(Reuters) - Chipotle Mexican Grill has hired a team of Washington legal A-listers to shore up its hiring and handle a federal criminal investigation stemming from the discovery of hundreds of illegal workers in its popular burrito restaurants.
The Denver-based chain has been in hot water since audits by U.S. Immigration and Customs Enforcement (ICE) turned up large numbers of undocumented workers on payrolls in Minnesota, Virginia and Washington, D.C.
Around the start of the year, Chipotle quietly brought in a lawyer who knows the ins and outs of ICE -- Julie Myers Wood, the director of the federal agency under President George W. Bush and now an immigration consultant.
The launch of a related federal criminal investigation in April prompted the company to turn to Washington litigators Robert Luskin (of law firm Patton Boggs) and Gregory Craig (from Skadden Arps Slate Meagher & Flom) as co-counsel.
Luskin is a top Washington litigator specializing in white-collar crime. He helped Bush strategist Karl Rove avoid charges in the outing of Central Intelligence Agency operative Valerie Plame after her husband criticized the Iraq war.
Craig has represented Washington power brokers and was President Barack Obama's White House counsel in his first year in office. Most recently, disgraced politician John Edwards hired him to fight charges of using illegal campaign funds to cover up an extramarital affair.
"Both Bob and Greg are imaginative and stubborn advocates," said William Jeffress, a partner at Baker Botts. "Chipotle has a lot of audiences -- customers, government regulators, shareholders -- and they're going to need somebody who is capable of dealing with all of those challenges."
Mark Fabiani, who earned the "Master of Disaster" moniker after representing Bill and Hillary Clinton in the Whitewater affair, will manage Chipotle's public relations message. More recent clients include Goldman Sachs and seven-time Tour de France winner Lance Armstrong.
There is a lot at stake for Chipotle, both on Wall Street, where it's an investor favorite, and on Main Street, where the gourmet burrito concept has won legions of fans. The company has more than 26,500 employees and roughly 1,100 restaurants and is on the brink of opening a new Asian street food chain.
Luskin, who spent years at the Department of Justice, said his work centers on resolving Chipotle's issues with ICE and the U.S. Attorney's office.
Among other things, his team is handing over hiring records, emails and documents that deal with corporate policy. Chipotle also received "a handful" of subpoenas seeking "very specific records that were unique" to some of the roughly 30 restaurants visited by ICE agents in May.
Luskin said that hiring illegal workers was "absolutely not" part of a corporate strategy to support the company's famed low labor costs -- as some on Wall Street questioned.
"We're very comfortable that at the end of this process, the U.S. Attorney is not going to find a basis to proceed criminally," Luskin said.
As Luskin helps Chipotle navigate the criminal probe, Myers Wood is steeped in the nitty gritty of compliance.
She recently went to Colorado to spend a day with the company's new, dedicated team of compliance specialists, who are being trained to ferret out fake documents that may be presented to prove work eligibility.
"We are pretty aggressive on compliance, so we're brought in when companies are serious about getting it right and doing things to really address the issues," said Myers Wood, president of ICS Consulting.
Chipotle recently began using E-verify on all new hires. That government system allows U.S. companies to check if prospective employees are eligible to work. Use is voluntary.
All this assistance doesn't come cheap.
Jack Hartung, Chipotle's chief financial officer, warned investors in May that the company's legal costs were rising due to the probes of its hiring practices.
Chipotle spokesman Chris Arnold declined to say how much costs were up. He said Chipotle planned to update the CFO's comments when it reports second-quarter results on July 19.
ROSARITO BEACH, BAJA CALIFORNIA, MEXICO—Taking advantage of the many opportunities shared between Southern California and Baja California was the main message delivered by speakers Friday at the Fifth Binational Mayors’ Summit here.More than 220 civic and business leaders plus mayors from 14 cities on both sides of the border attended the summit, which had as its theme “Unifying the Californias.”The summit, at which U.S. Customs and Border Protection Commissioner Alan Bersin was a keynote speaker, was the largest of the five inspired two years ago by an agreement between California Gov. Schwarzenegger and Baja Gov. Osuna.Representatives of both governors attended Friday’s summit as did the consuls of several countries.As well as welcoming and keynote speeches, the summit included workshops on border crossings, desalination/environment, economic development, public safety, education and a mayors’ roundtable.The summit, which is held twice a year on alternating sides of the border, was hosted by Rosarito and Redondo Beach. The San Diego and San Ysidro chambers of commerce, plus Rancho Santiago Community College were among assisting groups.Rosarito Beach Mayor Hugo Torres in opening remarks thanked all those who attended, while citing a recurring theme: “Having a shared border is not what separates us; it is what brings us together.”While sharing the busiest border crossing in the world creates some challenges, including traffic congestion, it creates many more opportunities in a region that shares friends, family, environment and economy, Torres said.Redondo Beach Mayor Pro Tem Steve Diels mentioned ways in which the region is closely linked, including by geography: “We’re 150 miles away, but when Mexicali shakes we feel it.”San Diego Mayor Jerry Sanders, noting the many vacation trips his family has taken south of the border, said “we view San Diego and Baja as one region in just about every respect.”Sanders also mentioned San Diego’s assistance in helping train Baja’s new Metropolitan Tourist Police in an effort to ensure that tourists on both sides of the border are treated alike.Mexican Congressman Gaston Luken Garza spoke of the southbound border crossing while Bersin cited actions that would improve the northbound flow of traffic.Among those were more public and private partnerships for infrastructure, plus increasing trusted traveler programs, such as SENTRI, so that they are used by 75 percent of commuters rather than the current 24 percent.Alternating between Spanish and English, Bersin said the Obama administration was troubled by recent legislation enacted by Arizona that allows police to seek residency status verification based on suspicion that someone might be an illegal immigrant.He said the Obama administration was reviewing its options on the law, including a possible court challenge.Bersin also said an organized, staffed and well funded binational organization was needed to advocate the interests of the region.The next Binational Mayor’s Summit will be in six months in Redondo Beach, co-hosted by the city of Tijuana.