Suit: Tesla, other automakers used illegal foreign workers to build plants

SAN JOSE — Widening earlier claims of immigration fraud at the Tesla factory, a recently unsealed whistleblower suit says several other major automakers, including Mercedes-Benz, BMW and Volkswagen, illegally used foreign construction workers to build their U.S. factories.

The charges expand on an investigation by this news organization last year into foreign construction workers building Tesla’s paint shop in Fremont. The federal suit charges that the carmakers used hundreds of Eastern European workers on suspect visas hired through subcontractors for the German company Eisenmann.

The investigation, “The Hidden Workforce Expanding Tesla’s Factory,” and court documents revealed at least 140 foreign workers on questionable business visas worked on the factory expansion for as little as $5 an hour.

The suit, which comes as the Trump administration pushes new limits on legal and illegal immigration, claims the hiring of lower-cost European construction workers may have cost the U.S. hundreds of jobs and millions in lost wages.

It alleges the companies created or helped promote the delivery of “false and fraudulent documents to the United States to secure illegal visas for their direct and indirect employees to come to the United States.”

Tesla and Mercedes denied the claims. An Eisenmann spokesman said the company complies with U.S. immigration laws.

Despite a willing whistleblower and a federal probe initiated by Sen. Charles Grassley, R-Iowa, federal prosecutors have hesitated to take the case. The U.S. government in April allowed the suit to go forward, but deferred a decision on whether to collaborate with the whistleblower, injured Tesla subcontractor Gregor Lesnik. A new, amended complaint was filed under seal in U.S. District Court in San Jose in August.

Lesnik, a construction worker from Slovenia, was injured in May 2015 when he fell through the roof of the Tesla factory. He suffered a concussion and several broken bones, and spent weeks in the hospital. He filed a state workers’ compensation claim and civil suit against Tesla, Eisenmann and a subcontractor, which were settled for $550,000.

Lesnik has returned to Slovenia. His San Jose lawyer, William Dresser, declined to comment on the whistleblower suit.

Eisenmann spokesman Wolfgang Albeck said the company has always complied with U.S. immigration laws, but changed its hiring and visa practices after this news organization’s investigation.

“The government declined to intervene in this lawsuit,” Albeck said, “reinforcing our opinion that the lawsuit filed by Mr. Lesnik is without merit.”

Tesla CEO Elon Musk said his company paid appropriate wages to contractor Eisenmann, a manufacturer of industrial systems — about $55 an hour. Eisenmann subcontracted the work to a Slovenian company, ISM Vuzem. Workers interviewed by this news organization said they received a little more than $10 an hour from Vuzem. Pay vouchers submitted as part of Lesnik’s suit indicate he was paid as little as $5 an hour.

The suit claims Eisenmann and various subcontractors hired at least 200 foreign workers to build the paint shop at Tesla’s Fremont factory.

The men were given letters endorsed by Eisenmann stating they were supervisors with “specialized knowledge” of Eisenmann equipment and construction, enabling them to receive B-1/B-2 visas, the suit says. Those business visas allow for limited work — typically meetings, negotiations or conferences — but broadly ban hands-on labor like construction work.

Eisenmann repeated this visa and hiring process at automobile and parts factories across the country, the suit says. It also claims the contract work broke federal law and allowed companies to avoid taxes owed to the government.

If the companies are found liable, damages and fines could reach into the millions of dollars. A whistleblower is entitled to between 15 and 30 percent of the proceeds, depending on the government’s involvement in the case.

The suit also charges that foreign workers on questionable visas have been employed at automobile and parts factories in Michigan, South Carolina, Tennessee and Alabama, and perhaps at sites in New York, Washington and Illinois.

Lesnik, a Slovenian laborer, worked for Vuzem at the Tesla factory on a B-1/B-2 visa. Lesnik knew his Vuzem co-workers came over on identical visas, and believes Eisenmann used the same system to bring in foreign construction workers on several U.S. projects, the suit claims.

Albeck said Eisenmann legally obtained the visas through an informal program known as “B-1 in lieu of H-1B” visa. The H-1B visas are limited in number and reserved for skilled workers, generally with advanced degrees. Companies will sometimes use common business visas to bring workers into the U.S. with permission from immigration officials.

A Tesla spokesman said it no longer works with Vuzem or any companies associated with its owners. Tesla said it has not been served with the whistleblower suit.

A Mercedes-Benz representative said the company’s supplier contracts explicitly prohibit contractors from knowingly using unauthorized foreign workers. If a contractor is caught, the statement said, Mercedes “will order those individuals removed from the work site, and the partner will be held accountable for any consequence of their employee’s non-compliance with U.S. laws.”

A BMW spokesman declined to comment, citing pending litigation. Volkswagen and Citic Dicastal, an automotive parts manufacturer in Michigan, did not respond to multiple requests for comment.

Brian Stretch, U.S. Attorney for the Northern District of California, asked a federal judge in court papers to unseal part of the case and require the parties to keep his office apprised of developments in the action. The office did not respond to a request for comment, but said in court documents that it reserved its rights to “intervene in this action, for good cause, at a later date.”

A spokesman for the U.S. Department of Labor, which also investigates employment claims, declined to comment.

The suit could face an uphill battle, said David Silbert, a San Francisco attorney who has represented whistleblowers. False claims, or “qui tam,” suits are traditionally brought to expose fraud against the government. A common example is a contractor filing fraudulent bills to the government.

Silbert said false claims suits allow private citizens to bring a case on behalf of the government and share in any recovered funds. An employee typically shows proof that the government has been defrauded through contracts and invoices. Lesnik claims the companies defrauded the government by failing to pay social security and Medicare taxes for the foreign workers, as required by law.

Whistleblowers will often drop suits if the government declines to intervene, he said, adding that “every case is different.”

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