Federal indictment rocks fishing industry - Anglers Journal - Anglers Journal - A Fishing Life

Carlos Rafael, known around the docks as “The Codfather” for the power and influence he wields in New Bedford, Mass., appears to have lost his mojo and sullied his reputation as the rough, tough entrepreneur fisherman who kept the town’s fishing economy going.

Rafael, 64, and his longtime bookkeeper, Debra Messier, 60, were arrested Feb. 26 in a federal raid on Carlos Seafood Inc., a Rafael-owned seafood dealer in New Bedford that buys catches from his 40 commercial fishing boats, one of the largest fleets in the Northeast.

The pair were charged with conspiracy and submitting falsified records to evade federal fishing quotas, and allegedly selling fish “off the books” to a New York City wholesaler who paid Rafael in bags of cash — $668,000 during one six-month period alone.

Gregarious, profane and aggressive, Rafael won respect for his successes in a failing industry, but an affidavit said those successes were tainted.

“Fishing vessels owned by corporate shells controlled by Rafael catch certain species of [premium-priced] fish subject to strict federal quotas, but Rafael falsifies federally mandated forms to misrepresent that catch as other [less desirable] species subject to more lenient quotas,” IRS special agent Ronald Mullett said in the affidavit.

The arrests have made Rafael a poster child for damaging the efforts to rebuild overfished groundfish stocks.

Rafael sold the catches for cash to the wholesaler, transporting them daily by truck to New York. The wholesaler paid in advance for as much as six months of catches, handing over bags of cash at a prearranged location in Connecticut. Rafael then laundered at least part of that money, taking it out of the country through Logan International Airport in Boston and depositing it in banks in Portugal, again according to Mullett.

IRS agents, one impersonating a broker and two others pretending to be Russian immigrants with ties to organized crime, elicited details of Rafael’s scheme by telling him they were interested in buying his business. He had advertised it for sale a few months earlier.

Rafael knew he was taking a risk opening his records to them.

“You could be the IRS in here,” he told them. ”This could be a cluster-f…. So I’m trusting you. The only thing is, I open myself because both of you is Russians and I don’t think they would have two Russians [posing as agents]. F… me — that would be some bad luck!”

Rafael allegedly described to them his method for evading the quotas, what he called “dancing” — fixing the books so the fishing boats’ records and Carlos Seafood’s records and the wholesaler’s records jibed.

Carlos Seafood’s financial statements for 2011 to 2013 and a draft statement for tax year 2014 reported $3 million to $4 million in income each year and combined business assets of $21 million, Mullett said.

Yet Rafael was asking $175 million for the business. How could he justify that, the agents asked. Rafael pulled out a ledger labeled “cash” and told them, "We are profitable,” Mullett said. “[Though] you will not see it on paper for Carlos Seafood.”

Mullett said owning both the fishing boats and the seafood dealership made perpetrating the fraud easier because “to perpetuate an ongoing fraud regarding the weight or species of a given catch, the vessel operator and dealer must collude. This is easier when the vessel and dealership are owned by the same person, here Carlos Rafael.”

The U.S. Attorney’s Office in Massachusetts, in a press release, said its complaint against Rafael alleges that “for years, [he], with help from his bookkeeper, Messier, lied to federal authorities 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.”

If the complaint holds up — and if other commercial fishermen are fudging on their catch reports, as well — it means that for years NOAA scientists have been basing their sustainability plans for fish species on erroneous data, and this is worrisome.

“Given the size of his fleet and reported landings, Rafael’s potential illegal catch over 30 years could be skewing stock assessments of fish populations at historic lows, undercutting regulations intended to rebuild species to healthy levels,” said an article in the Cape Cod Times.

The arrests also cast commercial fishing in a very bad light. “This case will cast a pall over all of the honest fishermen who stuck to their quotas, despite their lack of faith in the data,” said an editorial in National Fisherman magazine. “The scope and breadth of the charges against Rafael reflect poorly on the entire industry.”

Lastly, the case raises issues about the enforcement of quotas. “This arrest and these allegations make it clear that NOAA must start an effective fishery monitoring system, not continue the underfunded program it has had in place for years,” Joshua Wiersma of the Environmental Defense Fund told The Standard-Times of New Bedford.

“While the arrest in New Bedford … is an extreme case, it underscores the need for greater accountability of vessels out at sea, and potentially on the dock,” he said.

“Currently, we do not know what fishermen are catching and selling because the current system of monitoring and reporting has clear holes in it that are being exploited to the detriment of honest fishermen across New England.”

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We approached the charter boat just as the customers were saying their goodbyes to the captain and mate and dragging their coolers to their trucks. It was about 2 p.m. in the afternoon, and the temperature was in the low 90s.