on the rare occasion that a worker absconded he would immediately report it to NCGA. HORNEY stated that he did not deduct anything from the worker?s pay for housing, transportation, uniforms, or food. He stated that they did withhold for taxes per his accountants instructions. His workers are paid weekly by check and they do maintain a payroll ledger. HORNEY stated that he paid an annual membership fee to NCGA of $200 and paid ?about $1000 per worker?. HORNEY stated that he is charged $350 per worker as a ?transfer fee? for workers that come from ?out East? from other farms and crops to assist at harvest time. He stated that he ?didn?t feel cheated with the $1000 per worker fee? but he thought the $350 per worker transfer fee was "steep". He stated that he had seen an itemized invoice at one time but the current invoices just had a non-itemized per-worker amount. HORNEY stated that he didn?t know what exactly the fees were for and wasn?t that concerned as long as he got his workers. HORNEY stated that he generally got the same workers year after year. He stated that he had a good relationship with his workers and had even visited some ofthem in Mexico on two occasions. He stated that at the end of the season he returned a ?preferred worker list? to NCGA. HORNEY stated that he had on occasion received less than his requested number of workers but the difference in fees was deducted from the fees invoiced for the ?transfer workers? in the fall. HORNEY stated that he didn?t recall ever voting on anything related to NCGA and he had never reviewed any NCGA records or books. HORNEY had a file of documents that he had received from NCGA which he showed to the agents. HORNEY stated that he was unaware of what NCGA had to pay to any other entity and he had never heard of Manpower of America, MILPA, Consular Solutions International, or Mike Bell. HORNEY stated that he established the number of workers he needed each year based upon his experience in the Christmas tree industry and projected amount of work for the upcoming season. HORNEY stated that he did have adequate housing for his H2A visa workers and he does not charge them forthis housing. HORNEY stated that the North Carolina Department of Labor inspected his worker housing priorto the start of each season. He stated that he had never been ?spot inspected" during the harvest season. HORNEY was unaware of how the fees he paid to NCGA were disbursed and he had no idea if ASAP was in any way involved. SA asked, hypothetically speaking, ifthe directors of NCGA were receiving any profit above their salary, in violation ofthe NCGA Articles of Incorporation, would he consider that a violation oftrust and he stated that he thought that would be ?underhanded?. He stated that he was unaware that NCGA made any claims to be a ?non- profit? and reiterated that in the beginning of his association with them he thought they were a part ofthe NC Department of Labon HORNEY loaned a folder of correspondence he received from NCGA to the agents with the intention that they be copied This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 2 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU (LAW ENFORCEMENT SENSITIVE) Case Document 66-4 Filed 01/21/15 Page 3 of 4 VF-2010-00076 SBU (LAW ENFORCEMENT SENSITIVE) CASE INTERIM: 05/05/2014 04:00 AM GMT and returned. On April 17, 2014, SA spoke to HOWELL and asked if Triple Services obtained workers compensation insurance from Star Insurance or Pioneer Insurance. HOWELL said that they were covered by Accident Fund Insurance. HORNEY and HOWELL stated that they would be willing to answer further questions in the future. This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 3 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU (LAW ENFORCEMENT SENSITIVE) Case Document 66-4 Filed 01/21/15 Pace 4 of 4 Exhibit Case Document 66-5 Filed 01/21/15 Pace 1 of 3 SBU (LAW ENFORCEMENT SENSITIVE) Greensboro Resident Office IMS Report of Investigation DS Case Number: Case Title: ROI Type: Report Date: VF-2010-00076 Operation Hammerlock CASE INTERIM 05/05/2014 Case Type: Investigative Program Type: Date Investigated: CRIMINAL VISA FRAUD 04/07/2014 Case Impact: Case Status: Open Date: HIGH OPEN Investigation /Analysis Ongoing 01/22/2010 Memorandum of Interview On April 7, 2014 Special Agent (SA) Paul and SA Nicholas Hicks interviewed Harry YATES of Yates Christmas Trees at the Boone Police Department at 1500 Blowing Rock Road, Boone, NC. 28607. YATES con?rmed that his business address was located at 134 Jake Storie Road, Boone NC, 28607 (phone 828-264-7574). The interview was