Some Interesting Details on the Wright State Case

In yesterday’s post, I discussed a scandal that emerged involving Wright State University and a local defense contractor, UES. The latter apparently used WSU as a vehicle under which UES could hire a foreign worker, Satya Ganti, without worrying about the H-1B cap, with the added bonus that the legal wage requirement, being for an academic, could be lower.

A fellow academic researcher called my attention to the fact that a number of documents related to the case were posted by the Dayton Daily News. Though most involve things like letters to various administrators, informing them that they are being placed on leave while the scandal is investigated, there also are documents pertaining to the hiring of Dr. Ganti. These turned out to be interesting reading.

Before continuing, I wish to stress that I am not saying that any laws or regulations were violated in the Ganti case. On the contrary, readers who know my writings well will recall that I constantly point out that most abuse of H-1B and related programs is perfectly legal, due to gaping loopholes. There may or may not have been illegalities here, though there definitely seems to be a gray area, as you’ll see.

The documents show that UES had a project that needed to be done, and it wanted to hire Ganti for it. However, Ganti, a 2012 PhD at WSU, had come to the end of her OPT period, which allows foreign students to work for a while in the U.S. after they earn their degrees. Thus she needed to be hired as an H-1B.  In fact, her OPT time had expired, but the WSU people noted that there is a 60-day grace period.

But since the H-1B visa program is greatly oversubscribed, there was no guarantee UES could get a visa for Ganti — unless she were hired through WSU, as academic institutions are exempt from the visa cap.

So, Ganti was hired for a position for which WSU was the nominal employer, but in which she would basically report to UES. One of the WSU memos wondered who should be Ganti’s listed supervisor at WSU. The reply from another WSU person suggested a name, but then added, “Obviously we know that the employee [Ganti] will take their day-to-day direction from their supervisor on the customer side [UES].” In the contract, in which WSU is referred to as the Seller, the Customer, UES, specifies that the job funded by the contract is required to be filled by Ganti.

So who is the real employer here? This is the gray area, something that USCIS policy people have struggled with for some years now. I know that some readers will think that UES is obviously the employer, with the university being a “launderer,” but it may not be quite that simple. It may have been planned, for instance, that Ganti would write research papers, based on her work for UES but published under the university’s name, in which case she would interact with WSU researchers who would coauthor the papers.

Or, of course, it may be that UES simply wanted to circumvent the H-1B cap and get a break on wages.

But what was in it for WSU? The documents show an Overhead item in the amount of $20,000. If a university is awarded a grant or contract for $x, it adds a percentage to that figure, ostensibly to offset expenses incurred in the project in question. Ganti would be using electricity, the university might have to buy a new desk for her, and so on, hence the Overhead charge. In practice, universities simply use Overhead as “profit centers.” In this case, the university apparently charged UES a $20K “tax” on top of Ganti’s $65K salary.

Note by the way that that made her effective cost $85,000, which is more in line with what UES would have to pay a comparable American. But as I always point out, “comparable” means young, and the typical American with those qualifications would command much more. And note that the WSU documents point out that all WSU workers are exempt from Social Security tax, whereas UES would have to pay that tax if it hired a worker directly.

By the way, Ganti’s pay of $65,000, low by industry standards, was actually listed at Level III in WSU’s application for the H-1B visa. Since the vast majority of visas are awarded only at Levels I and II, one might think that those at Level III are not underpaid. But again, her pay was judged at an academic-sector level, even though she was doing industry work.

To understand further why WSU was likely anxious to land this contract, it is vital to realize the huge role that extramural funding plays in U.S. universities. Professor Sundaram Narayanan, who was recently fired for his role in a similar H-1B scandal, was also lauded for his role in founding the WSU research institute in which Ganti was hired. The institute has grown tremendously, bringing in lots of funding, which in turn makes it in line for even further funding from the state.

The 2012 report, for example, shows the enormous importance of funding. Note that Dr. Narayanan, then just a faculty member, had grants of sizes $1.5 million from the Air Force, $750,000 from the state employment department, another $500,000 from the Air Force, and two “smaller” grants of $165K and $100K — all acquired just within one year. His prowess as a “rainmaker” likely played a role in his 2013 appointment as Provost, at a salary of $340K/year. Had he not had this fall from grace, university presidencies and so on at even higher pay, maybe even prestigious high-level government positions, say Undersecretary of Commerce, would have been his in the coming years.

