Fence-builder no poster child for immigration crackdown
Published: Sunday, January 13, 2008 at 6:01 a.m.
Last Modified: Sunday, January 13, 2008 at 12:00 a.m.
SAN DIEGO - That the government wanted to put Mel Kay behind a prison fence is an irony, though one neither he nor his accusers would find amusing.
Mel Kay builds fences. His was the largest fence-building company in Southern California; he rode the nation's housing boom to $150 million in annual sales. His fences are just about everywhere - at gated subdivisions, on military bases, at prisons.
He even built fences at two immigration jails, a Border Patrol station and the U.S.-Mexico border.
Which is the second irony, because he admits now that many of his company's fences were built by illegal immigrants. Federal authorities knew it, and they went after him tenaciously, determined to send him to prison as an example to other employers who hire undocumented workers.
They had plenty of evidence. Prosecutors determined about a third of his 750 workers were illegal immigrants. They told Kay's lawyers of videotaped interviews with about a dozen employees who had been caught in raids at Golden State Fence Co. in 1999 or 2004 - exposed as illegal immigrants - and then were rehired by the company, regardless. Kay thought he was toast. But this sun-beaten 65-year-old had two things going for him: he was tough and he was tender.
Kay started Golden State Fence in California in 1984 with five employees and was on a roll by the early 1990s. Almost from the start, he relied on illegal immigrants.
Kay admits depending on illegal workers as the housing market grew in the 1990s and exploded in the first half of this decade.
"I'd never experienced any boom like that,'' he says. "It was almost out of control.''
Installing fences is punishing labor, especially in Southern California's desert heat and rocky soil. Kay requires job applicants to raise 60 pounds over their heads and move wheelbarrows of dirt. About 75 percent of his workers are Hispanic.
But Kay compensated his employees well. New hires start at $35,000 a year and jump to about $60,000 after three years plus benefits.
The business prospered. An array of small companies bought fences from Kay's factory. Other customers include major homebuilders and the government, which accounts for about 30 percent of revenue.
In letters to the judge in Kay's case, they lauded the variety of Golden State's designs and materials and its track record on big projects.
Joe Flores was Mel Kay's nemesis.
The El Paso, Texas, native and son of Mexican immigrants began policing federal immigration laws in 1987 after 10 years as a Texas state trooper. A year earlier, the government made it a crime to hire an illegal immigrant; the offense became a felony in 1996.
Now, at age 53, he is a group supervisor for U.S. Immigration and Customs Enforcement. From his office in downtown San Diego's federal building, he directed the raid on Golden State Fence.
Flores strongly believes American jobs should go to citizens and legal residents. He is skeptical of Kay's claims Golden State couldn't find enough of them to dig ditches for $60,000 a year, with benefits.
"If you're paying good wages, why risk your company? Why put yourself in that situation?'' Flores asked.
The government's enthusiasm for punishing employers waned after Flores' first few years on the job and, by the mid-1990s, his focus turned to illegal immigrants who got into gangs and violent crime.
The Bush administration has renewed enforcement at factories and offices but scored few legal victories.
Golden State Fence was different.
Investigators stumbled on the company when they were auditing military contractors in a nationwide post-Sept. 11 crackdown and determined 48 of 182 workers at Golden State's Oceanside branch were illegal. In the pre-dawn hours of Sept. 21, 2004, agents arrested 12 as they left home.
As they pored over files, investigators discovered a government audit in 1999 that found 15 employees were illegal immigrants, including three they had just arrested. They needed to find them and have them admit they were rehired with the company's knowledge. It is a crime only if 10 workers are knowingly hired.
Investigators picked up two outside their homes. They staked out a warehouse across the street from the Oceanside branch and videotaped workers as they came and went for a week, resulting in six arrests.
There would be other evidence against Kay, but rehiring workers flagged in the audits would be the crux of the government's case.
Kay says he ignored the warnings not to rehire the men.
"I didn't figure it was that big a deal,'' he says. "Poor decision on my part. Very poor decision.''
Shortly after Kay arrived at work at 5 a.m. on Nov. 30, 2005, federal agents stormed his 14-acre headquarters in an industrial part of Riverside, 60 miles east of Los Angeles. In 14 hours, they would fill a 16-foot truck with boxes of documents and computer hard drives.
Simultaneously, a helicopter with a loudspeaker circled over nearly 200 agents who raided the largest of Kay's 10 branches, in Oceanside, north of San Diego. In all, agents arrested 17 employees at their homes or as they came to load their trucks at 6 a.m.
Finally, Kay recognized he had a very serious problem. But it was too late.
Kay offered to plead guilty to a felony and pay a fine but Carol Lam, then the top federal prosecutor in San Diego, took a hard line. Lam was one of eight U.S. attorneys who were fired last year by the Bush administration after criticism that she was lax on immigration.
Kay says Lam wanted him to serve 18 months in prison. Prosecutors were ready to file criminal charges against 10 to 12 managers.
The government relented, agreeing to recommend six months prison time and charge only Kay and his son-in-law, Michael McLaughlin, manager of the Oceanside branch.
Kay and McLaughlin pleaded guilty to knowingly hiring at least 10 illegal immigrants during a 12-month period.
"They give you some ground, you give them some ground,'' Kay says. "That's the best I could get.''
When Kay arrived at his sentencing in March, U.S. District Judge Barry Ted Moskowitz said his initial instinct was to send him to prison. Moskowitz joined the federal bench in 1986, the year President Reagan gave amnesty to 2.7 million illegal immigrants and promised to crack down on employers who broke the law.
The crackdown never came, and the judge felt it was long overdue.
Moskowitz knew Kay's prison term could set a national precedent to determine how much time other employers would spend behind bars.
But Moskowitz noted Kay's strong work ethic and support from employees who overflowed the courtroom into the hallway. The judge said he couldn't ignore that Kay and McLaughlin treated employees like family.
"Are these the poster children for being the first ones to get jail time?'' Moskowitz asked. "I think the answer is no.''
Kay and McLaughlin were confined to their homes for six months with permission to leave only to go to the office. Golden State and the two executives forfeited $5 million in a deal with prosecutors.
Still, the government didn't get the six months prison time it wanted. Flores struggles to hide his disappointment. "Jail time would have really sent a strong message,'' he says.
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