Well generally when you are on US soil you have to follow US employment laws and respect Immigration laws and pay laws.
When the Nanny came in US she was sponsored by the Queen Bee , so she took the executive decision to commit fraud
a) Irregularities in Visa application (General Abuse of power)
Lying to Government of USA immigration officers on Visa Application
documents she signed on behalf of nanny
(CRIME)
b) Probably a lie on visa application how much the nanny would be paid as you can't enter us unless you give "EVIDENCE" you will pay substantial pay to the worker
(CRIME)
c) Not respecting Minimum wages law in USA and giving payment slips
(CRIME)
Also TAX fraud , $2.00 wage means less Taxes paid to US IRS another crime!!!
(CRIME)
US IRS hits hard on Employers who do not report correct figures on wages paid to workers !!!
Lies to Immigration officers she will pay nanny 30,000-40,000 USD minimum wage in USA for nanny. You can't get a VISA unless you proof that you will pay enough salary for a person before you bring them in USA,
Felony crime !!!
(CRIME)
Lies on paying salary , and not deducting enough taxes from the salary checks for the nanny
a) Tax Fraud
(CRIME)
b) Federal Taxes not paid
(CRIME)
c) Provincial Taxes not paid
(CRIME)
d) Social Security not deducted for minimum wage and Taxation document released to nanny not done
(CRIME)
Each of the Crimes carry a (2 x 8 = 16)Years in Prison! JAIL time and then deportation
PS It is also a CRIME in USA to come on visit visa pretending to be doing training but working on jobs in USA , I have seen some workers come in on Visit visa and then working in US companies for 2-3 months duration many Indians who come are not aware that its a Major Crime to do that , some Indian companies tell their workers to bend the rules however they don't know if they get caught its a
PERMANENT ban and prison for such actions
I have seen Indian companies put 4-5 people ins 1-2 room flats running this scheme which again is illegal, the same companies do this in middle east and get away with such practices sadly they do such things also in USA
The fact this Diplomat got caught does not surprises me at the wide spread problem of abuse of labour rules