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Date: 08-14-2019

Case Style:

United States of America v. Phillip R. Carawan

Case Number: 2:19-cr-00012-FL

Judge:

Court: United States District Court for the Eastern District of North Carolina (Craven County)

Plaintiff's Attorney: Banumathi Rangarajan and Gary N. Donner

Defendant's Attorney: Raymond C. Tarlton

Description:




New Bern, NC - Seafood Processor Pleads Guilty to Selling Foreign Crabmeat Falsely Labeled as Blue Crab from the U.S.

Phillip R. Carawan of Columbia, North Carolina, pleaded guilty today in federal court in New Bern, North Carolina, on charges that his company, Capt. Neill’s Seafood Inc., at Carawan’s direction, falsely labeled millions of dollars’ worth of foreign crabmeat as “Product of USA.”

“Today’s plea helps to ensure that American fishermen and consumers are not defrauded,” said Assistant Attorney General Jeffrey Bossert Clark for the Justice Department’s Environment and Natural Resources Division. “We are proud to partner with the U.S. Attorney’s Office and NOAA in bringing this case.”

“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 U.S. Attorney G. Norman Acker III for the Eastern District of North Carolina. “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.”

“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, 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 crabmeat from domestically harvested blue crab. Carawan pleaded guilty to a one-count information charging him and Capt. Neill’s with substituting foreign crabmeat for domestic blue crab and, as part of the plea, Carawan admitted to falsely labeling more than 179,872 pounds of crabmeat 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. Charges have also been filed against Capt. Neill’s and a hearing is set for Sept. 11, 2019.

As part of his guilty plea, Carawan admitted that he and his company could not and did not process sufficient quantities of domestic blue crab to meet customer demands. To make up the shortfall, Carawan and his company used foreign crabmeat to fulfill customer orders. During the periods when the company did not have a sufficient supply of domestic crab, Carawan and Capt. Neill’s purchased crabmeat (not live crabs) from South America and Asia.

As part of the guilty plea, Carawan further admitted that beginning at least as early as 2012, and continuing through June 16, 2015, he directed company employees to repack foreign crabmeat into containers labeled “Product of USA,” which Capt. Neill’s then sold to customers as jumbo domestically harvested blue crab.

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 crabmeat 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 or http://justice.gov/largecases.

This case was part of an ongoing effort by NOAA’s 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 crabmeat.

The plea took place before U.S. District Judge Louise W. Flanagan in New Bern. Sentencing will take place in January 2020. The maximum sentence for falsely labeling crabmeat is five years in prison 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 the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Eastern District of North Carolina.


Charge:


Lacey Act False Labeling; and Aiding and Abetting

Outcome: 08/13/2019 26 Minute Entry for proceedings held before Magistrate Judge Robert B. Jones, Jr. - Arraignment as to Phillip R. Carawan on Count 1 held on 8/13/2019 in the New Bern hearing room - Defendant present with counsel - Assistant US Attorney present on behalf of the government - Defendant Consents to be arraigned before a Magistrate Judge - Waiver of Indictment filed in open court - Defendant advised of all rights, charges and penalties by the Court - A Memorandum of Plea Agreement was filed - Plea entered by Phillip R. Carawan: Guilty as to Count 1 - The court accepts the plea of guilty of Count 1 and conditionally approves the Memorandum of Plea Agreement - Sentencing Hearing to be set for the January 2020 term before District Judge Louise W. Flanagan - Defendant released on conditions. (Court Reporter Harry Hagopian) (Castania, M) (Entered: 08/13/2019)
08/13/2019 27 Consent to proceed before Magistrate Judge for felony arraignment by defendant Phillip R. Carawan. (Castania, M) (Entered: 08/13/2019)
08/13/2019 28 Waiver of Indictment filed in open court by Phillip R. Carawan. (Castania, M) (Entered: 08/13/2019)
08/13/2019 29 MEMORANDUM OF PLEA AGREEMENT as to Phillip R. Carawan. (Castania, M) (Entered: 08/13/2019)
08/13/2019 30 ORDER Setting Conditions of Release. Signed by Magistrate Judge Robert B. Jones, Jr. on 8/13/2019. (Castania, M) (Entered: 08/13/2019)
08/13/2019 31 SENTENCING SCHEDULING ORDER as to Phillip R. Carawan: Sentencing set for that term of court commencing on 1/6/2020 in New Bern - Courtroom before District Judge Louise Wood Flanagan. Absent a continuance, this order will constitute the only notice of hearing provided by the court. The court's calendar, which will include more specific date and time of sentencing within the sentencing term, will be available on the court's website approximately three weeks prior to sentencing. Absent extenuating circumstance, any motion, including one for departure or variance, and/or sentencing memorandum shall be filed not later than seven days before the sentencing hearing. Counsel should read order in its entirety for critical information and deadlines. Signed by District Judge Louise Wood Flanagan on 8/13/2019. (Tripp, S.) (Entered: 08/13/2019)

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