Here is a short list of the all-time great staffing scams.
Some of these are historical screw-ups; some are just historical. The most recent are simply indicative of how the staffing industry has evolved (or not).
There are probably larger scams in the recent past – Walmart and Halliburton come readily to mind – but we’re not ready to deem them all-time scams yet; history needs to take its course.
If you have any others that you feel belong on this list, fire away in the comments.
The Pharaoh Cheops, 2600- 2560 BC
You have to be a heck of an employer to get thousands of people to devote 20 years – a lifetime in those days – to building you your own personal mausoleum.
Some people say the pyramids were built by slaves who were forced to cut huge chunks of limestone and then drag them hundreds of miles to the pyramid site. Others say that some of them probably were very skilled craftsmen who cast the stones on site.
The actual labor force didn’t show up until late summer.
But still. The pay for this hard work was your daily rations and the knowledge that you’d be taken care of in the afterlife. So you had that going for you.
The Feudalist Society, 800 – 1600
If you had any doubts that the typical Medieval existence was “nasty, brutish and short,” look no further than the feudal serf. These people were definitely scammed.
While the lords and the vassals did lordly and vassally things, the serfs – who found themselves serfs through their inherited lots – toiled in the mines and the forests keeping the place respectable. Their payment: food (from fields that they leased and then worked in whenever they had time) and the assurance of not getting abused or killed by a rival lord.
At least most of them weren’t slaves. The lords usually claimed them as serfs because they were better that way as tax writeoffs.
Pennsylvania Coal Mining, 1860 – 1920
The trouble here started in 1762 when somebody near Scranton, PA estimated that there were 16 billion tons of anthracite coal under the ground there.
For companies like U.S. Steel, Bethlehem Steel and H.C. Frick Coke Co., it was a recruiter’s dream. Hundreds of thousands of European immigrants came flocking in search of jobs, food and a better existence.
What many of them got was coal mining: dirty, dangerous and exemplified by old photos of children breaking rocks for minimal or no pay. The coal operators and railroad barons who benefitted from the work, meanwhile, certainly enjoyed their Victorian mansions.
More than 10,000 of the miners died in the mines between 1870 and 1900. It took a union strike and the intervention of President Teddy Roosevelt to get things back in order.
Triangle Shirtwaist Factory, March 1911
The good news: You’ve just landed a contract job in New York City as a factory seamstress.
The bad news: Your average work week is 84 hours. So you don’t have much of a social life.
Worse, the sewing factory you’re working in can burn. That’s what happened during the infamous Triangle Shirtwaist factory incident, when 146 employees, mostly young women and all between 14 and 48, died.
It didn’t help that the owners had locked all the doors to prevent employee theft.
Labor unions were created shortly afterwards.
Port Chicago, July 1944
This is what happens when you misuse your talent management system.
It remains a mystery why the U.S. Navy placed this crew at Port Chicago, which is near San Francisco, CA. Together, they had an average score on the Navy’s General Classification Test of 31 – the lowest 8% in the Navy.
The task: loading munitions onto ships that are already filled with fuel oil. What could go wrong?
The resulting explosion destroyed the entire harbor and killed 320 people. Most of the dead were African-American.
Madness ensued: a mutiny, courts-martial, appeals, even the early work of Thurgood Marshall. If nothing else, all this led to a much less segregated Navy.
The Schlecker Scandal, January 2010
When you’re operating the largest drugstore chain in Europe and you have a German labor minister, a trade union and the German Association of Temporary Employment Agencies (BZA) breathing down your neck, you’ve probably done something wrong.
That was the case at Schlecker, which was accused of closing its smaller stores, building larger ones … and firing nearly half of its full-time workforce and then forcing them to reapply (for about half of their previous wage) through a temporary agency.
Worse yet, the temp agency, called Meniar, was said to be completely controlled by Scheckler.
This was apparently part of a long pattern of mismanagement at the sizeable chain, which under the new leadership of Lars Scheckler undertook a major revamping of its stores and its image.
Still, the fallout included several other incidents at Scheckler and even a retaliatory terrorist attack at the Frankfurt offices of staffing giant Randstad.
The Internet Solutions Corporation, 2007 – Present
Staffing industry, meet the online world.
It can be confusing. We’re not even sure who Ayman Ahmed El-Difrawi is. On paper, he’s been Ayman Ahmed El-Difrawi, Michael El-Difrawi, several variations of Alec Difrawi, David Mellon, Michael Jenson, Michael Chandler and probably more.
Also on paper: convictions for wire fraud, conspiracy to commit bank fraud, child abuse, assault and nearly four years in U.S. federal prison. Oh, and something about him running for U.S. Congress on the platform of Internet reform.
Given all of this, we’re not saying that these staffing sites are actually one giant phishing scam – that would be outrageous.
Mirabilis Ventures, September 2008
Even against the backdrop of the occasional staffing scandals in Europe or the Philippines, where some large staffing firm or another has to pay back a few million in the local currency to make up for lost wages, this was big.
Frank Amodeo, the CEO of Mirabilis Ventures in Orlando, FL, pleaded guilty to stealing $182 million in payroll taxes from the state.
That’s one hundred eighty-two million U.S. dollars in federal withholding, Social Security and Medicare deductions. Amodeo was able to soak all of this up through his various temporary staffing and professional employment organizations including AEM, AQMI Strategy Corp., Common Paymaster Corp., Nexia Strategy Corp., Presidion Corp., Presidion Solutions, Quantum Delta Enterprises and Wellington Capital Group.
In IRS language, that’s $200 million after penalties. It also amounts to 27 counts of conspiracy and fraud, and what one IRS special agent called one of the biggest employment tax scams in the agency’s history.
Originally Amodeo faced as many as 370 years in prison, but the judge settled on 22 years.
Kenyan Ministry, December 2010
The Kenyan government set out to hire more than 2,500 people for jobs as diverse as teachers, supply chain officers, electricians, artisans and plumbers.
Six months after the hires, it all came crashing down. Corruption lives between the numbers here.
In all, 2,588 people were terminated following an audit by Kenya’s Education Ministry that showed 436 people who had passed interviews for the jobs had not even applied for the posts. The audit also showed, among much else, that 239 candidates who had supposedly been accepted for the positions had never actually started work.
As investigations by the likes of the Kenya Anti-Corruption Commission began, government officials threw up their hands and declared all of the new hires be classified as temporary. Their employment ended Dec. 31, pending a second try.
Global Horizons, Inc., June 2011
Here is definitive proof that enslavement can now be financial instead of physical.
Three executives from Global Horizons, Inc. – a farm-labor contracting firm based in Los Angeles, CA – pleaded guilty to using the federal guest worker program to lure 600 Thai workers to the U.S. Global Horizons chief executive Mordechai Orian continues to battle multiple criminal and civil charges against him.
Instead of recruiting the old-fashioned way, the company instead made sure that the workers were sufficiently indebted to Global Horizons from the start – usually through making them put up their land or homes.
Then, once the workers arrived, they would confiscate their passports and ship them to complicit farms in Hawaii or Washington state to harvest crops.
What happened after that is pretty unhumanitarian. The workers were charged for meals, housing and transportation, and retaliated against when they spoke up.
In all, eight defendants are charged in what the FBI says is “the largest human trafficking case in U.S. history.”
Again: If you have other scams that you feel belong here, we’d love to hear about them!