At least two dozen employees were arrested March 4th after deputies raided four Pei Wei restaurants and its corporate headquarters in Scottsdale.  Maricopa County Sheriff Joe Arpaio had warrants for 120 employees who were suspected of identity theft.

Just how bad can it get?  Unfortunately pretty bad.  At the corporate headquarters, boxes of documents and computer databases were seized.  Arpaio said the investigation began in June 2010 after the sheriff’s office received a tip that several employees were illegal immigrants.  The investigation showed that most of the victims whose identities may have been stolen live out of state; eight of them are children under the age of 12 and four of them are dead.

Arpaio stated, “That’s one thing that makes this operation unusual. People apparently are fed up with the ID theft problem and the problems ID theft causes and are willing to help law enforcement to ensure the successful prosecution of this kind of crime.”

Pei Wei Asian Diners are operated by publicly held P.F. Chang’s China Bistro Inc   P.F. Chang’s operates about 170 Pei Wei locations nationwide and more than 200 P.F. Chang’s China Bistros.

It is estimated that a Pei Wei restaurant can generate up to $2 mil/year in sales.  The prolonged closure of a number of locations is costing the company a significant amount of money and the media coverage is tremendously damaging including a loss of prestige and community standing.

The case at hand teaches a lesson about the E-Verify program, in that using E-Verify doesn’t insulate an employer against penalties and doesn’t provide a safe harbor against worksite enforcement. This is a wake-up call to anyone who thinks E-Verify is an effective remedy to stop identity fraud.  E-Verify doesn’t have the proper protections and safeguards in place for detecting it.

Secondly, if you own and operate a chain of restaurants, it’s time to be proactive and get your I-9’s in order and secure the services of a 3^rd party audit team who are skilled in handling employer compliance issues.  You must carefully review your systems and procedures around I-9 processing and management at all of your locations, particularly if you are a multi-site employer – including corporate headquarters.

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