Finally, one of the WSU documents suggests deceptive behavior is commonplace:  “Please note: if new employment is for research position & he/she/you decide to apply for Permanent Residency (aka ‘green card’) the job title needs to sound permanent. IE – titles with “Postdoctoral or Postdoc”…won’t be approved for green card applications.” In other words, conjure up a fake title so as to fool USCIS. Having observed the H-1B/green card process closely for more than 20 years, I can tell you that such chicanery occurs everywhere, in all the big mainstream firms, and yes, in academia too.

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21 thoughts on “Some Interesting Details on the Wright State Case

  1. I appreciate your investigative journalism regarding Wright State University’s conduct, which I believe is abuse of the controversial H-1B Visa program.

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  2. Caltech Vice Provost David Goodstein touched on some issues related to academic overhead in his classic 1993 (Phi Beta Kappa) American Scholar essay, “Scientific Ph.D. Problems.” A copy of this article should be available to most academic professionals via the inter-library loan program at their college or university. Alternatively, please contact me at c0030180 [at] airmail dot net to obtain a copy. . . . . . . Also, since the Department of Defense was involved with WSU-UES, I wonder if the H-1B “deemed export rule” would apply to Satya Ganti’s work.

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  3. >In this case, the university apparently charged UES
    >a $20K “tax” on top of Ganti’s $65K salary.

    That’s only $20/85 or 24%, in the US most recruiters charge 33% or more for US workers and generally closer to 50% for H-1Bs, although these nonacademic jobs also include 12.4% for SSN. So the overhead in this case is somewhere between customary and low.

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    • The overhead in Ganti’s case, about 30%, is actually low by academic standards. Typically it is well above 50%. However, in WSU’s case, it may be lower for contracts than for grants.

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  4. Since the university’s benefit financially, it is not in their interest to pursue improper activities and financial fraud. Larger ones have such a convoluted structure, it is difficult, if not impossible to follow the money.

    I have also tried to follow faculty work for outside companies – including their own – and have been refused copies of the conflict of interest documents that are required to be filed with the claim that these are protected personnel records.

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    • I too file those things every year, as we are told that they are required by law. That makes it sound like they are also required to be publicly accessible, and I’ve often wondered whether that is the case.

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      • They are required but my FOIA equivalent request was denied. It is impossible to tell which university employees are employed outside the university through university documents. I do not think it is logical (of course, logic seems to have little to do with activities of university administrations) and need to check with the expert on state transparency statutes. Fortunately, he is at the other major state university,

        Another odd thing in my state is that the State Auditor has no authority over universities and the Attorney General does not pursue fraud. It takes the county DA and a Grand Jury to take an investigation outside the university.

        The major investigative reporting agency rents space from the university in question and has refused to look at my evidence.

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  5. The H-1b visa is corrupt in the entirety. We’ve spent decades trying to figure out how to fix each and every loophole, which is a fools errand.

    The program, and all employer sponsored visas, need to be abolished. It’s time to remove brokers and middle-men of all types from our immigration system. They have too great of an incentive to cheat the system.

    Lobbyists wrote the H-1b law and it was passed in a midnight session when nobody was watching. It was birthed from scandal. And it should die from scandal.

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  6. Two Cupertino residents and two Sunnyvale residents have been indicted in connection with several types of fraud involving H-1B visas.

    Ragini Vecham, 36, of Cupertino, Kishore Pallapothu, 42, of Cupertino, Satyanarayana Tota, 45, of Sunnyvale and Ramana Reddy, 44, of Sunnyvale are all charged with participating in conspiracy involving visa fraud, mail fraud, obstruction of justice and witness tampering, among many other potential charges.

    The four allegedly owned seven business entities through which they would commit the fraud, “which individuals used companies to fraudulently submit fraudulent H-1B visa applications and other documents to the U.S. Department of Homeland Security and the U.S. Department of Labor” according to a press release distributed by the Department of Justice.
    http://www.mercurynews.com/cupertino/ci_28789184/cupertino-sunnyvale-four-residents-indicted-h-1b-visa

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  7. I also can’t get out of my head how hare-brained it is to turn over background investigations to some junior administrator or clerk at a college, cosmetology school, truck driving academy, or university. It really drives home how divorced from reality the legislators, presidents, cabinet officials and such have been for so long.

    Of course, to them, running proper background investigations on every visa applicant would be declared “unrealistic”, “impractical”, “inconvenient” and expensive, so “Why bother doing any at all? That would be totally unreasonable.”, to excuse cutting corners on even “background checks”.

