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Justice News

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Thursday, March 30, 2017

Owner of One of the Largest Commercial Fishing Businesses in U.S. Pleads to Falsifying Records & Smuggling Proceeds Abroad

Defendant known in fishing industry as “the Codfather”

BOSTON – The owner of one of the largest commercial fishing businesses in the United States pleaded guilty today in U.S. District Court in Boston to operating a long-running scheme through which he submitted falsified records to the federal government to evade federal fishing quotas. He then smuggled a portion of the proceeds to Portugal.

 

Carlos Rafael, 65, of Dartmouth, pleaded guilty today to one count of conspiring to commit offenses against the United States, 23 counts of false labeling and fish identification, two counts of falsifying federal records, one count of bulk cash smuggling, and one count of tax evasion.

 

Rafael, owner of Carlos Seafood, Inc. based in New Bedford, Mass., owned 32 fishing vessels through independent corporate shells and 44 permits, which amounted to one of the largest commercial fishing businesses in the United States. He was initially arrested and charged in February 2016. U.S. District Court Judge William G. Young scheduled sentencing for June 27, 2017.

 

“Mr. Rafael’s scheme not only compromised delicate fish populations, but also profited on the backs of his hard-working crews,” said Acting United States Attorney William D. Weinreb. “Mr. Rafael knew he was breaking the law by falsifying records, evading taxes and smuggling ill-gotten profits to Portugal. Without Mr. Rafael and his scheme, New England fishermen who work hard for honest pay can now enjoy a more level playing field.”

 

“The fraud perpetrated by Mr. Rafael was motivated by greed, at the expense of the delicate ecosystem of the North Atlantic ocean,” said Special Agent in Charge Joel Garland, IRS Criminal Investigation. “Mr. Rafael not only evaded federal income taxes on bags of cash, but smuggled some of the cash to Portugal. IRS-Criminal Investigation is proud of our undercover program and the unique perspectives, skill set and resources we can bring to a case of this magnitude. I commend the entire investigative team for their incredibly hard work in exposing this massive financial and natural resource fraud.”

 

“As the Nation’s federal maritime law enforcement agency, the Coast Guard has a critical role in enforcing federal fisheries regulations to protect our precious marine resources, promote sustainable fish stocks, and ensure a level playing field for all the honest fishermen,” said Rear Admiral Steven D. Poulin, Commander, First Coast Guard District. “I am proud of the Coast Guard’s partnership with the NOAA Office of Law Enforcement, the IRS Criminal Investigation Division, and the U.S. Attorney's Office to help bring these illegal operations to a halt.”

 

“NOAA is committed to ensuring a level playing field for honest fishermen,” said Samuel Rauch, Acting Assistant Administrator for NOAA Fisheries. “Those who cheat the American taxpayers and their fellow fishermen will be found out, investigated, and brought to justice.”

 

The charges arose out of an undercover investigation in which federal agents posed as organized crime figures interested in buying Carlos Seafood. From 2012 to January 2016, Rafael routinely lied to the National Oceanic and Atmospheric Administration (NOAA) about the quantity and species of fish his boats caught, in order to evade federal quotas designed to guarantee the sustainability of certain fish species.

 

During that period, Rafael misreported to NOAA approximately 782,812 pounds of fish, telling NOAA that the fish was haddock, or some other abundant species subject to high quotas, when in fact the fish was cod, sole, or other species subject to strict quotas. After submitting false records to federal regulators, Rafael sold much of the fish to a wholesale business in New York City in exchange for bags of cash. During meetings with the undercover agents, Rafael said that in his most recent dealings with the New York buyer he received $668,000 in cash. Rafael smuggled at least some of that cash out of the United States to his native Portugal, hiding it there to evade federal taxation on that revenue.

 

The charges of conspiracy and tax evasion provide for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Twenty-three of the charges of falsifying records submitted to the federal government carry the same potential sentence, while two counts, brought under a different statute, provide for a sentence of no greater than 20 years in prison and a fine of $250,000. The charge of bulk cash smuggling provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

 

Acting U.S. Attorney Weinreb; IRS-CI SAC Garland; Rear Admiral Poulin; and Acting Assistant Administrator Rauch made the announcement today. Assistant U.S. Attorney Andrew E. Lelling of Weinreb’s Economic Crimes Unit is prosecuting the case.

Topic: 
Environment
Financial Fraud
Tax
Updated March 30, 2017