Wages and Welfare : Refugees Called Victims and Perpetrators of Fraud

Inside a boarded-up storefront on the outskirts of Los Angeles, Mai Nguyen works 14 hours a day, seven days a week, as a seamstress.

From morning to midnight, hunched over a sewing machine and a pile of fabric, the Vietnamese mother of three sews one identical garment after the other for cash wages that average $1.75 an hour.

She and a dozen other seamstresses, all refugees from Vietnam, share a cramped, dingy workroom that lacks heating in the winter and air conditioning in the summer.

The incessant whir and buzz of sewing machines and click of foot pedals are interrupted only twice a day for 15 minutes. The women gulp down a meal of rice, pork and tea warmed on hot plates in a back room and return to their machines.

Yet Nguyen, who fled Vietnam with her husband and children in 1980, does not dwell on the poor wages or abject working conditions. Because her family receives full welfare benefits, any additional income that can be hidden from authorities is considered a bonus.

“The extra money that we make we use very carefully,” said Hoang Nguyen, Mai’s husband. “We use it for the future.”

The garment industry forms the core of a vast underground economy in which refugees from Southeast Asia are earning unreported cash wages while collecting maximum welfare benefits, The Times has found.

Centered in Los Angeles County, the underground economy is found in Southeast Asian communities throughout the state. Officials estimate that as many as half of the state’s Southeast Asian families on welfare--about 22,000 families numbering roughly 100,000 refugees--are earning illegal income.

Some refugees are supplementing welfare benefits with as much as $25,000 a year in illegal cash income by working in such mainstream businesses as beauty shops and nail parlors. Many others, like the Nguyens, are being exploited by employers in the garment, restaurant and electronics industries who pay piece-work, substandard wages.

For these families, the underground economy is a double-edged sword, enticing them with its potential for escaping poverty but leaving them highly vulnerable. The exploitation of Southeast Asians who are, in turn, exploiting the welfare system blurs the line between perpetrator and victim. Refugees working illegally often are both.

For instance, some refugees have become targets of armed robbery after buying gold and other valuables with money earned from the underground economy. The crimes typically are unreported because refugees fear revealing their welfare fraud.

‘Not . . . Ungrateful Refugees’

“This is not simply the story of ungrateful refugees coming to this country, collecting welfare and then exploiting the system for their own,” said Bill Cassidy, a former U.S. Senate staff member and one of the nation’s leading authorities on Vietnamese exile life. “In many ways, refugees themselves have become victims.”

The men, in particular, suffer a personal loss.

Because of the nature of the work, it often is easier for a refugee woman to find an underground job. Hoang Nguyen said he reluctantly agreed to his wife working while he stayed home with their three young children.

Every morning, he said, he feels a tinge of sadness and humiliation when a van from the shop picks up his wife and five other Vietnamese women from their apartment complex in Monterey Park and takes them to a sweatshop near Glassell Park, where they will work for 14 hours.

“This is not something that I like, but what choice do I have? It is very expensive to live in California,” said Nguyen, who spoke on the condition that his and his wife’s first names be changed. Nguyen is a common Vietnamese surname.

“The welfare helps, but what am I supposed to do when the rent goes up? When my son grows and wants to go to college, what do I tell him?”

In October, 1985, Nguyen, 44, moved his family to Southern California after living for six years in Michigan, where they were initially resettled. During his first four years in this country, Nguyen said, he had a steady job at a foundry, working his way up to an $8.90-an-hour wage. He said he was forced to quit after he fell and injured himself while transporting hot metal. He has not worked since.

Nguyen was attracted to California for several reasons. He said his wife’s family moved here in 1981 and always talked of the weather and how it reminded them of Saigon.

There were economic reasons too. California, he said, provides not only more generous welfare benefits but also the opportunity to work in an underground economy and to pool resources and share living quarters with relatives.

Within six weeks of moving here, Nguyen said, his wife was recruited by one of her sisters to work in a sewing factory near Los Angeles. Shortly thereafter, the family began receiving welfare benefits.

‘$20 or $25 a Day’

“What we are getting from the work is not much,” he said. “My wife maybe makes $20 or $25 a day. It is the Taiwanese and Vietnamese bosses who are becoming rich. They pay my wife by the piece. She cannot even take a break because a break means she is losing money.”

Robert Bach, a professor of sociology at State University of New York at Binghamton who has studied the refugee underground economy, said the exploitation of Southeast Asians is consistent with the history of the garment industry in America.

“If you look at the garment industry in the major areas of the country, it has always turned to the newest and most vulnerable immigrant for its work force,” he said. “In Los Angeles today, that happens to be the Vietnamese boat people.

“But what makes this exploitation so different and so important is its connection to welfare,” he added.

