Honesdale police get Wal-Mart settlement money

Local burglary sparked national Wal-Mart investigation

By FRITZ MAYER

HONESDALE, PA — The Honesdale Police Department is $253,623 richer, thanks to the payout of a settlement from a lawsuit regarding the use of illegal immigrants in the cleaning of Wal-Mart stores nationwide.

In announcing the payout on August 14, a spokesperson of the U.S. Department of Homeland Security (DHS) said, “The Honesdale Police Department was one of the first law enforcement agencies to bring the alleged employment of illegal aliens to the attention of the DHS, and provided essential support and assistance to the initial local aspects of this nation-wide investigation.”

The announcement brought to a close a local, state and federal investigation that began eight years ago.

In November 1998, an 18-year-old Russian immigrant named Vladimir Blinov was accused of robbing a fellow immigrant, and the crime was reported to Honesdale police. According to police chief Mark Flynn, when officers interviewed Blinov, “It was pretty easy to figure out that he was illegal because he had no documentation.” He had entered the country on a tourist visa and it had expired.

Both men worked for a contractor who provided cleaning crews to Wal-Mart in Texas Township. Because both Blinov and his victim were Russian, Flynn contacted the Philadelphia office of Immigration and Customs Enforcement (ICE.)

An ICE agent, Julio Santana, interviewed Blinov, who revealed that his employer was a man named Stanley Kostek. Santana then developed a confidential source who worked with Kostek. The informer lived in a trailer with cleaning crews who had emigrated from the former Soviet republic of Georgia.

The information from this and other sources led to a raid on March 20, 2001 of Wal-Mart stores in Honesdale, Harrisburg and two other locations in Pennsylvania, in which 27 undocumented immigrants were arrested. All had emigrated from countries that were members of the former Soviet Union or its client states.

But the investigation did not stop there.

As the investigation in Pennsylvania was going forward, federal agents were also working with Christopher Walters, a businessman in St. Louis, MO in an effort dubbed “Operations Rollback,” which was a play on the famous Wal-Mart “Price Rollback” campaign. Walters owned companies that contracted with Wal-Mart for cleaning services and was cooperating in an investigation of the giant chain. Walters and Kostek were connected through one of the companies Walters owned.

According to the St. Louis Post Dispatch, Wal-Mart terminated its relationship with Walters’ company, Intensive Maintenance Care Inc., in 1997 over the illegal alien issue. The relationship with the company ended, but the relationship with the man did not.

Walters set up more than a dozen shell companies, and then hired subcontractors to run them. Through these subcontractors, Walters continued to provide cleaning services to Wal-Mart, which were performed by undocumented immigrants.

Walters claimed that Wal-Mart had instructed him to set multiple companies, a claim that Wal-Mart denied. According to federal investigators, Wal-Mart paid at least $82.2 million to Walter’s companies in a three-year period ending in 2001.

The relationship between Walters and Wal-Mart came to a final and abrupt end on October 23, 2003, when ICE agents raided 60 stores in 21 states and arrested 245 undocumented workers who worked for contractors cleaning Wal-Mart stores. The next day, Wal-Mart officials promised to cooperate with ICE in its investigation of the matter. The immigrants were subsequently placed into deportation proceedings.

The ICE investigation of Wal-Mart ended on March 18, 2005, when Wal-Mart agreed to pay an $11 million civil settlement without admitting any wrongdoing. Walters also agreed that his companies would forfeit $4 million in profit. Charges were dropped against Stanley Kostek, though several other subcontractors who worked with Walters were sentenced to fines or short prison terms.

It is not clear what happened to Vladimir Blinov, whose petty burglary sparked the investigation. ICE did not return a call seeking comment. As for the other 300-plus immigrants who were swept up in events, it has been reported that many of them have been deported, while some disappeared during the investigation.

Wal-Mart has now changed the way it maintains its buildings. John Simly, a company spokesperson, said in-house personnel now perform all the cleaning tasks. He said this eliminates the question of subcontractors as far as cleaning services, and allows the company to better handle issues of quality control and flexibility. He added that the company maintains the position, as it did in 2003, that Walters “hoodwinked” the company. Waters had certified that he was following company procedures to ensure that the people doing the cleaning were in the country legally, when in fact he was not following those procedures.

What about the money?

Flynn said the Honesdale Police Department has not decided how the department will spend its share of the settlement money. The station is in need of renovations and the department could use another four-wheel-drive vehicle for patrols this winter. He said, however, that the funds had already been turned over to the department from the federal government.

Asked if there are still problems with cleaning crews at Wal-Mart, Flynn said, “No.” He said the situation was much better than it was when the Blinov matter was brought to his attention.