Law

Fishermen suing the Ciulla family, their real estate LLC and defunct fish auction in federal court in an alleged fraud and racketeering scheme to skim proceeds from fish sales have asked U.S. Bankruptcy Court to lift the automatic stay on actions to allow the plaintiffs to undertake discovery.

And a series of affidavits lay out how the alleged scam was discovered late last year.

According to affidavits, Hesse, a ground fisherman and member of the board of the Cape Cod Commercial Hook Fishermen's Association, obtained evidence in November 2010 that the auction was paying fishermen less than the sale price, minus the 7 cents a pound off loading fee in a conversation with Kim Marden, owner of Capt. Marden's, a frequent buyer at the Ciullas auction.

When Marden mentioned he'd bid successfully at the previous day's action on fish landed by Hesse, "I inquired as to the purchase price for the major species we had landed," Hesse said in his affidavit.

"I recorded the values he stated (large haddock $2.53, large cod $2.26, market cod $2.06) for later comparison with the settlement I received from the auction," he said. "Kim reminded me that the prices he quoted included the 10 cents per pound Marden's paid as a feet to the auction, so my prices would be commensurately less."

"I was upset when I received my settlement via U.S. Main almost three weeks later to find the prices listed as follows: large haddock $2.19 to $2.29, large cod $1.94 and market cod, $1.76," Hesse said in his affidavit — adding that when he asked auction President Larry Ciulla about the discrepancies, "he said he would look into it and passed it off as a misunderstanding regarding 'buyer's fees' or buyer's premium' in the auction's nomenclature."

Hesse went on to recount how he asked a local dealer, Maguro America, to monitor and record our auction prices at a subsequent auction on Dec. 13, 2010, "and the eventual settlement was exactly in line with the auction result, minus the 10 cent (per pound) buyer fee."

"On the basis of this curious result and a longstanding dissatisfaction with the lack of transparency at the auction, I approached Marden's with the days of server trips taken in 2009 and 2010 to see if they had bought my fish at the action on any of those dates," Hesse said in his affidavit.

"They provided me with sales results for the catch they purchased, and in all cases during the period the same 10 cents per pound was charged to Marden's. After deducting this 10 cent fee, I found that the sales price reported on my settlements had been reduced by an additional six to 32 cents per pound on every trip throughout the period, in addition to stated fees for vessel off-loading and auction sales."

The affidavits of Sanfilippo, who captains the Lilly Jean, and Vitale, who captains the Angela Rose, recount similar stories that roughly parallel the affidavits of Hesse and Walinski, who is also a member of the board of the Cape Cod Commercial Hook Fishermen's Association.

Sanfilippo and Vitale's statements each recounted getting reports from a fish buyer showing what the buyer paid for some of the catches on three different days. Each fisherman wrote that he "was basically lucky to stumble upon the reports," which contained evidence that the auction was shortchanging them.

Sanfilippo figured he had been shorted by about 5 percent or about $30,000 since 2005, while Vitale figured his business had been shorted by about 6 percent — or $10,000 — since then.

Read the complete story from The Gloucester Times.

 

 

 

 

 

 

 

 

WASHINGTON, Oct. 31, 2011 – (OCEANA PRESS RELEASE) Oceana, the largest international advocacy group working solely to protect the world's oceans, filed suit late-Friday in Federal Court to challenge the National Marine Fisheries Service (NMFS) and its implementation of Mid-Atlantic fisheries regulations. Oceana is challenging the Omnibus Annual Catch Limit Amendment, which sets rules for fisheries from New York to North Carolina. The Amendment was originally intended to set scientifically-based annual catch limits and accountability measures for all 13 fish species managed in the region as a means to end overfishing and responsibly managing the fisheries in the future. Oceana believes the Amendment fell far short of its goal.

"The Magnuson-Stevens Act – the law governing U.S. commercial fisheries – requires NMFS to set limits on the number of fish caught regardless of whether or not the species is a target of the fishermen," said Gib Brogan, Northeast representative for Oceana. "Current methods completely ignore bycatch – the catch of non-target fish and ocean wildlife. Oceana believes that limits should be set for both target species and bycatch to ensure that fisheries are not taking too many fish out of the oceans."

NMFS recently released its U.S. National Bycatch Report, which shows that bycatch is rampant in the Mid-Atlantic. For example, the most recent estimates indicate that in the Mid-Atlantic trawl fishery one pound of non-target fish is caught for every three pounds of fish being brought to shore. This wasteful bycatch is often thrown overboard, dead or dying and includes species that are specifically targeted by fishermen in other federal or state managed fisheries. Unfortunately, fishery managers are failing to take into account the fish that are caught in multiple fisheries as target catch and bycatch.

Read the complete press release by Oceana from Yuba Net.

 

 

 

 

 

October 4, 2011 – The Ciulla family filed in U.S. Bankruptcy Court Tuesday to protect the mostly theoretical assets left in the Gloucester Seafood Display Auction from liabilities traced to claims in a pending lawsuit.

And the Chapter 7 filing came shortly before a suit filed last month against the business, alleging that the Auction cheated two fishermen by skimming, was rewritten Tuesday into a requested U.S. District Court class action that would include more than 100 fishermen and businesses.

