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Company employees were told to label foreign-caught crab as a “Product of the USA.”

Going Rogue Issues Justice Systems

The owner of a North Carolina-based seafood supplier pleaded guilty on Tuesday to falsifying country of origin labels on crabmeat products, which it then sold primarily to wholesale membership clubs, the Department of Justice announced.

Beginning in 2012 through 2015, Phillip R. Carawan, owner and president of Capt. Neill’s Seafood Inc., ordered employees to mislabel nearly 180,000 pounds of crabmeat imported from South America and Asia as a “Product of USA.” The retail value of the mislabeled crab products was estimated at slightly more than $4 million. A separate criminal case against Capt. Neill’s Inc. is ongoing.

Fraud is not uncommon when it comes to the prized shellfish. The blue crab, named for its azure-hued limbs, is a popular and iconic species in the Chesapeake Bay region; supply doesn’t always keep up with demand. In 2015, Oceana—a marine conservation nonprofit—tested the DNA of 90 crab cake samples sourced from restaurants in the Chesapeake Bay region and found that 38 percent labeled as locally sourced actually contained imported meat. 

Blue crabs are much smaller than their popular counterparts like snow crab or king crab, and are known for having a distinct sweetness. In the past, love for the delicacy—and, likely, money—has driven some people to steal crabs out of fishing pots or illegally harvest them. To boot: Capt. Neill’s isn’t the only perpetrator of crab mislabeling—last year, a Virginia supplier was accused of cutting blue crab harvested in the Chesapeake Bay with a foreign product.

Carawan agreed that Capt. Neill’s Seafood would compensate customers who purchased the mislabeled crab at least $7 per pound in restitution.
Seafood mislabeling, though prohibited under the Lacey Act, is rampant in an industry notorious for the opacity of its supply chain. Transshipment—the practice of transferring fish from one boat to another—can obscure its sourcing right on the ocean. Some grocers have also mislabeled seafood at the retail level in order to boost revenue, a 2018 New York state investigation found. In 2014, the Obama administration created an inter-agency task force to reel in seafood fraud.

In a statement issued through his attorney, Carawan admitted to mislabeling, noting that it took place “primarily during the off-season when domestic blue crabs cannot be harvested.” Fishermen typically catch blue crab between March through November, as the species “hibernates” during the colder months by digging deeper into mud and laying dormant.

“Over the last four years, the company … has sold nothing but domestic Blue Crab,” the statement reads. “Phillip Carawan is in the process of resolving this matter with the federal government.”

As part of a plea agreement, Carawan agreed that Capt. Neill’s Seafood would compensate customers who purchased the mislabeled crab at least $7 per pound in restitution; pay a $500,000 criminal fine; and take out full-page ads in two “major” North Carolina-based newspapers to apologize to the public. (It’s not unusual for judges to mandate this kind of public shaming, to which lake-polluting energy utilities, racketeering tobacco companies, and even drunk drivers have been ordered.)

A judge will make final sentencing decisions for both Carawan and his company at a later date.

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