The factory operators, often Southeast Asian refugees themselves, acknowledge the sweatshop conditions but say that cutting corners is the only way they can survive.

Charles Wong, a professor of sociology at California State University, Los Angeles, said industries employing welfare-dependent Southeast Asians are using government dollars as a kind of business subsidy, allowing them to pay refugees even lower wages.

“How much you exploit the workers is directly related to how much profit can be made by the contractor, the middleman and the retailer,” Wong said. “Everything else--the rent, the utilities, the fabric and the machines--are fixed costs.”

Southeast Asian refugees on welfare, accustomed to the hardships of war and persecution, are among the most compliant of workers.

“It’s quite easy to satisfy workers whose subsistence is assured by welfare,” Wong said. “Anything on top of that is seen as a bonus.”

The family’s extra income, however, leaves it vulnerable to a host of fraudulent schemes and crimes, law enforcement authorities say.

Cassidy, who speaks Vietnamese and works as a consultant on Southeast Asian crime to several government agencies, said Orange County refugees have lost hundreds of thousands of dollars in recent years through real estate scams.

For example, Cassidy said, one local Vietnamese real estate agent purchased homes in several Orange County communities on behalf of 10 refugee clients who had brought assets with them from Vietnam or had saved enough money through work in the underground economy.

The refugees, wanting to hide ownership from welfare authorities, gave down payments to the agent, who purchased the homes in his name. The refugees then paid “rent” to the agent with the verbal understanding that he would sign over the homes to them when they no longer needed welfare.

‘No Recourse’

As soon as the homes appreciated, however, the agent sold them and kept not only the equity but the down payments as well.

“The refugees were left with no recourse,” Cassidy said. “They knew the guy would report them to welfare if they made any trouble.”

In other cases, some refugees conceal unreported income from welfare investigators by buying gold and other valuables from Vietnamese jewelry stores and hiding the items in their homes. Authorities believe that Vietnamese youth gangs, using contacts in the jewelry firms, are targeting these welfare homes for armed robbery.

“At first, we speculated that perhaps the victims were running gambling houses and that’s why they were being targeted,” said Bob Burton, senior investigator of the Orange County district attorney’s organized crime unit.

“But there is a growing feeling that youth gangs are targeting welfare recipients who are participating in the underground economy.”

Chief Don Saviers of the Westminster Police Department, whose city has one of the largest Vietnamese communities outside Vietnam, said welfare homes would be safe targets.

“(Welfare recipients) are caught in a bind,” Saviers said. “You’re certainly not going to report your own crime to prove that one occurred against you.”

Hiep Nguyen, publisher of the Orange County-based newspaper Tin Viet, cited still another reason why welfare recipients working in the underground economy are targets of crime.

Preying on Friends

“The gang kids generally come from low-income families, so they naturally target those people they know best--friends and neighbors who are also low-income,” he said. “When they break into these homes, they know exactly where the phone is, the back door, the bedroom.

“I know some parents who won’t allow friends of their teen-age children inside their homes because they are afraid the friends are checking out the place for a future robbery.”

Police say that fear of residential burglaries in Vietnamese communities throughout the state has prompted some refugees on welfare to store their hidden assets at jewelry stores, making them, in effect, the banks of the underground economy.

“There are large, large numbers of refugees working for cash and taking that money and investing it in gold,” said Marcus Frank, a Westminster police detective assigned to the Asian crime unit.

“Jewelry stores are the equivalent of banks. . . . They take money, convert it to gold, pay out interest and even issue loans using the gold as collateral,” he said.

Police suspect one large Vietnamese jewelry firm in Westminster, Kim Tinh, of laundering thousands of dollars in illegal cash wages. With income from the underground economy, refugees purchased gold wafers embossed with the store’s label. The store’s owners then hold the gold, paying interest while investing it in the gold futures market.

Robbery at Store

In late 1985, according to police records, Kim Tinh was robbed of $60,000 in cash and $500,000 in valuables. Police said they were unable to determine to whom the stolen merchandise belonged because the shop’s transactions were all done verbally. No arrests have been made and the shop has since closed. The owners could not be reached for comment.

Cassidy, who recently completed a study of Vietnamese-owned jewelry stores in Orange County, said welfare recipients lost thousands of dollars in gold in the robbery. Because the gold had been purchased with unreported income, the refugees did not report the loss to police.

Despite the notoriety of the Kim Tinh case in the Vietnamese community, Cassidy said, refugees continue to entrust their valuables to a dozen jewelry stores along Bolsa Avenue in Westminster and Garden Grove and scores of other jewelry firms in neighboring communities.

“The refugee who works in the underground economy really has no other choice,” he said. “If you put the money in a bank, you risk detection by welfare investigators. And if you keep it at home, you’re vulnerable to a group of highly mobile and vicious criminals.”