Top Retailers May Have Sold Sweatshop Goods

Clothing produced at an El Monte sweatshop raided by investigators this month may have ended up on the racks of some of the nation’s best known department stores, including Macy’s, Robinsons-May and Filene’s, according to federal officials and documents obtained by The Times.

The list of firms targeted by the U.S. Labor Department provides the first indication of the volume and breadth of the sweatshop’s business. The list may grow as the investigation continues, authorities say.

“Our investigation indicates that the clothing produced at El Monte was shipped to major retailers throughout the country,” said William C. Buhl, a regional administrator of the Labor Department in California.

The documents also detail the conditions endured by 72 laborers who worked in alleged prison-like conditions at the barbed-wire-fenced El Monte plant. The workers, investigators concluded, labored an average of 115 hours a week and were paid 69 cents an hour--a fraction of the legal minimum of $4.25 an hour.

Federal and state authorities have signaled their intention to go to court to hold manufacturers and retailers who may have purchased sweatshop-produced garments liable for about $5 million in back pay owed the workers.

The Labor Department investigation shows that merchandise produced at the inconspicuous El Monte site may have reached retailers from Los Angeles to Boston, from Atlanta to Portland. Authorities say the El Monte site has been functioning since 1988.

Federal officials are expected today to name 33 firms--21 retailers and 12 manufacturers--from which investigators are seeking information on the shipments, said Buhl. The companies include manufacturers, which initially purchased the goods, and the retailers.

Also on Tuesday, California Labor Commissioner Victoria Bradshaw said state authorities will unveil subpoenas for the records of 16 manufacturers that are believed to have done business with one or more of the alleged front firms for the El Monte factory. Authorities suspect that much of the business from El Monte was funneled through one firm, D&R; Fashion of Los Angeles, whose state license expired in March.

Bradshaw said authorities will seek information from any retailer whose labels were found in the Aug. 2 raids at the El Monte and Los Angeles sites and a third facility, in Panorama City, that may be linked to the operation.

Federal labor investigators have determined that the 72 Thai workers at the El Monte site are due more than $4.2 million in back wages, while the mostly Latino immigrant employees of the Los Angeles operation are due at least another $300,000. Four El Monte workers are owed more than $100,000 each in wages.

In statements to investigators, the workers said they typically toiled from 7 or 8 a.m. until 11 p.m. or midnight--with breaks for lunch and dinner--and were paid in cash on a per-piece rate. “The shorter break we take the more money I earn,” one worker noted.

The workers told investigators they seldom left the El Monte site, except, one worker said, for occasional forays outside to buy groceries--but then only with the operators’ permission. They generally purchased food and other items on site. One worker recounted a major outing on the Thai New Year, when the operators took them all to another factory to celebrate. Authorities and acquaintances said all were told they were working off debts of about $5,000, the up-front money allegedly supplied by the plant operators.

The workers were recruited in Thailand and called the boss “Aunt”--apparently referring to Sunee Manasulangkoon, whom federal authorities have identified as the ringleader of the operation.

During the raid on the El Monte site, federal authorities arrested her and seven other defendants--three men believed to be her sons, two women believed to be daughters-in-law and two men suspected of having been guards at the facility. The eight--all Thai nationals--are now in federal custody on charges of harboring or transporting illegal immigrants. Federal authorities are seeking two men believed also to be sons of Manasulangkoon--one of whom, nicknamed “Sunshine,” is suspected of being the Thailand-based recruiter.

Federal and state authorities are working feverishly to delineate the Byzantine trail from the sweatshop through conduit vendors to the nation’s retail giants.

Manufacturers who purchased the garments from D&R; for resale to retailers may be held legally liable for some of the back wages. State authorities have already filed suit seeking some $5 million from the eight defendants and looking to garnish whatever assets are outstanding, including bank accounts, the $853,000 seized at the El Monte site and the considerable jewelry also found there.

The state Department of Industrial Relations succeeded in winning a protective order in Los Angeles County Superior Court on Monday. The order temporarily freezes the assets of the operators and their businesses: D&R;, SK Fashions and S&P; Fashions.

