Lawsuit: Former Delia’s Tamales employees allege decades of fraud

More than two dozen former employees of Delia’s Tamales are suing the beloved San Juan-based company, alleging decades’ worth of fraud, theft, age discrimination, retaliation and threats.

In the lawsuit, which was originally filed in state District Court in late-August, but has since been removed to Houston federal court, the 26 employees outline a scheme they allege spanned more than two decades.

One that allegedly began with fraud upon an employee’s hiring, ending years later with threats that Delia’s — sometimes referred to in the lawsuit by its legal business name, Delgar Foods — would report them to immigration officials if they dared speak up.

“Fraudulent inducement generally means that a party was tricked into entering a bad deal. The plaintiff (sic) will allege that you, the defendant (Delia’s), used fraud and deceit to get the deal done,” the lawsuit reads, in part.

According to the petition, Delia’s allegedly accomplished the “bad deal” by helping the workers obtain fake Social Security numbers in order to work at the company. And each pay period, those employees would see a Social Security deduction taken from their paychecks.

Years later, however, when it was time for the employees to retire, Delia’s would fire them under the threat of calling immigration officials if they tried to speak out, the suit claims.

Delia’s attorneys declined to comment when reached by phone this week.

“Oh, no, I have no comment. Thank you, though,” said Lorena Valle, one of two attorneys from Houston-based law firm Porter Hedges, which is representing the tamale company in the litigation.

Thus far, part of that response has involved moving the lawsuit from local to federal court, which Delia’s did on Oct. 6.

But rather than going before a judge at the McAllen federal courthouse, the case has landed in Houston, where it has been assigned to U.S. Magistrate Judge Peter Bray.

Valle similarly declined to answer why the company chose Houston as its venue over McAllen.

“Nope. No comment,” Valle said.

Meanwhile, the 26 former employees’ allegations are outlined in a three-page complaint, which was filed on Aug. 31 by Edinburg attorney Richard Alamia.

“Defendant (Delia’s) would employ plaintiffs up to a certain age, because of the scheme they were committing and didn’t want any issues with the plaintiffs when it came time to retire,” the complaint reads, in part.

“The closer the plaintiff was in retiring, they would be let go, because of the scheme Defendant created with the Social Security deductions and its employees,” it further states.

The lawsuit claims that Delia’s would withhold Social Security deductions from the employees’ paychecks, just as any other American company does with its employees.

Normally, those deductions — essentially a 6.2% payroll tax — stay with the federal government to pay current retirees their monthly Social Security benefits.

But in the case of Delia’s Tamales, the false Social Security numbers that the company allegedly helped its employees obtain ultimately came in handy in getting those deductions back — money which the former employees claim Delia’s kept for itself, according to the petition.

“Even if Defendant (Delia’s) filed the deductions with social security. Social security would not be able to identify any of the plaintiffs, because their social security cards were fake. Social security would send the monies back to Defendant, because the social security cards she helped get plaintiffs were fake,” the complaint states.

The lawsuit claims Delia’s carried out the alleged scheme deliberately between 2000 and 2023, and that it “happened to each plaintiff in this cause.”

“Here, the Defendant intentionally and knowingly created a scheme in that they would help Plaintiffs get a fake social security card, so they could work for Defendant,” reads a portion of the lawsuit that alleges illegal paycheck deductions.

The allegation is repeated again as part of a claim of “fraud and inducement.”

“Here, the Defendant committed fraud by helping employees get a fake social security number. … Defendant knew eventually those social security deductions would go back to Defendant,” the complaint states.

After working for the tamale company for years, Delia’s would then fire the employees and use their undocumented immigration status to threaten them into silence, according to the lawsuit.

Though the company’s attorneys declined to speak with The Monitor, they did file a five-page response to the allegations.

“Delia’s Tamales denies that Plaintiffs have any valid claims against them,” the response reads, in part.

However, the company further states that since the employees’ claims involve the Social Security Administration and immigration status, their lawsuit is not a matter for a local court, but a federal one.

An initial hearing in the case is set for December.