The expanded suit, filed in federal court in Boston, also alleges the scheme violated the Racketeer Influence and Corrupt Organization — or RICO — Act.

"The plaintiffs' allegations are not made lightly given the significant impact they will have on an already distressed fishing community," the plaintiffs said in the preface of the amended suit, a copy of which was obtained by the Times.

Read the complete story from The Gloucester Times.

 

 

 

 

 

 

A suit filed last month against the Gloucester Seafood Display Auction, alleging that the Auction cheated two fishermen by skimming, was rewritten Tuesday into a requested U.S. District Court class action that would include more than 100 fishermen and businesses.

The expanded suit, filed in federal court in Boston, also alleges the scheme violated the Racketeer Influence and Corrupt Organization — or RICO — Act.

"The plaintiffs' allegations are not made lightly given the significant impact they will have on an already distressed fishing community," the plaintiffs said in the preface of the amended suit, a copy of which was obtained by the Times.

The modified suit alleges that the Auction defrauded fishermen throughout the Northeast region, Maine to the Carolinas.The Ciulla family filed in U.S. Bankruptcy Court Tuesday to protect the mostly theoretical assets left in the Gloucester Seafood Display Auction.

Read the story in the Gloucester Daily Times

Read the text of the Class Action filing

State Attorney General Martha Coakley has sent a de facto Freedom of Information Act request to the federal government for documents she believes will shed light on the administrative response at the Department of Commerce and NOAA to law enforcement abuses against fishermen.

Coakley made a broad request for internal documents reflecting decisions made inside the National Oceanic and Atmospheric Administration against disciplining law enforcement agents and litigators. whose improper actions over many years led to Cabinet-level apologies and reparations paid to 11 individuals and fishing businesses, including the Gloucester Seafood Display Auction. this past summer.

The apologies were issued last May while NOAA administrator Jane Lubchenco was in Gloucester in an attempt to reset the relationship with the industry.

Read the complete story from The Gloucester Times.

 

 

 

 

 

 

Citing a “Systemic Failure”, Massachusetts Attorney General Martha Coakley is calling on the United States Department of Commerce to voluntarily release documents pertaining to disciplinary and corrective actions taken by the Department, the National Oceanic and Atmospheric Administration (NOAA) and the National Marine Fisheries Service (NMFS) with regard to “overzealous” and “abusive” prosecutions of Massachusetts fishermen.

The following was released by the Massachusetts Attorney General's office:

BOSTON – Sept. 29, 2011 —  Seeking further accountability about actions taken to correct a systemic failure that led to the “overzealous” and “abusive” prosecutions of Massachusetts fishermen, Attorney General Martha Coakley is calling on the United States Department of Commerce to voluntarily release documents pertaining to disciplinary and corrective actions taken by the Department, the National Oceanic and Atmospheric Administration (NOAA) and the National Marine Fisheries Service (NMFS) in response to the revelations.

Coakley’s office issued the letter to Acting Commerce Department Secretary Rebecca Blank yesterday.

“Regulations are only effective and appropriate when we can ensure the integrity of those who enforce them,” AG Coakley said. “We believe only a full review of the decisions made in the past can restore the faith of our office and the public in NOAA’s enforcement efforts going forward.”

In the letter to Secretary Blank, Attorney General Coakley raises significant concerns stemming from an investigation by the Inspector General of the Department of Commerce and a subsequent report issued by Special Master Charles B. Swartwood, III that found that NOAA engaged in enforcement practices that were excessive and unreasonable. The IG’s and Special Master’s reports outlined a pattern of abuses committed by law enforcement personnel under that agency’s oversight that negatively impacted the livelihoods of individual fisherman, businesses, and fishing communities in Massachusetts.

In her letter AG Coakley states that questions remain about what disciplinary actions, if any, the Department, NOAA or NMFS took in response to conduct of personnel that was described by the Special Master as “overzealous, abusive or arbitrary.” Further, there has been little detailed information about how, or even if, the Department plans to address the “systemic failings” of managerial oversight acknowledged by former-Commerce Secretary Gary Locke in the NOAA Northeast Regional Office.

AG Coakley also calls for further corrective action to provide necessary restitution to those affected by the prosecutions including the refund of legal costs incurred by all parties that were found to have been unfairly penalized, and restitution for lost business costs due to overzealous suspensions. AG Coakley is requesting a voluntary release of all documents relied upon by the Secretary of Commerce, NOAA and NMFS in order to ensure that safeguards are in place to prevent such abusive behavior from re-occurring in the future

Last month, AG Coakley expressed her support for two bills filed by Senator John Kerry and Congressman Barney Frank which amend the federal Magnuson-Stevens Act Fishery Conservation and Management Act (“MSA”). The bills would establish a formal process to reimburse local fishermen for legal fees incurred while appealing excessive fishing fines.

