US Launches Major H-1B Fraud Probe; Cognizant Named by Labor Inspector

The US Department of Labor has launched a nationwide investigation into alleged H-1B visa fraud, naming Indian IT services firm Cognizant among companies under scrutiny. Labor Department Inspector General Anthony D’Esposito said whistleblower complaints have referred to companies like Cognizant in connection with the visa programs. The probe, part of the Trump administration’s crackdown on employment visa abuse, has already issued dozens of subpoenas targeting alleged schemes involving fraudulent visa applications, wage-kickback arrangements, and labor trafficking.

What the investigation covers

The US Department of Labor is examining alleged abuse of the H-1B and PERM employment visa programs. Investigators say employers and labor brokers submitted fraudulent visa applications, coerced foreign workers into wage-kickback arrangements, and used below-market wages to undercut American workers. The alleged abuses extend beyond paperwork violations to include labor trafficking and forced labor of foreign workers.

Why Cognizant is under scrutiny

Cognizant, a US-headquartered IT services firm with a majority workforce in India, was mentioned in whistleblower complaints to the Office of Inspector General. However, the company’s H-1B visa use has declined significantly. Cognizant filed 10,189 labor condition applications in 2018, compared with 3,436 in 2025. The company did not respond to requests for comment on the investigation.

Broader crackdown on visa fraud

The investigation is led by the Office of Inspector General in coordination with federal law enforcement agencies. It forms part of President Donald Trump’s administration’s broader push to eliminate employment visa fraud under Vice President JD Vance’s task force. Labor Inspector General D’Esposito stated that visa fraud fuels violent crime and is tied to cartels and transnational gangs. The H-1B visa, initially valid for three years and extendable to six years, is used by the technology sector for 60 to 70 percent of new applications in recent years.

Impact on Cognizant stock and investors

Cognizant stock fell 1.91 percent to $42.57 on the investigation news. Meyka rates the stock a B+ with a buy recommendation, though the company faces headwinds from the probe. The stock trades at a PE ratio of 7.81, below the historical average of 9.23, suggesting potential value. However, the investigation adds regulatory risk that investors should monitor as the company reports earnings on July 29.

Final Thoughts

Cognizant faces regulatory scrutiny in a major H-1B fraud investigation, though its declining visa use may limit exposure. Investors should await the company’s earnings and any investigation developments before reassessing the stock’s risk profile.

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