previously arranged by a phone call from Internal Revenue Service-Criminal Investigations Division (IRSCID) SA Brian Thomas. SA and SA Hicks presented their credentials for Mr. inspection. YATES stated that he primarily grows Christmas trees and uses 5-6 H2A visa workers each year with an additional 4-6 workers at ?harvest time?. YATES stated that he had been a member of the North Carolina Growers Association (NCGA) for roughly ?14 to 16 years?. YATES stated that he thought NCGA was a non-profit organization. YATES was shown pictures of Stan EURY, Lee WICKER and Kenneth WHITE and recognized them from the photos. He stated that EURY was ?chairman? of NCGA and that WICKER was his "assistant" and WHITE was a ?member ofthe NCGA management team?. YATES stated that he had spoken to EURY and WHITE in the past but did not routinely deal with them. He stated that he normally spoke with WICKER if he had a problem. YATES stated that NCGA had a board made up of NCGA member farmers and he had been asked to be a member ofthe board but had declined. YATES stated that NCGA was very ?proactive in educating farmers? on the visa process. YATES stated that NCGA provided him with ?legal workers?. He stated that he relied on NCGA to handle all ofthe papenNork and logistics involved with bringing in H2A visa workers. At the end of each season he ?lls out a NCGA packet detailing the number of workers he would need for the following year and the dates he would need them. He stated in the past they would send in a ?preferred worker list? of workers that they had used that year and wanted to have back forthe next season. He stated that now they would automatically receive the same workers unless they provided documentation on any individual they didn?t want back and would have to provide a reason. YATES stated that he would keep a photo copy ofthe worker?s visa and the I-9. YATES stated that on the rare occasion that a worker absconded he would immediately report it to NCGA. YATES stated that he did not deduct anything from the worker?s pay for housing, transportation, uniforms, or food. His Reporting Official: Distribution: Paul Approving Official: Taylor, John This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 1 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU (LAW ENFORCEMENT SENSITIVE) Case Document 66-5 Filed 01/21/15 Paoe 2 of 3 VF-2010-00076 SBU (LAW ENFORCEMENT SENSITIVE) CASE INTERIM: 05/05/2014 04:00 AM GMT workers are paid weekly by check and they do maintain a payroll ledger. YATES stated that he paid an annual membership fee to NCGA of $200 and paid ?about $1000 per worker". YATES stated that he didn?t recall ever voting on anything related to NCGA and he had never reviewed any NCGA records or books. YATES had a file of documents that he had received from NCGA which he showed to the agents. YATES stated that he was unaware of what NCGA had to pay to any other entity and he had never heard of Manpower of America, MILPA, Consular Solutions International, or Mike Bell. YATES stated that he established the number of workers he needed each year based upon his experience in the Christmas tree industry and projected amount of work for the upcoming season. YATES stated that he did have adequate housing for his H2A visa workers and he does not charge them forthis housing. YATES stated that the North Carolina Department of Labor inspected his worker housing priorto the start of each season. He stated that once during the harvest season he had been ?spot inspected? by the North Carolina Department of Labor. YATES was unaware of how the fees he paid to NCGA were disbursed and he had no idea if ASAP was in any way involved. SA asked, hypothetically speaking, ifthe directors of NCGA were receiving any profit above their salary, in violation ofthe NCGA Articles of Incorporation, would he consider that a violation oftrust and he declined to comment. YATES reiterated that he was reliant on NCGA to get the workers he needed. YATES stated that they would be willing to answer further questions in the future. This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 2 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU (LAW ENFORCEMENT SENSITIVE) Case Document 66-5 Filed 01/21/15 Page 3 of 3 Exhibit Case Document 66-6 Filed 01/21/15 Pace 1 of 3 SBU (LAW ENFORCEMENT SENSITIVE) Greensboro Resident Office IMS Report of Investigation DS Case Number: Case Title: ROI Type: Report Date: VF-2010-00076 Operation Hammerlock CASE INTERIM 04/17/2014 Case Type: Investigative Program Type: Date Investigated: CRIMINAL VISA FRAUD 04/08/2014 Case Impact: Case Status: Open