The Case Of The Missing Wage Thief

    A restaurant company allegedly owned by the Chinese government was ordered to pay its workers millions in back wages. Then it completely disappeared.

    Jin Ming Cao thought he was finally going to get his money back. He’d spent months organizing other workers at a Chinese restaurant in Manhattan, and another two years pursuing a lawsuit demanding $1.5 million in back wages and damages. Now the workers had finally won in court.

    But by October 2010, when a federal judge ordered that the restaurants pay back the money, the owner had shut down both of his restaurants and disappeared like a ghost. Stranger still, he had claimed in court that his businesses were really owned by a high-end liquor producer, itself owned by a provincial government in mainland China. In other words, Cao’s boss claimed that his boss, in turn, was the Chinese state.

    Four years later, neither Cao nor any of the other plaintiffs have seen any of the money they’re owed, and the former restaurant owners are nowhere to be found.

    Cao’s story is both strange and ordinary. Not many restaurant workers have bosses who claim to be agents of a foreign government, yet countless immigrants in the restaurant industry work long hours for illegal wages. And even when, like Cao, they get a court of law to rule in their favor, they very rarely see a penny of the money that was taken from them.

    Cao, who is now 32, immigrated to New York from the Fujianese countryside in his late teens. He speaks calmly, smiles frequently, and likes to explain that, in spite of its strange turns, his story is in many respects a common one. He spent his first several years in the U.S. hopping from restaurant to restaurant along the Eastern Seaboard, starting out as a busboy and slowly clawing his way to higher-paying posts as a waiter. He adopted the name “Vincent” so he could give his American customers a name they would understand.

    Cao, who wears his hair in a small ponytail with the sides buzzed short, likes to append the same matter-of-fact comment to all his descriptions of working conditions in the world of Chinese restaurants: “It’s very common.” He lived in cramped dormitories with other workers, sometimes in a restaurant’s basement: very common. He would work at restaurants for weeks without pay while the bosses decided whether or not to fire him: very common.

    At every job, Cao worked 11 or 12 hours a day, six days a week. He was paid flat wages that never added up to more than $1,300 a month, always in cash, and with no such thing as overtime pay. Many of these conditions violate U.S. labor law, but Cao understood them to be normal for a restaurant worker in the United States.

    Wage theft is an everyday occurrence in American restaurants, especially for workers like Cao. The Restaurant Opportunity Center’s study of the industry in eight major cities across the country found that 46% of workers reported overtime violations, one of the most common ways of skirting wage laws. As for New York City, the National Employment Law Project estimated in 2008 that there are overtime violations in 75% of the city’s restaurants.

    Immigrant restaurant workers are the most widely exploited. Operating in largely off-the-books cash economies, some 12% of food service workers are undocumented, according to the Pew Hispanic Center. That’s more than a million people, including Cao during his restaurant career.

    And, like Cao, immigrant workers often end up exploited by the very people they’re counting on to help them set down roots. “The guy who got off the boat 15 years ago is now the boss,” said Ken Kimerling, legal director for the Asian American Legal Defense and Education Fund (AALDEF) and the lead attorney on Cao’s wage theft case. “And because you share a common ethnic heritage and language, he’s the guy who can give you a job. And he’s doing the same thing to his workers that was probably done to him."

    When he was 24 years old, after working in U.S. restaurants for five years, Cao got a job as a waiter at Wu Liang Ye, one of three Manhattan establishments with the same name. Compared with his past workplaces, Wu Liang Ye was posh — a sit-down, white-tablecloth place popular with Midtown’s lunchtime throngs. He earned $300 a month in cash, plus tips.

    One afternoon in 2007, Cao picked up a copy of a Chinese-language newspaper and read an article about workers at a Vietnamese restaurant who sued their employer for unpaid wages. The workers were picketing the restaurant daily, holding signs about sweatshop labor and the minimum wage.

    Cao began to realize something was wrong. Before that point, he said, “I don’t know anything about labor law. I don’t even know what’s the minimum wage.” So the whole premise, the idea that workers would organize over low wages and seek legal redress, was eye-opening.

    But what really gave Cao pause was reading how much the Vietnamese restaurant’s workers had been earning. “I thought: Wow. They filed a lawsuit. They’re protesting every day. And our pay was much worse."

    Cao showed the article to his co-workers at Wu Liang Ye, but they were hesitant to act. Many were undocumented, but even those with papers understood their position was precarious: Their boss, like many others in the industry, had been known to fire workers impulsively and with little explanation.

    Frequently, employers pit workers against one another based on immigration status. “They’ll go to the undocumented workers and say, 'If you don’t like it here, you can leave' — there are plenty of other undocumented people out there who want to work,” said Sarah Ahn, an organizer with the Flushing Workers Center in New York. “And they’ll go to the undocumented workers and say, 'We’re doing you a favor. We’re not even supposed to be hiring you.'"

