Nine owners and managers for four Black Hills logging companies and a general store have been indicted by a federal grand jury for immigration violations and fraud in connection with U.S. Forest Service contracts.

A federal grand jury indictment unsealed Thursday afternoon states that since January 2008, the owners of the logging companies — Munoz Logging and Construction Co., Black Hills Thinning Co., Escalante Logging Co. and SM Logging Co. — devised a scheme to defraud the U.S. Forest Service by underpaying undocumented workers to outbid their competition by hundreds of thousands of dollars.  

"Oftentimes, these companies will all bid on the same federal contract, and once the contract is awarded, the non-winning bidding companies still ultimately perform or assist in the performance of the contract," according to the indictment. 

The grand jury indicted all nine of the owners and managers for conspiracy to harbor aliens and harboring aliens, which carries a maximum penalty of five years in prison and a $250,000 fine, according to a news release issued by South Dakota U.S. Attorney Brendan V. Johnson.  

Four of those people are also charged with an additional count of conspiracy to defraud the U.S., which carries a maximum penalty of 10 years in prison and a $250,000 fine, according to the news release.  

Since January 2009, 23 undocumented aliens employed by the four logging companies have been located, contacted, arrested or removed from the U.S., according to the indictment. At that time, the U.S. Department of Homeland Security sent a warning notice to Munoz Logging to verify the eligibility of its hired employees.

The indictment says Munoz Logging issued paychecks to their undocumented workers under fictitious names or included the pay for a number of illegal workers in a check made to a single person’s name.

The companies also paid their undocumented employees using their true names, and those checks were cashed a Benja’s Mexican Store in Rapid City, although those employees did not have valid documents to conduct lawful financial transactions, according to the indictment. 

Ace Crawford, a spokeswoman for the U.S. Attorney's Office, said seven of the nine were arrested Thursday and appeared in U.S. District Court in Rapid City to enter pleas of not guilty.

The arrests came out of a Thursday morning multi-agency operation in and around Rapid City that included the U.S. Immigration and Customs Enforcement's Homeland Security Investigations, U.S. Forest Service, Rapid City Police Department, Pennington County Sheriff's Office and other state and federal law enforcement agencies, said ICE spokesman Shawn Neudauer. 

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"Today's law enforcement operation sends a strong message that HSI and our law enforcement partners are committed to working together to protect hard-working citizens and American business interests," special agent Michael Feinberg said in a news release. He is the agent in charge of HSI St. Paul, which covers South Dakota.

The following indictments were handed down: 

  • Angel Munoz-Escalante, owner and operator of Munoz Logging and Construction Co. in Rapid City, is charged with one count of conspiracy to defraud the U.S., one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Barbara Munoz, also an owner and operator of Munoz Logging and Construction Co., is charged with one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Christina Pourier, bookkeeper of Munoz Logging, is charged with one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Mario Rangel, manager for Munoz Logging, is charged with one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Aurelio Munoz-Escalante, owner and operator of the Black Hills Thinning Co., is charged with one count of conspiracy to defraud the U.S., one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Rogelio Escalante, owner and operator of Escalante Logging Co., is charged with one count of conspiracy to defraud the United States, one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Sergio Munoz-Escalante, owner and operator of SM Logging Co., is charged with one count of conspiracy to defraud the United States, one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Miguel Soto, foreman for Black Hills Thinning Co., is charged with one count of conspiracy to harbor aliens and one count of harboring aliens.
  • Benjamin Munoz-Botello, owner and operator of Benja’s Mexican Store in Rapid City, a grocery and licensed money-transmitting and check-cashing business, is charged with one count of conspiracy to harbor aliens and one count of harboring aliens.
During the course of Thursday's operation, Homeland Security Investigations special agents encountered 18 people who were arrested on administrative immigration violations, according to Neudauer. 

"Those administratively arrested will be interviewed by immigration officials. Those individuals will be adjudicated on a case-by-case basis, including providing prosecutorial discretion or other benefits where appropriate," Neudauer said.

The other agencies assisting Thursday were the South Dakota Division of Criminal Investigation, U.S. Marshals Service, U.S. Department of Agriculture Office of the Inspector General, Custer County Sheriff's Office, U.S. Department of Labor and the South Dakota Highway Patrol, Neudauer said.

Contact Holly Meyer at 394-8421 or holly.meyer@rapidcityjournal.com

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