Date: HIGH OPEN Investigation /Analysis Ongoing 01/22/2010 Memorandum of Interview On April 8, 2014 Special Agent (SA) Paul and SA Nicholas Hicks interviewed Dr. Earl L. DEAL of Cranberry Service, Inc. at the Boone Police Department at 1500 Blowing Rock Road, Boone, NC. 28607. DEAL confirmed that his business address was PO Box 133, 3452 Meadow Fork Rd, Laurel Springs NC, 28644 (phone Also in attendance at the interview was his wife, Betsy Deal (BETSY). The interview was previously arranged by a phone call from Internal Revenue Service-Criminal Investigations Division (IRS-CID) SA Brian Thomas. SA and SA Hicks presented their credentials for Mr. inspection. DEAL stated that he is a retired educator with a in Economics and primarily grows Christmas trees as a retirement job. He uses approximately 35 H2A visa workers each year with an additional 15-20 workers at ?harvest time?. DEAL stated that he had been a member ofthe North Carolina Growers Association (NCGA) ?about 20 years?. DEAL stated that they thought that NCGA was a ?cooperative? but was unaware oftheir status as a non-profit organization. DEAL was shown pictures of Stan EURY, Lee WICKER and Kenneth WHITE and recognized them from the photos. DEAL stated that he had spoken to EURY, WICKER, in the past but did not routinely deal with them. He stated that he normally spoke with a WHITE if he had problems. DEAL stated that NCGA had a board made up of NCGA member farmers and he had been a member of the board ofdirectors in the 1990?s. He said the board is an unpaid position but he recalled that active board members had their $200 membership fee waived forthe year. DEAL stated that NCGA provided him with ?legal workers?. He stated that he relied on NCGA to handle all ofthe papenNork, recruiting, and logistics involved with bringing in H2A visa workers. At the end of each season he fills out a NCGA packet detailing the number of workers he would need for the following year and the dates he would need them. DEAL stated that he would keep a photo copy ofthe workers visa and the I-9. DEAL stated that he thought he had seen a I-129 didn?t recall signing one. DEAL stated that on the rare occasion that a worker absconded he would immediately report it to NCGA. DEAL stated that he did not deduct anything from the worker?s pay for housing, transportation, uniforms, or food. He stated that they did withhold for taxes per his accountants instructions. His workers are paid weekly by check and they do Reporting Official: Distribution: Paul Approving Official: Taylor, John This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 1 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU (LAW ENFORCEMENT SENSITIVE) Case Document 66-6 Filed 01/21/15 Paoe 2 of 3 VF-2010-00076 SBU (LAW ENFORCEMENT SENSITIVE) CASE INTERIM: 04/17/2014 04:00 AM GMT maintain a payroll ledger. DEAL stated that he paid an annual membership fee to NCGA of $200 and paid ?about $985 per worker?. DEAL stated that he is charged $350 per worker as a ?transfer fee? for workers that come from other farms and crops to assist at harvest time. He stated that it had been explained at a yearly meeting how the fees paid by the member farmers was broken up but the current invoices just had a non-itemized per-worker amount. DEAL stated that he didn?t know what exactly the fees were for and wasn?t that concerned as long as he got his workers. DEAL stated that he generally got the same workers year after year. He stated that at the end ofthe season he returned a ?preferred worker list" to NCGA. DEAL stated that he didn?t recall ever voting on anything related to NCGA and he had never reviewed any NCGA records or books. DEAL had a ?le of documents that he had received from NCGA and he provided a copy to the agents. DEAL stated that he was unaware ofwhat NCGA had to pay to any other entity and he had never heard of Manpower of America, MILPA, Consular Solutions International, or Mike Bell. DEAL stated that he established the number of workers he needed each year based upon his experience in the Christmas tree industry and projected amount of work forthe upcoming season. DEAL stated that he did have adequate housing for his H2A visa workers and he does not charge them forthis housing. DEAL stated that the North Carolina Department of Labor inspected his worker housing prior to the start of each season. He stated that he had never been ?spot inspected? during the harvest season. DEAL was unaware of how the fees he paid to NCGA were disbursed and he had no idea if ASAP was in any way involved. SA asked, hypothetically speaking, ifthe directors of