But authorities say there is some doubt that the huge amount of back wages can be collected from the defendants alone, or even from the manufacturers. Moreover, there is some question about the potential liability of manufacturers that purchased goods from D&R; before its state license expired in March. D&R; had a state license during 1993 and 1994, confirmed Bradshaw, the state labor commissioner.

In another development Monday, Bradshaw said that two manufacturers that federal authorities say purchased goods from D&R; are themselves unlicensed--a violation of law, she said.

Michael G. Dave, the attorney representing the two firms--New Boys Inc. and Tomato Inc.--confirmed that the two firms did not have state registrations. But he disputed whether such a state registration, or license, was required for garment manufacturers.

Tomato reported on tax forms that it made more than $3.3 million in payments to D&R; during 1993 and 1994, according to federal documents obtained by The Times.

Also somewhat murky is the extent of financial liability of the retailers, some of whom appear to have purchased the goods from legitimate, licensed manufacturers.

State authorities have already said they are seeking information from Mervyn’s, Montgomery Ward and Miller’s Outpost, but other names are certain to surface.

Federal documents obtained by The Times indicate that a licensed Los Angeles manufacturer, L.F. Sportswear, purchased garments from D&R; that were later destined for various well-known retailers, including Macy’s West (which owns Bullock’s), Portland, Ore.-based Meier & Frank, Boston-based Filene’s, Robinsons-May, Pittsburgh-based Kaufman’s, Washington, D.C.-based Hecht’s, Atlanta-based Rich’s and Houston-based Specialty Retailers Inc.

Steven Katz, an L.F. Sportswear vice president, said his firm was “appalled and outraged” by the conditions unveiled at El Monte and had signed an agreement with the Labor Department pledging to monitor all facilities with which it contracts.

Michael Margolis, president of New Boys, which purchased garments from D&R; for resale to retailers, said Monday he was “totally devastated and shocked” when he heard about the El Monte sweatshop.

According to federal documents, New Boys wrote checks totaling more than $311,000 to D&R; Fashion--the suspected sweatshop front--in June and July, after the firm’s state license expired.

Jim Abrams, vice president of corporate communications for the May Deptartment Stores, said the firm is continuing to investigate whether the El Monte incident involves merchandise being manufactured for delivery to any of its divisions. May’s holdings include Meier & Frank, Robinsons-May, Filene’s, Kaufman’s and Hecht’s.

Carol Sanger, vice president for corporate communications for Federated Department Stores, said that her firm has been told by authorities that two of its retailing divisions--Macy’s West and Rich’s--will be named by federal officials today.

Sanger said Federated has not been told which vendor may have subcontracted with the sweatshop or its front operation. But she added that Federated will take legal action against any vendor that did so.

“When you sign contracts, those contracts specifically say all laws will be adhered to and there will be no violation of any state or federal statutes in the production,” Sanger said.

Ed Bernard, owner of Bermo Enterprises, a Michigan-based discount chain, said he has been contacted by federal authorities about his purchase of men’s shirts from Paragraff Clothing Co., formerly based in Los Angeles.

Bernard, whose 11 stores go by the name MAX 10, said his firm bought a big order of D&R; merchandise, apparently through Paragraff, which was going out of business.

He said that retailers are in no position to know how the clothing they purchase was made and how the employees making it were treated.

“We’re here in Michigan and don’t know. People offer us product, we can’t oversee who makes it for them.

“I was horrified when I heard about [the El Monte raid],” Bernard continued. “But when we go to buy product from companies, we don’t check to see if they’re operating legitimate-type operations. We can’t check. We may buy from 20 different companies a day. We can’t be flying across the country making sure they’re taking care of their employees properly.”

A federal source said investigators were seeking information from at least two other major firms, B.U.M. International, based in Rancho Dominguez, and Specialty Retailers. Telephone messages left at the two firms were not returned.

Times staff writer Don Lee contributed to this report.