    Cao kept going back to the other workers. “If we don’t fight,” he would say, “we’re going to get fired sooner or later anyway.” Within a few months he had 25 workers from two Wu Liang Ye restaurants who were willing to go to court. Cao also started using his free time to volunteer at the Chinese Staff and Workers Association, a long-standing workers’ rights center in Chinatown, which referred them to AALDEF.

    Before filing suit, Cao confronted his boss, a man named Jian Li, and told him his wages were criminally low. Li, trying to keep the peace, offered Cao a “red envelope” — a bribe, a play on the festive packaging used to give cash gifts to young relatives in China.

    Cao refused. Instead, in April 2008, he and the other workers filed suit under the Federal Labor Standards Act (FLSA). AALDEF got pro bono help from Davis Polk & Wardwell, an international corporate law firm. A small army of the firm’s rookies began collecting every scrap of paper Wu Liang Ye had on file and interviewing every worker and manager.

    That’s when things got strange.

    Both of the restaurants in Manhattan operated by Jian Li bore the name and logo of Wu Liang Ye, a famous brand of luxury liquor manufactured by a state-owned company in Sichuan province. The name, sometimes spelled Wuliangye, is instantly recognizable in China. Its flagship product is a high-end booze so strong that some compare its taste to gasoline.

    The liquor, according to a 2012 New York Times article, has “become identified with corruption among government officials and businesspeople, serving as a favorite gift as well as an aid to sealing deals at highly alcoholic banquets.” The brand is also highly profitable. The same Times article reported that the company’s profits that year were 6.16 billion renminbi — close to $1 billion.

    Wu Liang Ye Group is majority-owned by the governments of Sichuan province and its capital city, Yibin, according to its annual reports. As with any state-owned enterprise in China, the company’s top officials are members of the Communist Party, appointed by the central government.

    Wu Liang Ye Group did not respond to BuzzFeed News’ requests for comment, and during the case they sent a letter to Cao’s attorneys denying any connection to the restaurants in Manhattan. But the restaurant owners told a different story.

    In 1993, Wu Liang Ye Group sent a man named Liang Zhang to New York City with the express purpose of opening restaurants for the company, according to a court document filed by Zhang’s attorney. Zhang opened three restaurants, two in Midtown Manhattan and one on the Upper East Side. All bore the name Wu Liang Ye and the company’s distinctive red logo, all served the Sichuanese cuisine of the company’s home province, and all featured the company’s liquor prominently behind the bar.

    A year later, Wu Liang Ye Group sent Jian Li to New York to work under Zhang, according to documents Li filed for the case. In August 2001, Li took over management of two of the restaurants. Zhang kept the third and, according to his court filing, purchased it from the Chinese corporation — he continues to run that restaurant today, still under the name Wu Liang Ye. Zhang did not respond to numerous interview requests, and his lawyer declined to comment.

    Along with the alleged connections to the Chinese government, Cao’s lawyers crunched the numbers on Li’s restaurants and found extensive violations. They found that Jian Li and his wife, Sosuet Li — who worked as a manager and helped keep the restaurant’s books — had paid less than minimum wage for years and had never paid overtime. (Under federal law, workers are entitled to time-and-a-half pay for every workweek hour over 40.) On top of that, they docked 10 percent from credit card tips, also illegal.

    The lawyers calculated that Cao was owed $142,812.05 for two years’ worth of unpaid hours. Others had it worse. One worker alone was owed close to $300,000 for six years of work — the maximum time allowed by the FLSA’s statute of limitations.

    In their depositions, Jian and Sosuet Li defended themselves by saying they were simply following an industry standard. “All the restaurants in Manhattan they operated like this,” Sosuet Li said. “So I follow the rules to give the salary to the waiters and the delivery guys.”

    These arguments don't hold water as a legal defense, but the workers and their lawyers would be the first to acknowledge that they are true. As Cao would put it: “It’s very common."

    Through one of Davis Polk & Wardwell’s offices in China, the lawyers reached out to Wu Liang Ye Group, which replied with the letter denying any connection to the restaurants.

    Both sides, of course, had an incentive to say what they said. By claiming Wu Liang Ye Group owned the restaurants, Jian and Sosuet Li could try to buck their liability. By denying it, Wu Liang Ye Group could avoid becoming embroiled in an American labor lawsuit. In any case, the lawyers couldn’t decisively prove ownership, much less reach the standard for liability, which would have required showing that Wu Liang Ye Group had control over the restaurants’ day-to-day operations.

    “If there was a deeper pocket there,” Kimerling said, “we weren’t able to get to it."

    In October 2009, Cao showed up at work to find a group of workers packing the restaurant’s dishes and cutlery into cardboard boxes. Others were in the kitchen packing up the food. Sosuet Li, who was there supervising the workers, told Cao the restaurants were shutting down.

    In late October, the federal judge hearing the case declared his intention to side with the workers. By then Jian and Sosuet Li had dismissed their lawyer and stopped fighting the case. The final ruling awarded the workers the full amount of wages they demanded. “The record clearly demonstrates the willful nature of defendants’ violation of the FLSA,” the judge wrote.

    By then, however, Jian and Sosuet Li were nowhere to be found.