NCGA were receiving any profit above their salary, in violation ofthe NCGA Articles of Incorporation, would he consider that a violation oftrust and he stated that he ?would be surprised of EURY, WICKER, or WHITE were receiving a kickback?. He stated that he was unaware that NCGA made any claims to be a ?non- profit?. DEAL stated that he had had ?positive relationship with NCGA for 20 years and didn?t feel taken advantage of?. DEAL provided folders of copies of correspondence he received from NCGA to the agents. DEAL stated that they would be willing to answer further questions in the future. This report is the property of the US. Department of State, Diplomatic Security Service. Neither the report nor its contents Page 2 may be disclosed to unauthorized persons without the expressed permission of the Diplomatic Security Service. SBU (LAW ENFORCEMENT SENSITIVE) Case Document 66-6 Filed 01/21/15 Page 3 of 3 Exhibit Case Document 66-7 Filed 01/21/15 Pace 1 of 5 DEPARTMENT OF THE TREASURY Internal Revenue Service Criminal Investigation Memorandum of Interview Investigation #2 1000233619 Location: Goldsboro Police Department Investigation Name: Craig Stanford Eury 204 South Center Street Date: 04/0Ti2014 Goldsboro. NC Time: 4:15-5:30pm Participant(s): Phillip Neal Aycock, Witness Robert Broadway, Witness Brian G. Thomas, Special Agent Sharon Foster, Special Agent, DOL OIG Tracy C. Curtner, Attorney (252) 243-3136 1. On the above date and time, Special Agent Thomas and Foster introduced themselves to Phillip Neal Aycock and Robert Broadway as special agents with Internal Revenue Service, Criminal Investigation and US. Department of Labor Of?ce of Inspector General. SIA Thomas and Foster displayed their credentials for their inspection. Thomas explained to Aycock and Broadway the purpose of the interview and they agreed to answer questions and provided the following pertinent information: 2. Name: Philli Neal A cock DOB: SSN: Residence: Telephone: Name: Robert Broadway DOB: SSN: Residence: Telephone: 3. Aycock and Broadway are owners and operators of Aycock Brothers Farms (ABF). For the past 20 or more years, ABF has been a member of the NORTH CAROLINA ASSOCIATION (NCGA). The last time Aycock or Broadway spoke to a representative of NCGA was approximately one week prior to the interview (March 30, 2014). Aycock stated ?They wouldn't tell me anything, but did tell me that we need to get our own attorney". 4. Aycock and Broadway were shown photographs and asked to identify STAN EURY, KENNETH WHITE, and LEE WICKER. Aycock and Broadway confirmed the identities of each individual. Aycock stated EURY, WHITE, and Memorandum Page 1 OH US. Treasury Criminal Investigation Case Document 66-7 Filed 01/21/15 Pace 2 of 5 WICKER are executive board members of NCGA. Broadway explained, NCGA is comprised of executive board and an advisory board. The advisory board is comprised of the executive board members and several growers from the various regions of the state. 5. As a member of NCGA, ABF pays annual dues to the association. Neither Aycock nor Broadway was aware of the entity classification of NCGA. Both individuals were presented and asked to review the North Carolina Secretary of State (NCSS) information pertaining to NCGA. According to the articles of incorporation filed with NCSS, NCGA is a non-profit. As a non-profit, NCGA is supposed to provide the following information to its members: Minutes of all meeting of members Minutes of all meeting of board of directors Appropriate accounting of records A list of current members Current bylaws All written communications to the members within the past three years. 6. Aycock and Broadway were provided and asked to review various sections of the articles of incorporation for NCGA. In article Vl it states ?No part of the net earnings of the corporation shall inure to the benefit of any officer, director or member of the corporation?. Both Aycock and Broadway replied had know idea that this existed?. Aycock and Broadway confirmed that they have never received or been granted access to review any of the NCGA minutes, accounting records, bylaws, or written communication. Approximately, eight or nine years ago, Aycock recalled voting on a topic at the annual meeting, but that was the last time. After reviewing the articles of incorporation, Aycock stated ?It appears the executive members of NCGA had a duty and responsibility to keep the members informed?. 