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Date: 09-14-2019

Case Style:

United States of America v. Capt. Neill’s Seafood, Inc.

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

Judge: Louise Wood Flanagan

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

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

Defendant's Attorney:

Call Kent Morlan at 888-354-4529 if you need a Lacey Act False Labeling lawyer in North Carolina.


Wilmington, NC - Seafood Processor Pleads Guilty to Selling Foreign Crab Meat Falsely Labeled as Blue Crab from USA

Capt. Neill’s Seafood, Inc. of Columbia, North Carolina, pleaded guilty on charges that the company falsely labeled millions of dollars’ worth of foreign crab meat as “Product of USA.”

“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:

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.


Lacey Act False Labeling; and Aiding and Abetting

The Lacey Act (16 U.S.C. 3371 et seq.), first enacted in 1900 and
significantly amended in 1981, is the United States' oldest wildlife
protection statute. The Act combats, among other things, trafficking in
illegally taken wildlife, fish, or plants. The Food, Conservation and
Energy Act of 2008, effective May 22, 2008, amended the Lacey Act by
expanding its protection to a broader range of plants and plant
products than were previously covered. (Section 8204, Prevention of
Illegal Logging Practices). The Lacey Act now makes it unlawful to
import, export, transport, sell, receive, acquire, or
purchase in interstate or foreign commerce any plant, with some limited
exceptions, taken, possessed, transported, or sold in violation of any
law of the United States or an Indian tribe, or in violation of any
State or foreign law that protects plants or that regulates certain
specified plant-related activities. The Lacey Act also now makes it
unlawful to make or submit any false record, account, or label for, or
any false identification of, any plant.
In addition, Section 3 of the Lacey Act, as amended, makes it
unlawful, as of December 15, 2008, to import certain plants, including
plant products, without an import declaration. The import declaration
serves as a tool for combatting the illegal trade in timber and timber
products by ensuring importers provide required information. Through
the declaration requirement, the importer maintains accountability for
exercising reasonable care regarding the content of the shipment before
it arrives in the United States. Information from the declaration is
also used to monitor implementation of Lacey Act requirements. The
declaration must contain the scientific name of the plant, value of the
importation, quantity of the plant, and name of the country from which
the plant was harvested.
On June 30, 2011, the Animal and Plant Health Inspection Serviced
(APHIS) published an advance notice of proposed rulemaking (ANPR) in
the Federal Register (76 FR 38330, Docket No. APHIS-2010-0129),\1\
soliciting public comment on several regulatory options to address
certain issues that have arisen with the implementation of the
declaration requirement. These options included establishing certain
exceptions to the declaration requirement. We solicited comments on
these options for 60 days ending on August 29, 2011, and received 37
comments by that date. The comments received were from academics,
environmental groups, importers and exporters, industry associations, a
trade union, representatives of foreign governments, and private

Outcome: 09/11/2019 32 Minute Entry for proceeding held before US Magistrate Judge Robert B. Jones, Jr.: Arraignment as to Capt. Neill's Seafood, Inc (1) held on 9/11/2019 in Wilmington, Courtroom 3. Assistant US Attorney present for Government. Counsel present on behalf of Defendant. Waiver of Appearance executed by Phillip Carawan, sole shareholder and President of Defendant Capt. Neill's Seafood. Memorandum of Plea Agreement filed in open court. Plea entered by Capt. Neill's Seafood, Inc (1) - Guilty as to Count 1. The court conditionally approves the Memorandum of Plea Agreement. Sentencing to be set for the January 2020 term of court before District Judge Louise Wood Flanagan in New Bern, NC. (Court Reporter Suzanne Patterson) (Grady, B.) (Entered: 09/11/2019)
09/11/2019 33 Consent to proceed before Magistrate Judge for felony arraignment by defendant Capt. Neill's Seafood, Inc. (Grady, B.) (Entered: 09/11/2019)
09/11/2019 34 Waiver of Indictment filed in open court by Capt. Neill's Seafood, Inc. (Grady, B.) (Entered: 09/11/2019)
09/11/2019 35 Waiver of of Appearance by defendant Capt. Neill's Seafood, Inc. (Grady, B.) (Entered: 09/11/2019)
09/11/2019 36 Joint Written Consent to Action Without Meeting of The Sole Shareholder and Director of Capt. Neill's Seafood, Inc. to Approve Plea Agreement filed by Defendant Capt. Neill's Seafood, Inc. (Grady, B.) (Entered: 09/11/2019)
09/11/2019 37 MEMORANDUM OF PLEA AGREEMENT filed in open court as to Capt. Neill's Seafood, Inc. (Grady, B.) (Entered: 09/11/2019)
09/11/2019 Terminate Plea to Criminal Information Hearing deadline as to Capt. Neill's Seafood, Inc. (Grady, B.) (Entered: 09/11/2019)
09/11/2019 38 SENTENCING SCHEDULING ORDER as to Capt. Neill's Seafood, Inc: Sentencing set for that term of court commencing on 1/8/2020 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 9/11/2019. (Tripp, S.) (Entered: 09/11/2019)

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