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  8. “Before continuing, I wish to stress that I am not saying that any laws or regulations were violated in the Ganti case.”

    The statement from the University read, in part: “This past spring, we were presented with credible evidence that somewhere between two and five years ago not every H-1B employee sponsored by the university was actually working at the university. That would VIOLATE FEDERAL LAW, and it concerns us greatly.”

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  9. Norm, there is another aspect I think that everyone is missing on this scandal and the issue at large. Consider this quote from the CIS.org Wright State article:

    “The former provost, Sundram Narayanan, who is currently the subject of an effort by the university to remove him from his tenured professorship, took a huge risk in this venture; he was paid at the rate of $352,642 a year in 2013 according to university records.”

    I’m seeing more and more of these type of fraud and corruption stories on the various H1B websites. In this case, this provost thought that the prestige of his position and a salary of $350K per year wasn’t enough and had to break the law to make more dough. I know its hard to prove scientifically but I just feel that the ethical behavior of H1Bs is significantly lower than the average “US citizen”. Believe me, I’ve met my share of unethical citizens. But in my 30 years of dealing with H1Bs, I generally find more instances of lying, cheating and other unsavory behavior. When I meet an H1B, I have doubts about their education, skills, abilities and background until I see it demonstrated.

    Years ago, my former H1B manager was walked out of the building in the middle of the day. We were never told the real reason but rumors had it that he was taking kick-backs from some of the DBAs under his management.

    I’m currently working with a brilliant hard-working H1B, to try to get another H1B removed from her DBA position. Claiming to have over 10 years of experience, she has trouble performing basic database tasks.

    Does this concern every come up with your contacts at IT firms? Are any of them worried with the damage that the bad ones could do to their companies?

    Is there any complaints about quality of work? What I find with H1Bs is that 1/3 are brilliant, 1/3 are mediocre and 1/3 are scoundrels. For the 2/3 that aren’t brilliant, if management asks for “ABC”, they will produce “abc” – nothing more, nothing less. If there is a glaring “D” they won’t do it – Even if the program, project or firm would be at risk without it, they won’t budge without a word from management.

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    • First of all, note that I said in my posting that this may NOT have been a case of fraud. Abuse, in many people’s eyes, but very possibly in compliance with the law. Had the university board been aware that the institute was “renting out” workers, the board likely would not have raised an eyebrow. It was the press coverage that blew everything apart.

      Second, note what I said about President Narayanan’s likely motivation:

      His prowess as a “rainmaker” likely played a role in his 2013 appointment as Provost, at a salary of $340K/year. Had he not had this fall from grace, university presidencies and so on at even higher pay, maybe even prestigious high-level government positions, say Undersecretary of Commerce, would have been his in the coming years.

      So, it’s not just an issue of “Why wasn’t $340K enough for him?”

      Third, the general quality of the H-1Bs is indeed low, even for the group the industry says is the best, namely the H-1Bs hired as foreign students. See my EPI paper regardig this.

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      • This is why I believe that we need to find a way to shine a light on any government organization or user of taxpayer revenue who displaces Americans.

        Americans pay their taxes in the belief that the people using those funds will do their part to take care of Americans and America.

        When they find out that this is not happening, I believe questions will be raised.

        If one or more of us in each state would watch the projects that are offered in their state and report on which government organizations are awarding projects to foreign companies, or users of temporary non immigrant visa holders, we could shine a very bright light on these people and I believe it would stop them from doing it

        Same thing with this database of laid off workers

        http://doleta.gov/tradeact/taa/taa_search_form.cfm

        The media is not shining a light on this subject.

        If I could figure out a way to hire analysts, I would dedicate one or more to this database alone.

        If you haven’t seen it before, take a look at the following link to see what International Paper has been up too:

        http://doleta.gov/tradeact/taa/taadecisions/90187.pdf

        Pay attention to Section 3: Trade Effects on Separations

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  10. Hello

    Dr Narayan is a very talented man…However fraud is fraud.

    This is a terrible lesson for students to learn from a senior player at WSU.

    Ethics is an important part of any curriculum.. It is an important part of any life

    However it is critical to note..that many WSU senior leaders turned a blind eye to this.foolishness, yet none of them have shown the moral fiber to stand up and take responsibility for poor oversight

    Dr Hopkins….is leadership a side bar or a core value at WSU

    This missing core human value is the larger crime
    Terry Feeley

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