Source: PRESS RELEASE, 9/11/19

Capt. Neill’s Seafood, Inc. of Columbia, North Carolina, pleaded guilty today in federal court in New Bern, North Carolina, on charges that the company falsely labeled millions of dollars’ worth of foreign crab meat as “Product of USA,” announced G. Norman Acker, III, Acting United States Attorney for the Eastern District of North Carolina, under authority conferred by 28 U.S.C. § 515.

“Seafood mislabeling is consumer fraud that undermines efforts of hardworking, honest fisherman and the free market by devaluing the price of domestic seafood,” said Acting United States Attorney G. Norman Acker III.  “In this case, the fraudulent scheme artificially deflated the cost of domestic blue crab and gave Capt. Neill’s Seafood an unacceptable economic advantage over law-abiding competitors.”

“Seafood fraud and mislabeling can affect the economic value of our domestic fisheries,” said Logan Gregory, Deputy Director of the U.S. Department of Commerce’s National Oceanic and Atmospheric Administration Office (NOAA) of Law Enforcement.  “Our office is committed to investigating these crimes to help ensure the economic value and sustainability of our fisheries.”

According to information in the public record, Phillip Carawan was the owner, President, and Chief Executive Officer, of Capt. Neill’s Seafood, Inc., a North Carolina company engaged in the business of purchasing, processing, packaging, transporting, and selling seafood and seafood products, including crab meat from domestically harvested blue crab. Carawan previously pleaded guilty to a one-count information charging him and Capt. Neill’s with substituting foreign crab meat for domestic blue crab and, as part of his plea, Carawan admitted to falsely labeling more than 179,872 pounds of crab meat with a retail market value of $4,082,841.  The falsely labeled crabmeat was then sold primarily to wholesale membership clubs, but also to other retailers.

As part of its guilty plea, Capt Neill’s Seafood admitted that the company could not and did not process sufficient quantities of domestic blue crab to meet customer demands. To make up the shortfall, the company used foreign crab meat to fulfill customer orders. During the periods when the company did not have a sufficient supply of domestic crab, Capt. Neill’s Seafood purchased crab meat (not live crabs) from South America and Asia.  The company further admitted that beginning at least as early as 2012, and continuing through June 16, 2015, company employees repacked foreign crab meat into containers labeled “Product of USA,” which Capt. Neill’s then sold to customers as jumbo domestically harvested blue crab.

As part of its plea agreement, Capt. Neill’s Seafood agreed to a criminal fine of $500,000; to pay restitution to recipients of the mislabeled crabmeat; to develop and implement a compliance program; and to be debarred from any federal contracts during the term of probation.  The parties will request that the company be placed on probation for a term of five years, the maximum sentence authorized for a corporate defendant for the charge.  In order to ensure payment of all monetary penalties, Capt. Neill’s Seafood’s sister corporation, Capt. Charlie’s Seafood, agreed to serve as a guarantor.

As part of the plea agreements entered into by Carawan and Capt. Neill’s, restitution will be made to persons whom the government confirmed purchased Capt. Neill’s jumbo crab meat between 2012 and June 16, 2015. For individuals who wish to see whether they qualify for restitution and for further information on the prosecution, please visit the following site:  https://www.justice.gov/usao-ednc/captneillsseafoodvictiminformationpage

This case was part of an ongoing effort by the Department of Commerce’s National Oceanic and Atmospheric Administration Office of Law Enforcement, in coordination with the Food and Drug Administration, and the Department of Justice, to detect, deter, and prosecute those engaged in the false labeling of crab meat.

The guilty plea took place before U.S. Magistrate Judge Robert T. Numbers, II in Wilmington, North Carolina. Sentencing will take place in January 2020. The maximum sentence for falsely labeling crab meat by a corporation is five years’ probation and a fine of up to twice the gross gain of the offense, which in this case, is $8,165,682.00

This prosecution is being handled by jointly by the U.S. Attorney’s Office for the Eastern District of North Carolina and Justice Department’s Environmental Crimes Section. The government is represented by Senior Litigation Counsel Banumathi Rangarajan and Trial Attorney Gary N. Donner.