Crabmeat was labeled ‘product of USA’ — but it was a lie, feds say. NC man gets prison
Without enough crab to meet demand, Capt. Neill’s Seafood was in over its head.
So, the North Carolina seafood processor and its owner, Phillip R. Carawan, opted to package foreign crabmeat from South America and Asia in containers falsely labeled as “Product of USA” — $4 million worth of it, federal prosecutors said.
Now Carawan is going to prison and Capt. Neill’s owes half a million dollars.
A federal judge in North Carolina sentenced the company to five years’ probation and $500,000 in fines on Thursday, the Department of Justice said in a news release. Carawan was sentenced to one year and one day in prison and ordered to pay a $250,000 fine.
They also have to repay customers who purchased Capt. Neill’s jumbo crabmeat between 2012 and 2015, according to the release.
“The effects of this type of fraud impact not only the consumer, but also honest fishermen and the livelihoods of others in the fishing industry,” said Jim Landon, director of the National Oceanic and Atmospheric Administration’s Office of Law Enforcement.
Capt. Neill’s in Columbia — nestled a few miles inland from the Albemarle Sound — is a “critical employer” in an otherwise “economically depressed region of North Carolina,” court documents show.
It was named for Carawan’s son Edward Neill, who died from a botched appendectomy when he was 7, his attorneys said in a sentencing memorandum.
Carawan — a commercial fisherman himself — built the company up from a small crabmeat house in 1986 with 20 employees to a large-scale operation employing more than 250 people during peak season, according to the memorandum.
But for roughly three years from 2012 to mid-2015, Capt. Neill’s didn’t have the funds to “purchase, pick, and freeze extra crabs at the end of the domestic harvesting season,” court documents show.
So he bought it from U.S. brokers originating in Venezuela to sell “mainly during the off-season when domestic blue crab were unavailable in North Carolina,” Carawan’s attorneys said in the memorandum.
The meat was reportedly “safe” and “of high quality.”
“Blue crab is not overfished and is not a threatened species,” the memorandum states. “Nor is there evidence to suggest that it was caught illegally.”
His attorneys said if the same crabs were caught in the same waters by a vessel from the United States instead of Venezuela, it could legally be labeled “Product of the USA.”
Still, prosecutors said the mislabeling flew in the face of the Lacey Act, which makes it illegal to falsely identify the origins of fish, wildlife and plants used in interstate or foreign commerce.
“Seafood mislabeling is consumer fraud that undermines efforts of hardworking, honest fishermen and the free market by devaluing the price of domestic seafood,” Acting U.S. Attorney General Norman Acker III for the Eastern District of North Carolina said in the release. “In this case, the fraudulent scheme artificially deflated the cost of domestic blue crab and gave Carawan an unacceptable economic advantage over law-abiding competitors.”
The retail market value of that repackaged meat — totaling almost 180,000 pounds — was $4.08 million, court documents show.
The pair pleaded guilty to charges relating to the scheme in September, according to an earlier news release.
Carawan sought to avoid prison time.
According to the sentencing memorandum, he “is a hardworking and caring person” and “driven by a charitable impulse” who made a mistake.
“Despite having fixed the underlying problems since mid-2015, choosing the easy wrong over the hard right during that time frame has led Phillip to a day of judgment in this court,” the memorandum states.
Carawan, who is “advanced in age,” was diagnosed with colon cancer in 2016 and has been in and out of treatment, his attorneys said in the memorandum. He’s also needed to run the business and has already lost civil liberties as a convicted felon — such as no longer being able to own a firearm.
“Phillip had been a passionate hunter and conservationist,” the memorandum states.
His attorneys argued a probationary sentence with community service or home confinement would be adequate punishment, but the judge disagreed.
Instead, she sentenced Carawan to 12 months and one day in prison with three years’ of supervised release, prosecutors said.
Capt. Neill’s will also be subject to a corporate compliance plan requiring it to retain a compliance officer, educate all employees regarding the Lacey Act and enact a quality control system.
Anyone who believes they qualify for repayment after purchasing the crabmeat during the relevant time period can visit the DOJ’s website.
