By Mary Milliken, Lisa Baertlein and Erin Geiger Smith
LOS ANGELES (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.
(Erin Geiger Smith reported from New York; Editing by Steve Orlofsky)