Suspended WSU employees tied to IT contract

Wright State University sponsored foreign workers for an IT staffing company that paid the workers less than what local graduates typically are paid for similar work. Immigration experts say the arrangement may have violated federal immigration rules. JIM WITMER / STAFF
Wright State University sponsored foreign workers for an IT staffing company that paid the workers less than what local graduates typically are paid for similar work. Immigration experts say the arrangement may have violated federal immigration rules. JIM WITMER / STAFF

Credit: Jim Witmer

Credit: Jim Witmer

Wright State immigration investigation timeline

2007 – Sundaram Narayanan co-founded the Wright State Research Institute with WSU president Dave Hopkins. Narayanan became executive director of WSRI, the university's applied research arm, as well as a professor and later dean of the college of engineering and computer science.

October 2010 – The Dayton-based information technology staffing firm Web Yoga awarded Wright State Research Institute $413,463 for "Web Yoga System Development"

October 2010 – Wright State is approved to hire a pair of software developers under work visas. Their salary was $40,000 and their listed work location was at Web Yoga.

November 2010 – Phani Kidambi earns his PhD from Wright State University. He was employed at WSRI as an associate researcher, working for WSRI director Ryan Fendley, who reported to Narayanan.

December 2010 – Web Yoga president Vijay Vallabhaneni signs a contract with WSRI to develop SpiderXchange. The project hopes to employ up to 60 people, eight of whom were named in the contract and hired by Wright State – seven under work visas. Kidambi is listed as project manager.

December 2010 – Web Yoga awards WSRI $1.5 million for "Web Yoga SpiderXchange System."

January 2011 – WSRI gets approval to hire software developers on H-1B visas. The applications are filled out by university general counsel Gwen Mattison. The university is exempt from limits and wage requirements for foreign workers that Web Yoga would have faced. From 2010 through early 2012, at least 19 visas will be authorized for people working at Web Yoga.

January 2013 – A Web Yoga employee emails Kidambi to inform him of the last day of several Web Yoga employees.

March 2013 – Narayanan is promoted to university provost, making him second-in charge of the university.

April 2013 – Narayanan promoted Fendley to senior advisor to the provost.

July 2013 – Kidambi is named director of Wright State International Gateway, the department tasked with recruiting international students. Kidambi also taught as a lecturer, worked on research projects worth millions of dollars and received glowing performance reviews.

May 2015 – Narayanan, Fendley, Kidambi and Mattison are all placed on paid administrative leave – with monthly salaries of $66,979 combined – pending internal and outside investigations.

June 2015 – This newspaper reported the administrators were suspended. The university refused to comment on the reason for the suspensions, but hired an outside law firm and forensic accounting firm to advise them on "immigration matters" and an internal investigation.

August 2015 – Wright state fires Fendley, demotes Narayanan and Kidambi from their administrative roles but leaves them on paid leave as faculty members, and signs a $300,000 separation agreement with Mattison.

August 2015 – This newspaper requests records on H-1B visas obtained by WSRI and contracts with several companies that had contracts for foreign workers with WSRI. A week later, Wright State confirms it is under federal investigation for possible violations of H-1B rules requiring workers employed by Wright State under visas to work at WSU.

See the records, previous coverage

See the records behind this story, including Wright State’s contracts with Web Yoga and work visa records — and read our coverage of this story going all the way back to when we first broke it — on our premium website MyDaytonDailyNews.com.

See the records, previous coverage

See the records behind this story, including Wright State’s contracts with Web Yoga and work visa records — and read our coverage of this story going all the way back to when we first broke it — on our premium website MyDaytonDailyNews.com.

Wright State University sponsored 19 foreign workers who came to the United States not to attend college but to work at an area information technology staffing company that paid the workers less than what local graduates typically make for similar IT work.

The workers were brought here under H-1B or work visas that require companies, agencies and schools to have an employer-employee relationship with the worker. But an I-Team investigation found that the local company that contracted with Wright State for the workers, Web Yoga, told Wright State who to hire and when their employment ended.

Immigration experts say the arrangement may violate immigration laws designed to prevent staffing agencies from trafficking in cheap labor from overseas.

“It has all the appearences of an abuse of the H-1B program,” said Hal Salzman, a senior fellow at the John J. Heldrich Center for Workforce Development at Rutgers University.

Technology First, a local IT trade association, has found a consistent shortage of computer programmers in the Dayton region, resulting in a demand for those jobs. But Salzman said companies throughout the country have exaggerated the need to import IT workers to justify bringing in low-cost workers from overseas.

“Evidence is quite clear that there is a more-than-ample supply of U.S. workers to fill the needs of the IT industry, and then some,” Salzman said.

Wright State in May placed on paid leave four top officials, including the school’s provost, pending a federal immigration investigation. Records obtained by the I-Team show all four were involved at some point with a Web Yoga contract signed in 2010.

Wright State has used the work visa program to attract talent from across the world, often for professorships. The Web Yoga contact, however, does not appear to be a means for bringing talent to the university. Instead, Web Yoga made key decisions, evaluating the performance of the employees and informing Wright State when they needed to travel.

The company paid Wright State $1.9 million to develop and implement the program through the Wright State Research Institute, the school’s applied research arm. Of 31 H-1B work visas issued to WSRI since October 2010, 19 were for the Web Yoga contract.

No one at Wright State or any area company has been charged with any crime related to this investigation.

