Seafood Processor and Owner Sentenced for Selling Foreign Crab Meat Falsely Labeled as Product of USA

RALEIGH — This is an official press release from the U.S. Department of Justice (USAO - North Carolina, Eastern), published as received.

RALEIGH – Capt. Neill’s Seafood Inc. (Capt. Neill’s) of Columbia, North Carolina, and Phillip R. Carawan, the owner, President, and Chief Executive of Capt. Neill’s, were sentenced today by U.S. District Judge Louise Flanagan, in New Bern, North Carolina. Capt. Neill’s was sentenced to a period of five years’ probation and is required to pay a $500,000 fine. Carawan was sentenced to 12 months and one day in prison, followed by three years of supervised release, and is required to pay a $250,000 fine for his role in falsely labeling millions of dollars’ worth of foreign crab meat as “Product of USA.”

“Individuals and companies who seek to profit from the fraudulent mislabeling of seafood harm American fishermen and consumers,” said Assistant Attorney General Jeffrey Bossert Clark for the Justice Department’s Environment and Natural Resources Division. “We are committed to working with our law enforcement partners to hold accountable those who engage in seafood fraud and mislabeling.”

 “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 General 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.”

“Combating seafood fraud continues to be a priority for the NOAA Office of Law Enforcement,” said Director Jim Landon of the Department of Commerce’s National Oceanic and Atmospheric Administration (NOAA) Office of Law Enforcement.  “The effects of this type of fraud impact not only the consumer, but also honest fishermen and the livelihoods of others in the fishing industry.  We will continue to identify and investigate those who seek to undermine the legal requirement to accurately label seafood products.”

Capt. Neill’s and Carawan were engaged in the business of purchasing, processing, packaging, transporting, and selling seafood and seafood products, including crab meat from domestically harvested blue crab. According to their plea agreements, Capt. Neill’s and Carawan admitted that beginning at least as early as 2012, and continuing through June 16, 2015, Carawan directed company employees to repack foreign crab meat into containers labeled “Product of USA,” which Capt. Neill’s then sold to customers as jumbo domestically harvested blue crab. The falsely labeled crabmeat was then sold primarily to wholesale membership clubs, but also to retailers. Capt. Neill’s and Carawan further admitted that during that time period, the retail market value of the mislabeled crabmeat they sold was $4,082.841.

As part of his plea agreement, Carawan further 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 crab meat 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 crab meat (not live crabs) from South America and Asia.

As a result of the plea and sentence, Capt. Neill’s will pay restitution 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 NOAA 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.

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. The government is represented by Senior Litigation Counsel Banumathi Rangarajan and Trial Attorney Gary N. Donner.