Today’s letter is a continuation of the Attorney General’s efforts to advocate for Massachusetts fishing communities. In 2006, the AG successfully brought a lawsuit against the U.S. Secretary of Commerce arguing that the fisheries management plan in place at the time, Framework 42, did not properly consider the interests of fishermen and fishing communities. While the Attorney General’s Office was able to successfully force the modification of Framework 42, AG Coakley has expressed new concerns with the recent transition to a “catch share” system, known as Amendment 16, and submitted briefs as amici in lawsuits challenging Amendment 16.

Read the letter from Attorney General Coakley to Acting Secretary Blank

Read the announcement from August 2011 in which the Massachusetts Attorney General expresses support for two bills filed by Senator John Kerry and Congressman Barney Frank

 

 

 

 

A Quincy-based fish packager was sentenced to three months of home confinement and a year of probation yesterday for falsely labeling frozen fish fillets that came from China.

Stephen C. Delaney, 55, who ran South Shore Fisheries, a fish dealership-turned packaging company, must also pay a $5,000 fine.

Read the complete story from The Boston Globe.

 

 

 

 

 

Attorneys in Gloucester and New Bedford are engaged in separate struggles with NOAA and the Coast Guard administrative law judge system to obtain more than a half million dollars combined in legal fees for two clients.

The clients — the Gloucester Seafood Display Auction and former New Bedford-based scalloper Larry Yacubian, now out of the fishing business, were harmed badly enough by law enforcement excesses to warrant reparations and elicit a Cabinet-level apology.

The reparations and apology last May 17 were accompanied by an order by the Commerce Secretary to terminate NOAA's contract for using the Coast Guard ALJ system and to make a fresh start with the fishing industry using another agency's judicial system to try contested cases.

But NOAA initially chose to keep the Coast Guard system in place for existing cases, so the effort to recover fees by the Auction and Yacubian remained in the system in which the injustices warranting apologies were done.

Yacubian's lawyer, Pamela Lafreniere, pursuing a different tact, filed a motion Tuesday to transfer the unresolved claim for more than $300,000 in legal fees from the Coast Guard ALJ system into the EPA's judicial system.

In a motion to Coast Guard ALJ Bruce T. Smith, Lafreniere wrote that NOAA should have honored Locke's order "to terminate the Coast Guard ALJ contract in order to reset NOAA's relationship with the regulated community."

NOAA filed a motion to stay all matters in the Coast Guard ALJ system pending the arrival of the replacement system. Referring to the rulings by the judges against the auction since the motion to stay was filed,

Lafreniere said "two Coast Guard ALJs havee ignored the language in the agency's motion' and "instead used a contorted analysis" remain in charge of the auction's claims.

In contrast, she said no Coast Guard judge had issued an order on her client's motion for legal fees.

Read the complete Motion to Transfer

Read the complete Motion to Stay

Read the Letter from Representives Barney Frank and John Tierney to Sectretary Locke

Read the complete story from The Gloucester Times

 

 

 

 

 

 

 

Two Cape Cod fishermen have filed a federal lawsuit alleging the Gloucester Seafood Display Auction, founded by the Ciulla family 14 years ago and sold last week, had been "skimming" from the actual sale price of their fish.

Seeking $1 million for "breach of maritime contract," the suit by Eric Hesse and Greg Walinski — both members of the board of the controversial Cape Cod Commercial Hook Fishermen's Association — was filed in U.S. District Court on Aug. 10 by Gloucester attorney David S. Smith.

Smith is the law partner of Stephen Ouellette in the firm of Ouellette & Smith, and Ouellette was listed in the Secretary of State's Corporate Records Division as of May 26 as the agent for Kristian 4Kristensen, who has acquired the auction from the Ciulla family.

On June 14, Ouellette also filed the incorporating papers as agent for the Zeus Fish Export Co. Inc., also owned wholly by Kristensen.

Read the complete story from The Gloucester Times

 

 

 

 

 

NEW BEDFORD — The cities of New Bedford and Gloucester have announced they will appeal the verdict in a federal lawsuit that challenged the legality of the controversial catch share system now governing the New England groundfish industry.

In a major setback for the fishing ports, United States District Court Judge Rya Zobel's decision, handed down on June 30, ruled in favor of the National Oceanic and Atmospheric Administration and against the industry. Arguments were heard in federal court in March with the outcome resting on the interpretation of the Magnuson-Stevens Act that governs federal fishing policy.

Among other things, the lawsuit claimed that Amendment 16 to Magnuson, which enacted catch shares, would privatize the fishery and consolidate it in the hands of big players. Many New Bedford groundfish vessels with insufficient fishing quota have been left idle since the new system was adopted in May of last year.

The suit was filed by both cites in conjunction with other plaintiffs from the fishing industry in Massachusetts and beyond. In the aftermath of the suit's dismissal, plaintiffs Lovegren et al, a group of groundfishermen from New York and New Jersey, filed what is known as a motion for reconsideration, essentially a request to the same judge to reconsider the verdict.

That motion was denied by Judge Zobel on Wednesday just as New Bedford Mayor Scott Lang and Gloucester Mayor Carolyn Kirk filed notice of their intent to appeal. This filing is a required preliminary step, after which there is a 60-day window in which to submit the appeal.

 

Read the complete story from The South Coast Today