    David Colodny, supervising attorney for the Urban Justice Center, said this happens all the time. “It’s one of the big recurring problems for workers,” he said, speaking not of Cao’s case but of wage cases in general. “While we’re in litigation, the defendants will disappear, hide their assets, file for bankruptcy in a fraudulent manner, or in some other way frustrate the ability to collect.”

    In New York, the law requires very little disclosure of a private corporation’s ownership, so a business can reincorporate under a new name while shielding the identity of its individual proprietors. Meanwhile, assets can be transferred to other shareholders, or their relatives or friends.

    “You’re dealing with employers in a cash economy who simply ignore court orders,” Colodny said. “It’s very, very hard to find the money.”

    Seven states have laws in the books that allow workers filing a labor lawsuit to request a lien on their employer’s property. A worker usually has to provide substantial proof that labor violations took place, and an employer can contest the lien. But, if successful, such liens keep a business’s assets firmly in place during the time a claim is litigated.

    While many other states have similar laws protecting laborers in limited industries, especially construction, workers in the informal service economy are by and large left with little recourse.

    Moreover, the kinds of organizations that file wage theft lawsuits on behalf of low-income immigrant workers are often not equipped to carry out the protracted, resource-intensive work of collecting on a judgment — tracking down assets, getting court orders to freeze bank accounts, placing liens on real property, and so on. There are specialized collections firms that do this type of work effectively, but their services are expensive.

    Cao spent months trying to do the work himself. Within a couple of weeks of Wu Liang Ye’s closing, Cao landed a job as a full-time organizer for the Chinese Staff and Workers Association, and he set about trying to find out what Jian and Sosuet Li had done with their assets. He started by going to Wu Liang Ye’s shuttered Upper East Side location. Carrying a video camera, he walked to the wooden menu box outside the restaurant and saw that it was stuffed with menus for a newly opened Sichuanese restaurant down the street. The menu, Cao said, was nearly identical to Wu Liang Ye’s.

    A few weeks after Wu Liang Ye’s Midtown location closed down, a new Sichuanese restaurant opened up in the same spot. Cao recruited other workers affiliated with the Chinese Staff and Workers Association to secretly film the interior of the new restaurant with a camera disguised as a pen.

    Looking at the video, Cao saw several of his old co-workers in the kitchen and the dining room. He also saw that the equipment and decorations were all the same: same tables, chairs, and dishware. Same kitchen equipment. Same painting on the wall of an evening party in the Ming dynasty. “Everything was the same,” Cao said. “Only the name was different.”

    To prove that Jian and Sosuet Li were still in New York, Cao borrowed a car, drove to their new address in Queens, and staked the place out all morning. Jian Li walked out early and drove off in a black Infiniti SUV. A couple of hours later, Cao ordered a pizza to the house. Sosuet Li came out, waved off the delivery man, and stood at the doorway gazing suspiciously outside.

    BuzzFeed News made numerous efforts to reach Jian and Sosuet Li by telephone and mail. Public records databases list them as still living in New York. None of the corporate records for the restaurants that Cao believes were opened to replace Wu Liang Ye list either of them as an agent. In one instance — the restaurant that replaced the Midtown location — the company originally incorporated under the name “Wu Liang Restaurant Corp.” only to change its name 10 days later.

    In the end, Cao couldn’t prove that the new restaurants were shells for the old Wu Liang Ye. The new restaurants, for example, may have simply purchased equipment from the old ones, kept many of the workers, and adopted the same menu — both Wu Liang Yes, after all, were popular and had established clienteles.

    Yet even if there had been resounding proof that Jian and Sosuet Li had simply reopened the restaurants under different names, it would have been hard to do anything about it.

    “You can, in some cases, sue the new corporation,” said Colodny of the Urban Justice Center. “But then if you win against them, they can just shut down too. It becomes like a never-ending shell game.”

    In September 2010, China’s Prime Minister Wen Jiabao visited the United Nations. Cao, who had taken Li at his word when he said his business was indirectly owned by the Chinese state, showed up and picketed with a handful of workers. But the links between the Wu Liang Ye restaurants and Wu Liang Ye Group remain obscure. If an ownership link did exist, it would be virtually impossible to prove, in part because New York law does not require subsidiaries to publicly disclose their parent companies.

    The China side of the equation is even more opaque. Heiwai Tang, an assistant professor at Johns Hopkins University and an expert on Chinese economics and politics, said China’s ministry of commerce would keep information on the foreign subsidiaries of state-owned enterprises. “But, of course, they never release that information,” Tang said.

    As Kimerling put it, “You’ll never know.”

    So Cao gave up. Many of the workers who had joined him on the lawsuit had left New York, and the rest had simply been worn down by three fruitless years of litigation. “They spent so much time,” Cao said. “They were discouraged.”

    For his part, Cao couldn’t afford to keep working on recovering his own lost wages, even though $142,812 could take him a long way. “I cannot focus on just one case,” he said. “Even if I spend 24 hours a day on this case — what else can I do?”

    Dot Gong and Bryant Hua contributed reporting.