WASHINGTON, Jan. 28 — A federal grand jury in Mobile, Ala., today returned a 28-count indictment against three individuals for conspiring to falsely label, smuggle and misbrand more than 325,000 pounds of seafood in order to avoid paying tariffs and defraud customers, the Justice Department announced.
According to the indictment, Karen L. Blyth of Paradise Valley, Ariz., was the co-owner and president of two companies, CSE Inc., in Phoenix and RF Inc., in Pensacola, Fla., that traded in a variety of seafood products. David H. M. Phelps of Scottsdale, Ariz., co-owned CSE and RF and served as a vice president. John J. Popa of Pensacola, co-owned RF with Blyth and Phelps and served as the company’s vice president.
The indictment alleges that the three used CSE to supply RF, among others, with falsely labeled fish that were in turn sold to RF’s customers in Alabama and the Florida panhandle. RF sold the mislabeled seafood and substituted cheaper product for more expensive seafood. As part of the conspiracy, the three caused the fish from the boxes that were correctly labeled to be removed and placed into boxes that bore no description or falsely labeled the fish.
Blyth and Phelps also arranged for CSE to purchase hundreds of thousands of pounds of frozen fillets of catfish through a company in Vietnam knowing that the catfish would be mislabeled to avoid import tariffs. A January 2003 anti-dumping tariff was placed on all imports of Vietnamese catfish into the United States because the Vietnamese catfish was being marketed at a significantly lower price than was market rate at the time. That initial anti-dumping order imposed a duty of up to 63.88 percent on fish subject to the order.
In order to do this, the two provided the Vietnamese company false shipping labels and generated purchase orders and other false documentation to conceal the product. Blyth, Phelps and Popa then had RF purchase the falsely labeled fish in small increments from CSE to sell to its Alabama and Florida customers.
Specifically, Blyth, Phelps and Popa were charged with conspiracy to:
falsely label fish and shellfish, including a type of catfish commonly called basa, swai or sutchi; Lake Victoria perch; grouper; oysters and shrimp, in violation of the Lacey Act;
receive, buy, sell and transport merchandise after importation, specifically frozen fillets of fish of the genus Pangasius, a type of catfish, commonly called basa, swai and sutchi, knowing it to have been imported contrary to law; and
misbrand seafood products, including a type of catfish commonly called basa, swai or sutchi, Lake Victoria perch, grouper, oysters, and shrimp sold in interstate commerce with the intent to defraud and mislead. The charge describes over 325,000 pounds of falsely labeled seafood involved in a conspiracy spanning from Jan. 1, 2004, to Nov. 8, 2006.
Blyth and Phelps were also charged with six felony counts of false labeling of approximately 283,500 pounds of imported Pangasius fillet, a type of catfish, as sole, in violation of the Lacey Act; two felony counts of the receipt, sale, and transportation of this falsely labeled fish, which was imported falsely labeled and without applicable tariffs having been paid; and one felony count of misbranding of this catfish as sole.
In addition, Blyth, Phelps, and Popa were charged with:
one felony count of falsely labeling and purchasing or selling approximately 34,100 pounds of imported catfish fillet as sole, in violation of the Lacey Act.
one felony count of the receipt, sale and transportation of this falsely labeled fish, which was imported contrary to law; and one felony count of misbranding of this fish as sole;
two felony counts for purchasing and creating false labels describing approximately 2,800 pounds of imported Pangasius fillet as grouper; and one felony count for misbranding this fish as grouper;
five felony counts of falsely labeling and selling to customers in southern Alabama and the Florida panhandle region approximately 18,350 pounds of an imported catfish as grouper and sole, in violation of the Lacey Act; and two felony counts of misbranding of this catfish as grouper and sole;
three felony counts of falsely labeling and selling Lake Victoria perch as grouper and/or snapper to customers in Alabama and the Florida panhandle region, in violation of the Lacey Act, and one felony count for the misbranding of this falsely labeled fish.
Finally, Popa was charged with three felony counts of falsely labeling live and shucked oysters in violation of the Lacey Act, resulting from his changing the harvest date on the oyster tags and labels to falsely indicate a more recent harvest date.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The maximum penalty for each smuggling count is up to 20 years in prison and a $250,000 fine. The maximum penalty for each violation of the Lacey Act includes up to five years in prison and a $250,000 fine. The maximum penalty for each misbranding count includes up to three years in prison and a $250,000 fine.
The case was investigated by the National Oceanic and Atmospheric Administration, Office of Law Enforcement; the Department of Homeland Security, Immigration and Customs Enforcement; the U.S. Air Force Office of Special Investigations; the Department of Defense, Defense Criminal Investigative Service. The case is being prosecuted by the Environmental Crimes Section of the Department of Justice and the U.S. Attorney’s Office for the Southern District of Alabama.
Source: U.S. Department of Justice