BOSTON (AP) – Being an illegal immigrant didn’t ruin anyone’s chance to get work at leather maker Michael Bianco Inc. in New Bedford, federal officials say. In fact, they say, it enhanced them as the company looked for cheap labor to maximize millions in military contracts.

But they say the jobs had steep price in dingy conditions and onerous fines, including a $20 charge for talking while working and spending more than two minutes in the bathroom.

Late employees were docked $15, twice their hourly pay, for every minute, according to U.S. Attorney Michael Sullivan. Others were forced to work double shifts amid the lines of machines for stitching military backpacks and safety vests. The bathrooms only had enough toilet paper to last until about 40 minutes each day.

“It’s the typical sweatshop you read about … in the early 1900s,” he said. “These were the deplorable conditions that these workers essentially had to endure under.”

“They were given no options. It’s either here, or the risk of no income at all,” Sullivan said. “Clearly, they were exploited because of the fact they were here illegally.”

On Tuesday, 300 federal agents raided the company, detained about more about two thirds of the 500 workers for possible deportation as illegal aliens, and arrested owner Francesco Insolia and three top managers.

Insolia, 50, and the three managers were released at their initial court appearance Tuesday, and Insolia’s wife, Suzanne Thompson, said Sullivan’s characterization of the company as a sweatshop was “horrifying.”

“None of that is true,” she said.

Insolia’s lawyer, Inga Bernstein, said, “The whole story will come out, and at that point it will be a very different scenario.”

The sweep caused chaos that saw some workers try to flee, only to be turned back by Tuesday’s bitter cold, said Bruce Foucart, Customs Enforcement Special Agent in Charge.

In an affidavit, investigators claimed Insolia, plant manager Dilia Costa, payroll manager Ana Figueroa and office manager Gloria Melo allowed an undercover officer posing as an illegal immigrant to continue working at the plant for four days in September 2006. Figueroa also advised her how to obtain a fake Social Security card, investigators charge.

The investigation began after an informant tipped off federal officials, Sullivan said. The informant said the practice of hiring illegals was so openly acknowledged that in 2005 Insolia announced over the loudspeaker that all employees were free to leave after they became nervous when ICE officials were investigating a nearby company.

“According to the (informant), approximately 75 individuals ran and hid,” Melvin H. Graham, a special agent for ICE, said in his sworn affidavit. “Some hid in their vehicles and others hid in boxes on the third floor at MBI.”

Most of the suspected illegals were women from Central America, officials said. The Massachusetts Immigration & Refugee Advocacy Coalition denounced the raid, and planned emergency support and a vigil for affected families Tuesday.

Paul Graham of United Interfaith Action said it was “ironic” that federal officials were detaining workers who stitched equipment for soldiers.

“We need these workers, Massachusetts needs them, and America needs them,” he said. “Let’s stop tearing families apart.”

Insolia; Costa, 55; Figueroa, 40; and Melo, 41, each were charged with conspiring to encourage or induce illegal aliens to reside in the United States – which carries a maximum sentence of 10 years in prison – and conspiring to hire illegal aliens, which is punishable by up to six months in prison.

Luis Torres, 45, who worked at a record shop across the street from Michael Bianco, was arrested and charged with preparing fake identification documents for its workers. He was held Tuesday pending a detention hearing March 12. He faces 15 years in prison.

Lawyers for Figueroa, Melo and Torres declined comment after the hearing. Costa’s attorney, Kevin Barron, said his client was law-abiding and “terrified” by her arrest.

Michael Bianco Inc., founded in 1985, specialized in manufacturing high-end leather goods for retailers including Coach Inc. and Timberland Co. before landing a $9.4 million military contract in 2003 to make survival vests.

Between 2004 and 2006, it won $82 million in military contracts to make products including lightweight backpacks.

An Army spokesman did not immediately return a call about the status of the contracts.

The contracts led to a massive expansion of the company’s work force, which grew from 85 employees in 2003 to more than 500 today, according the affidavit.

The raid is among several recent operations as U.S. Department of Homeland Security investigators increasingly target employers who hire illegals. Last week, five former managers from IFCO Systems North America, a pallet recycling company, pleaded guilty in federal court in Albany, N.Y., to hiring undocumented foreign workers.

“We think most employers want to do the right thing,” said Julie Myers, assistant secretary at Homeland Security. “But if you don’t want to do the right thing, then ICE is building investigations and working on cases across the country.”