As many of our readers have suggested, there are plenty of problem with the H-1B visa program, but the ones uncovered by the US Citizenship and Immigration Services (USCIS) may not be the ones that first comes to mind. 

Try forged documents, fake degrees, and use of shell companies at phony locations. That's what an internal report by the USCIS examining the H-1B visa program has found evidence of.

In fact, the report released by Senator Chuck Grassley (R-Iowa) finds a more than 20% violation rate of the H-1B visa program and describes the situation as one of "significant vulnerability."

The report was released by the US Senate Judiciary Committee and represents the first time the agency (rightfully part of the Department of Homeland Security, by the way) has documented the issues with the controversial H-1B visa program.

Proof can be found in the 75 comments that have been posted to one of the first blog entry Now Hear This! did on H-1Bs (see "Wanted or not, H-1B visa process starts on April 1") and when that post was followed up with "H-1B visa cap (and readers’ limits) reached" 39 more comments flew up debating the pros and cons of the employment visa. 

EEs aren't the only ones railing against the imperfect H-1B system. "This report validates the major flaws in the H-1B visa program that we have been talking about," said Senator Grassley in a statement Wednesday. "It's unacceptable that these fraudulent activities are slipping through the cracks when there is so much legitimate demand for H-1B visas. ... This report is proof that reform must come sooner rather than later. The program ought to operate the way Congress intended so qualified high-tech American workers aren't left behind."

Grassley and Senator Dick Durbin (D-Ill) in April 2007 introduced a "The H-1B and L-1 Visa Fraud and Abuse Prevention Act of 2007." L-1 visas are similar to H-1Bs, but are used more for intracompany employee transfer than H-1Bs are and are based on employment history rather than education. Some of the key changes the two senators called for in their bill include:

• Requiring that before an employer may submit an H-1B application, the employer must first advertise the job opening for 30 days on a Department of Labor (DOL) Web site. DOL would also be required to post summaries of all H-1B applications on its Web site. 
• Prohibiting companies from hiring H-1B employees if they employ more than 50 people and more than 50% of their employees are H-1B visa holders.
• Giving the DOL the ability to conduct random audits of any company that uses the H-1B program, and would require the DOL to conduct annual audits of companies with more than 100 employees that have 15% or more of those workers on H-1B visas.
• Requiring the Department of Homeland Security to share with the DOL any information in H-1B visa applications indicating that an H-1B employer is not complying with program requirements.
• And requiring H-1B and L-1 employers to pay employees the prevailing wage to "ensure employers are not undercutting American workers" by paying substandard wages to foreign workers.

The USCIS report doesn't name the companies or individuals busted for forged documents, fake degrees, and use of shell companies. It was based on a random sample of 246 cases drawn from nearly 100,000 and its investigators discovered most of the problems during in-person visits to work sites, including one visit that found an H-1B holder working at a Laundromat. Out of the 246 cases, 51 were found to have problems.

What's the solution? End H-1Bs all together, cutting off the talent supply? Stricter regulation in an effort to thwart the fraud? Are the senators on to something with their bill? Share your thoughts below.