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RCI execs get prison for fraud, hiring illegals
Tuesday, March 04, 2008
By Nate ReensThe Grand Rapids Press

A failed plant-selling business led Richard Rosenbaum and Christina Flocken to start a janitorial and landscaping company that made them millionaires.

It also began a practice of hiring day laborers that transformed into conspiring to employ 1,000 illegal immigrants and failing to pay federal taxes for a venture that landed cleaning contracts at entertainment venues such as the Hard Rock Cafe, House of Blues and northern Michigan's Grand Traverse Resort.

That metamorphosis became a habit at Florida-based Rosenbaum-Cunningham International, whose top three executives were handed prison sentences between 30 months and 10 years on Monday.

U.S. District Judge Paul Maloney ordered Rosenbaum, 62, the one-time president of RCI, to serve 10 years in prison for conspiring to defraud the government and harboring illegal aliens.

Flocken, the company's 60-year-old controller and the mother of three of Rosenbaum's children, earned 30 months for working the company's books, allowing them to avoid $18 million in employment taxes.

A third executive, Vice President Edward Cunningham, 60, who was buying the business from Rosenbaum, was sentenced to 51 months in prison.

The trio also must reimburse the government nearly $17 million, Maloney ruled during sentencing hearings in Kalamazoo.

The case is uncomplicated, Assistant U.S. Attorney Hagen Frank wrote in court documents. The defendants developed and maintained a nationwide business that was staffed almost exclusively with illegal aliens and, as a result of that work force composition, they made themselves rich by evading their collective legal obligation.

Federal prosecutors worked for years to disband the ring of illegal activity that started with immigration agents investigating fake green cards in 2003. The company contracted at more than 100 major hospitality venues.

The case attracted national attention as authorities trumpeted dismantling the conspiracy and saying such crimes feed a national immigration and security problem.

Investigators also found a state employee, Juanita Schlagel, of Williamsburg, was using her job at Michigan Works to sell fraudulent legalization papers for some workers at the Grand Traverse Resort.

Court documents show Rosenbaum started employing illegal aliens while building the business he started in 1978. Flocken and Cunningham, who bought an equal partnership in 1992, were complicit.

Rosenbaum's attorney, Benjamin Gluck, said the employment issues began as a survival mechanism, paying cash to homeless workers. Gluck said in court documents Rosenbaum didn't engage in behavior such as stiffing workers or paying less than minimum wage.

"Mr. Rosenbaum showed a generosity that is quite unusual," Gluck wrote.

Send e-mail to the author: nreens@grpress.com