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.