Immigration Was Factor in 2 Bankruptcies: Report

SAN JOSE, Calif. — Efforts by the federal government that require employers to keep better tabs on potential illegal aliens was a significant factor in the bankruptcy filings of both Mi Pueblo Food Centers here last week and a similar filing by Pro's Ranch Markets, Ontario, Calif., in May, according to a report in Monday’s Wall Street Journal.

Both chains serve a primarily Hispanic demographic and employ many Hispanic workers.

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Audits of Mi Pueblo's employment rolls forced the 21-store chain to replace some of its 3,200 workers whose documentation came under review during an audit by the U.S. Immigration and Customs Enforcement agency, which resulted in higher payroll and training costs — making it difficult for the company to remain in compliance with restrictions of its loan from Wells Fargo Bank, the article said.

Reports also indicated Pro's was forced to lay off approximately 300 workers in Arizona, or about 20% of its work force, in 2010 when ICE found some workers were in the U.S. illegally, which was a contributing factor to the 11-store chain's financial problems.

Neither company could be reached for comment by SN.