Long Island Fish Dealer Pleads Guilty to Fraud, Falsifying Federal Records, and Lacey Act Violations
Jones Inlet Seafood Co., Inc., a federally-licensed fish dealer located in Point Lookout, New York, its company president, Michael G. Mihale, and the company vice-president, Bruce Larson, Jr. pleaded guilty today in federal court in Central Islip, New York., to federal felonies stemming from their role in systematically underreporting fluke (summer flounder) that was being harvested as part of the federal Research Set-Aside (RSA) Program, the Justice Department’s Environment and Natural Resources Division announced.
Michael G. Mihale and Bruce Larson, Jr. pleaded guilty to one count of wire fraud and one count of falsification of federal records. The two were involved in a scheme to direct unwitting subordinates to falsify and submit at least 65 fisheries dealer reports from June 2009 to December 2011, defrauding the United States of 56,000 pounds of overharvested and underreported fluke valued at $116,000. Jones Inlet Seafood Co., Inc. pleaded guilty to the falsification of federal records charge as well as one count of Lacey Act False Labeling for the knowing use of false documents in connection with approximately $100,000 worth of fluke that was shipped to customers in Connecticut and New Jersey.
As part of the plea deal, the three defendants agreed to be subject to between $222,000 and $276,000 in combined fines and restitution. The defendants also agreed to make a $30,000 community service payment to the Cornell Cooperative Extension of Suffolk County in order to pay for the enhancement of fluke habitat through the C.C.E.’s Marine Meadows Program. The jointly proposed sentence includes a ban on Mihale and Larson, Jr. from holding a federal dealer license, accessing the National Oceanic and Atmospheric Administration’s (NOAA) SAFIS computer system, participating in the RSA program, or being in a position to direct others to complete dealer reports . Jones Inlet also agreed to increased recordkeeping and auditing requirements. The court will hear sentencing recommendations regarding non-agreed terms at a hearing set for Jan. 12, 2015.
Jones Inlet Seafood is “Fish Dealer Y” as that entity is identified in the related case of U.S. v. Anthony Joseph. As a federal fish dealer, Jones Inlet Seafood had a NOAA permit to purchase fish directly from commercial fishing vessels without having to go through an intermediary. In June 2009, Mihale and Larson, Jr. learned that Anthony Joseph, captain of the F/V Stirs One, was consistently overharvesting fluke through Joseph’s abuse of the RSA Program. By June 2009, on behalf of Jones Inlet Seafood, Mihale and Larson, Jr. were making regular purchases of illegal fluke from Joseph at the Point Lookout, New York waterfront.
In order to cover his illegal fishing, Joseph would mail falsified fishing logs, known as FVTRs, to NOAA, but falsified FVTRs were just one side of the equation. This is because fish dealers are required to report their purchases to NOAA on an electronic form known as a dealer report. The dealer reports include information such as date of landing, port of landing, catch vessel, corresponding FVTR numbers, commercial grade, species, price and weight. NOAA utilizes the data in the dealer reports to set quotas and implement other management measures designed to ensure a sustainable fisheries. The dealer reports also serve as a check on the information that is submitted in FVTRs. In other words, in order to effectuate his scheme, Anthony Joseph needed to ensure that corresponding false dealer reports were being submitted that contained the same false information as was contained on the falsified FVTRs. A mismatch would have indicated a serious error or fraud, and would have been a red flag for fisheries managers. Accordingly, during June 2009 to December 2011, Mihale and Larson, Jr. schemed with Anthony Joseph to file at least 65 false dealer reports with NOAA, representing a loss of 56,000 pounds of fluke valued at $116,000. The vast majority of these three defendants’ illegal activity took place in 2011.
The case was investigated by agents of NOAA’s National Marine Fisheries Service, with assistance from the New York State Department of Environmental Conservation Police. The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section, Environment and Natural Resources Division.