7. ABF join NCGA because the organization assists them in getting immigrant workers under the H2A program. ABF pays NCGA to prepare the necessary papen/vork to legally obtain immigrant workers. NCGA charges ABF a ?flat rate? per worker. Neither Aycock nor Broadway was aware of the actual breakdown of the flat rate. 8. Prior to the workers arriving in Vass, NC, ABF receives an invoice from NCGA. The invoice shows the number of workers requested which is multiplied by the flat rate. For example, ABF usually requests 8 to 10 workers with a flat rate charge of $956. The total cost to ABF would be $9,560 for 10 workers. Both Aycock and Broadway assume the flat rate covers the following expenses: 0 Transportation (From and to Mexico) 0 Application costs (Government Fees) 0 NCGA overhead expense. Memorandum Page 2 of 4 US. Treasury Criminal Investigation Case Document 66-7 Filed 01/21/15 Page 3 of 5 9. When the immigrant workers arrive in Vass (NC), NCGA handles the processing. According to Aycock, in the earlier years, the immigrant workers arrived on Greyhound buses, but that became too expensive. NCGA found a private charter bus line, which is located in Mexico. The workers usually arrive in April and leave sometime in November (Prior to Thanksgiving). When the workers arrive at ABF, they are provided housing and transportation. 10. If ABF has any issues with a worker, the point of contact with NCGA is Jay Hill. If a worker absconds, ABF is instructed to contact Hill. 11.ABF relies on the knowledge and expertise of NCGA representatives to prepare the necessary paperwork to get legal H2A workers from Mexico. NCGA sends ABF an application.? Contained within the application are the following documents: 0 Checklist Signed and Competed NCGA application (General information about the farm) Signed NCGA Policies DOL H2A Regulations Acknowledgement Grower Assurance of Compliance (Signed) Contacting Former US Workers (Completed and signed) Form I-129 Supplement (Pg 15 of Asked to sign in blue ink, but do not date) 0 Proof of Worker?s Compensation (Star Insurance Company). 12.Aycock and Broadway were provided with a blank form I-129. Thomas asked Aycock and Broadway ?Have you seen or been provided a completed I- 129?? Both Aycock and Broadway replied ?No, we signed page 15 and it?s blank?. Neither Aycock nor Broadway knows the actual number of workers requested on the I-129. 13.ABF usually request 20 to 25 workers per year. In some yearstheir workers. Aycock would call NCGA and they would transfer some workers from another location to ABF. Aycock requested the additional help verbally to NCGA. He did not recall filling out any transfer papen/vork. 14. NCGA has not provided Aycock or Broadway with any DOL forms or a recruiting report. Broadway stated that is what ABF pays NCGA to do. Supposedly, NCGA handles all of the newspaper ads, interviews, and hiring of American workers. Aycock and Broadway stated if an American worker shows up at the farm, ABF will hire that individual. Aycock stated ?If a guy comes up to my door step, we have been instructed to hire that person. We also have to notify 15.Aycock and Broadway attempt to attend every annual meeting. During one annual meeting, they recalled hearing ASAP being mentioned. However, the conversation was very brief and no explanation of the company was provided. Memorandum Page 3 of 4 US. Treasury Criminal Investigation Case Document 66-7 Filed 01/21/15 Page 4 of 5 Neither Aycock nor Broadway was aware ASAP was located in Virginia. 16. Neither Aycock nor Broadway recall receiving a paperwork involving ASAP or recruiting fees. Aycock believes if NCGA told him that he needed to pay a government or recruiting fee, those fees would have been deducted from the total payments. Aycock and Broadway stated acts as agent and are supposed to represent us." Both Aycock and Broadway have heard that migrant workers were paying fees for their visa?s, but did not know the workers were actually depositing those fees into bank account, 17.When asked Aycock and Broadway have never heard of the following individuals or companies: Mike Bell Amanda Wright SARAH FARRELL Man Powers of America CONSULAR SOLUTIONS INCORPORATED (CSI). 1B.Aycock and Broadway stated ?We don?t feel real good right now, especially, If NCGA is paying recruiting fees to ASAP and 1/2 of those funds are going directly to the board members of I prepared this memorandum on April 11, 2014, after refreshing my memory from notes made during and immediately after the interview with Phillip Neal Aycock and Robert Broadway. ?aw? Brian G. Thomas Special Agent a Double click here to sign Sharon Foster Special Agent, DOL OIG Memorandum Page 4 of 4 US. Treasury Criminal Investigation Case Document 66-7 Filed 01/21/15 Pace 5 of 5