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Updated Jul 24, 2014 - 5:14 pm

Phoenix car wash mogul pleads guilty in fradulent hiring case

PHOENIX — The owner of a metro Phoenix car wash chain accused of
immigration fraud in its hiring practices pleaded guilty Thursday to a felony
charge to commit identity fraud.

Lee Stein, an attorney representing Danny’s Family Car Wash owner Danny Hendon,
said his client found the plea agreement to be a “fair resolution.”

“It’s been a difficult process and he’s just glad to have today behind him,”
Stein said.

U.S. Attorney’s Office spokesman Cosme Lopez said Hendon acknowledges in the
agreement that he “knowingly turned a blind eye” to the hiring of more than
200 unauthorized immigrants. The U.S. Attorney’s Office in exchange will not
prosecute Hendon for any other offenses that come out of investigation.

He faces a maximum of five years in prison, but could do less time and serve
part of the sentence in home confinement if he cooperates with the
investigation, according to the plea agreement.

The car wash business had also been indicted on federal charges of identity
theft, immigration document fraud, conspiracy, making false statements on
employment eligibility documents.

At a court hearing Thursday, attorney Ed Novak entered a guilty plea on behalf
of the company on one misdemeanor count for knowingly hiring immigrants in the
country illegally. The guilty plea covers 18 corporate entities that are part of
the Danny’s Family Car Wash chain, and forces the business to pay fines of
several hundred thousand dollars.

Hendon, a prominent figure in the Phoenix business community, had previously
not been charged by prosecutors while several lower-level managers have since
entered guilty pleas.

Some of the 13 managers who pleaded guilty said at least one higher-up within
Danny’s Family Car Wash instructed them to rehire workers who had to be fired
after a federal audit. The initial audit found nearly half of the company’s
1,900-person workforce was comprised of people who weren’t authorized to work in
the United States.

The company was accused of rehiring 233 terminated workers under new
identities. Some managers were accused of assisting in getting the fired workers
new identities and, in some cases, helping them get counterfeit documents.

The agreement also calls for Hendon to step down as company president but he
can still be a consultant, Stein added. The company announced Thursday that
Hendon’s daughter, Heather, will now serve as president. The company also vowed
to hold itself to rigorous hiring standards.

“Looking to the future, we are setting the bar high for best practices in
employee work authorization and we hope our competitors follow suit,” the
company said in a statement.

Hendon was released on his own recognizance. He is scheduled to be sentenced
Oct. 20.

Hendon will have to give up any interest in bank accounts held by the car wash
and more than $150,000 that was seized last year.

Federal agents raided 16 Danny’s Family Car Wash locations in August 2013 as
part of an ongoing investigation involving immigration fraud, identity theft and
financial violations. Questions have lingered about the extent to which upper
management and ownership at the company knew or played a role in the hiring
practices that federal authorities allege. All but one member of the company’s
top brass had been untouched by the case.

The bust by U.S. Immigration and Customs Enforcement reflects a new approach by
federal authorities in confronting employers suspecting of hiring people who
aren’t legally in the country.

The approach focuses on auditing employment eligibility documents and making
criminal cases against company officials. The focus on criminal cases was made
after authorities concluded that some violators viewed potential civil penalties
as the cost of doing business.


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