Phani Kidambi, WSU’s point person on the Web Yoga contract, was suspended and demoted from a research position amid the ongoing federal probe. Also demoted and suspended was Sundaram Narayanan, head of WSRI during the contract and later named provost, the second highest-ranking position at the university. His assistant, Ryan Fendley, was fired. Gwen Mattison, the university’s top attorney, recently took a $300,000 separation agreement after months of paid leave.

University officials won’t comment on the investigation beyond a statement that was issued Aug. 17, a week after this newspaper requested records using Ohio’s public records laws about the H-1B program and the Web Yoga contract.

The statement read, in part: “This past spring, we were presented with credible evidence that somewhere between two and five years ago not every H-1B employee sponsored by the university was actually working at the university. That would violate federal law, and it concerns us greatly.”

Records show that in December 2010, just a month after Kidambi obtained his doctorate in engineering from Wright State, he was put in charge of the Web Yoga contract. His supervisor was then-WSRI director Fendley, who reported to Narayanan, who was executive director of WSRI until he became university provost in 2013.

Mattison signed off on all of the visa application documents for Wright State.

Web Yoga contract

In December 2010, Web Yoga president Vijay Vallahbaneni signed a contract that called for WSRI to hire between eight and 60 software developers to implement a project called SpiderXchange. The original eight workers were named in the contract.

“SpiderXchange assists companies in procuring and managing their contingent workforce by streamlining and automating business processes,” the contract says.

By 2012, Wright State had brought in 19 workers under temporary work visas — 17 software developers and two business analysts. The visa applications, which have all expired or been withdrawn, list Web Yoga’s corporate address as a job location. The workers were each paid a total of $40,000 a year plus benefits.

That pay is less than the $50,000 a year that software developers entering the area workforce typically earn, according to an annual salary survey by Technology First.

It also is less than Web Yoga would have had to pay the workers under prevailing wages if they employed them directly. U.S. Department of Labor rules in 2010 required Dayton-area companies hiring software developers on work visas to pay them at least $63,190, according to the Economic Policy Institute.

‘Cheap labor’

Web Yoga is headquartered in Washington Twp. with an international office in Hyderabad, India. When a reporter visited the sparsely staffed office building at 938 Senate Drive, Vice President Tamiko Lawton said she knew nothing about SpiderXchange.

Vallahbaneni, who signed the contract calling for the development of SpiderXchange, was in China and not available for comment. The company responded with a statement:

“We have no comment on any investigation or potential investigation that may or may not involve our company. Web Yoga, Inc. has been a successful company in the Dayton area for years,” it said.

A sales brochure on Web Yoga’s website says the company, established in 1998, “is a leading edge professional services firm providing cost effective Information Technology staffing solutions and project management services.”

Among the services it advertises to customers is a Web-based staffing system called SpiderLite, and the ability to hold business visas for foreign nationals.

Securing H-1B visas is much easier for Wright State than it is for private companies, according to immigration experts. One reason is the federal government only allows 85,000 new visas to be issued each year, though universities and research nonprofits are exempt from that cap. Also, universities are exempt from prevailing wage requirements set by the U.S. Department of Labor.

“They can pay much lower wages,” said Ron Hira, an associate professor of public policy at Howard University who testified before the U.S. Senate in March that loopholes allow the H-1B program to be routinely exploited.

The qualifications specified in the December 2010 Web Yoga contract with WSRI were for a four-year bachelor’s degree and two years of technical experience, or a master’s degree with a minimum of six months experience.

Web Yoga has additional hurdles to climb to hire foreign workers because it is considered “H-1B dependent.” That designation occurs when a high percentage of an employer’s workforce consists of foreign workers on visas. H-1B-dependent employers must attempt to recruit a U.S. employee before filling a job with a foreign worker.

“It sounds to me this was just a vehicle for Web Yoga to bring over workers outside the cap and outside of their requirements,” Hira said.

“To me the question is: ‘Is it really just about cheap labor?’ And it sounds to me that if you’re really paying somebody $40,000 a year, it’s probably about cheap labor.”

Did WSU have control?

Federal rules require that the company or agency employing someone under an H-1B visa have an established employer-employee relationship, meaning they make all hiring and firing decisions.

This is meant to avoid staffing agencies basically trafficking in cheap labor from overseas, Hira said, but it can be difficult to determine who actually employs the workers.

Personnel records for several of the workers hired under the Web Yoga contract show that they were employed by Wright State. Fendley wrote them letters offering them employment and benefits through the university.

The job offer was good for seven months, with “continuation of appointment contingent upon availability of funds under this project and your performance.”

Under the contract, Web Yoga told the university who to hire and made their continued employment contingent on “satisfactory review by WebYoga.”

Personnel records obtained by this newspaper of two workers employed under the Web Yoga contract — Santhosh Vemnoori and Kolli Gnanendra — show a woman named Madhavi Kari emailed Kidambi on Jan. 11, 2013, letting him know the two would no longer be employed past Jan. 15, 2013.

Payam Yazdani, a Columbus immigration attorney, said Ohio has several staffing companies that rely on H-1B visa holders to provide temp work at other companies. They can do this legally as long as the company that holds the visa maintains control of the employee.

“It usually depends on who has control. Did Wright State have the control to fire them or tell them what to do?” Yazdani said. “There are different things you look at, but typically control is the main factor when you’re figuring out who is the employer. Whoever is in control is typically the employer.”