LOS ANGELES—Federal agents Tuesday executed search warrants at several Southern California sites they say are connected to three multimillion-dollar birth-tourism businesses that enabled thousands of Chinese women to travel here and return home with infants born as U.S. citizens.
The investigations are likely to culminate in the biggest federal criminal case ever against the booming “anchor baby” industry, according to U.S. authorities. The search warrants cite suspected visa fraud, tax evasion and harboring illegal immigrants, among other charges.
Agents seized records from apartments where, they said, Chinese women on tourist visas stay before and after delivering babies, as well as from residences of U.S.-based individuals who they allege run three separate anchor-baby operations in Los Angeles, Orange and San Bernardino counties. The U.S. Homeland Security and Treasury departments, as well as the Internal Revenue Service, are conducting criminal investigations of these individuals, according to three affidavits reviewed by The Wall Street Journal.
In Orange County on Tuesday morning, about 40 agents entered the luxurious Carlyle Apartment complex, where residents said they had noticed many pregnant women coming and going. The agents, who collected diaper boxes, computers and documents, are expected to remain at the site all day. No arrests were observed.
The businesses named in the affidavits could not be immediately reached for comment. One of the companies, Los Angeles-based Star Baby Care Center says on its starbabycare.com website that it has “served” more than 8,000 women since 1999. Another company, USA Happy Baby Inc., promises to refund women if U.S. officials at the airport send them back home, according to the affidavit.
Investigators said clients of some companies choose from different packages, some offering apartments in complexes boasting resort-style opulence and amenities and outings to upscale eateries, Disneyland and a shooting range. All are provided Mandarin-speaking nannies.
Long associated with Mexican immigrants who came across the border with the sole purpose of giving birth, the desire to bear an American child has spawned an industry that caters to wealthy foreigners. Chinese nationals, eager to gain a foothold in the U.S., have become the main clients, authorities say, often paying brokers $50,000, excluding medical fees.
Babies born on American soil are automatically U.S. citizens. The so-called anchor baby is thus eligible for education, health and other benefits, and when 21 years old, can sponsor family members to legally immigrate to the U.S.
There are no official figures on the number of babies born to mothers who visit the U.S. to give birth. The Center for Immigration Studies, a Washington group that supports a crackdown on the practice, estimates 40,000 so-called “birth tourists” annually.
U.S. authorities so far have had difficulty prosecuting promoters of such schemes because their clients fall into a legal gray area: It isn’t unlawful for foreigners who are pregnant to travel to the U.S., or for foreigners to give birth here. The businesses that have sprung up typically don’t have storefronts; they advertise online and by word-of-mouth. In L.A. County, considered the center of the industry, local authorities shut about 18 maternity “hotels” in 2013 over zoning violations following complaints from neighbors.
Efforts by some lawmakers in recent years to repeal birthright citizenship, guaranteed in the 14th Amendment of the Constitution, have failed. Opponents argue doing so would violate a fundamental tenet of the Constitution.
“Birth tourism should be illegal,” said U.S. Sen. David Vitter (R., La.). In January, he reintroduced a bill that wouldn’t allow a child born to a foreigner to automatically become a U.S. citizen unless certain conditions are met, such as one parent being a U.S. citizen, a lawful permanent resident or in the military.
The women and hospitals where they give birth are unlikely to be prosecuted, says Carl Shusterman, a former trial attorney for the Immigration and Naturalization Service.
Leading up to Tuesday’s raids, undercover agents with Homeland Security Investigations taped what officials called incriminating phone calls and collected incriminating evidence against individuals in Southern California allegedly running the schemes and their associates in China, according to the search-warrant affidavit prepared for one of the cases.
In Orange County, Chao Chen and Dong Li are partners in You Win USA Vacation Resort, a birth-tourism enterprise, according to the affidavit, which said the pair failed to report earnings to the IRS, “either by filing false tax return or not filing any tax return.”
In 2013, Mr. Chen received more than $500,000 in wire transfers, while his partner received more than $1.5 million from bank accounts in China, according to the affidavit.
Mr. Chen and Ms. Li couldn’t be reached for comment. It wasn’t known whether any of the companies named in the affidavits had attorneys.
From January 2013 to present, more than 400 babies were born at just one Orange County hospital used by the enterprise, the document said. At one apartment complex in Irvine, Calif., where agents collected documents Tuesday, the business rented “several tens” of units, which one or two pregnant Chinese women might share.
According to the affidavit, clients of You Win pay between $40,000 and $80,000 for a package that includes coaching on how to deceive U.S. officials in China to obtain a tourist visa, luxury accommodation for three months before and after delivery, transportation to hospitals, and help getting passports for newborns. Clients pay cash separately for medical expenses, often at an indigent rate of only $4,000 for delivery offered to uninsured U.S. patients, the affidavit said.
The website for You Win Vacation describes premium accommodation in high-rise buildings and beachfront villas near the “best” shopping mall and hospital.
An Internet chat room for the enterprise shows pictures of pregnant women, newborn babies and their families. Among the leisure activity enjoyed: a Clippers vs. Spurs basketball game at the Staples Center and visits to Disneyland and a shooting range.
One entry from a satisfied customer lauded the business’s staff, saying it hadn’t mattered that the baby’s father wasn’t present for the delivery because “all the staff were with me through every step.”
The business advised its clients to enter the U.S. through Hawaii or Las Vegas rather than Los Angeles “due to heightened security by customs and border protection” related to a high volume of “fraudulent visas and false statements in entry documents…over the last decade related to birth tourism,” according to the affidavit.
On arrival in the U.S., the clients opened accounts to receive funds later transferred from China to pay the Chen-Li enterprise, which operates a website, http://yyusa.com.
The website touts the advantages of having a U.S.-born child, including free K-12 education, low tuition and low-interest loans “to save over 1 million Yuan in four years in college over a foreign student,” government jobs reserved for U.S. citizens, legal immigration to the U.S. for family members who can later enjoy retirement benefits, and less pollution, among many others.
Agents who posed as interested clients heard from Mr. Chen that he had been in the business for several years, noting “it is a difficult business with a lot of competition.” He advised them to apply for a tourist visa early to ensure pregnancy wasn’t detected during the in-person interview with U.S. officials, according to the affidavit.
To qualify for a tourist visa, applicants must show they have strong ties to their home country and won’t remain in the U.S. long term. They must also pass an in-person interview with a U.S. consular official.
One undercover agent, who posed as a pregnant woman wishing to give birth in the U.S., told the suspects that she had no job, no college degree and no substantial assets in China, which would likely disqualify her for a visa, the affidavit said. A Chen-Li associate in China helped fabricate employment and fictitious university diploma, said the affidavit.
In Irvine, agents say they observed numerous Asian pregnant women being picked up and dropped off by vans at an apartment complex where the Chen-Li enterprise rents units. They also discovered U.S. passport applications for babies born to mothers who gave an address at the apartments, according to the affidavit.
Write to Miriam Jordan at email@example.com