Former National Fish, Sea Star execs guilty of bank fraud
The former director of sales for National Fish and Seafood and the former chief financial officer of Sea Star Seafood Corporation pleaded guilty to bank fraud in relation to Sea Star, in federal court in Boston, Massachusetts, U.S.A. on 12 March.
James R. Faro, 61, who was director of sales for Gloucester, Massachusetts-based National Fish and Seafood until recently – and was the former owner and president of the now-defunct Sea Star Seafood Corporation – along with John Crowley, 62, who was chief financial officer for Sea Star, pleaded guilty to conspiring to commit bank fraud.
The news is just the latest in a series of blemishes on Pacific Andes-owned National Fish and Seafood, manufacturer of Matlaw’s products. National Fish filed for bankruptcy in 2016 and the bankruptcy court judge ordered a sale of the company last October.
In addition, Richard Pandolfo, a senior sales executive at National Fish, pleaded guilty in federal court in Boston to tax fraud last year, and Jack Ventola, former president of National Fish, was also charged with tax fraud for not reporting more than USD 2 million (EUR 1.6 million) in income.
In the Sea Star bank fraud case, the U.S. Department of Justice alleges that, between November 2010 and August 2012, Faro and Crowley conspired to intentionally overstate the value of Sea Star’s outstanding accounts receivable that it reported to a bank that agreed to loan the frozen seafoods company USD 6 million (EUR 4.8 million).
“By doing so, Faro and Crowley fraudulently increased the level of assets against which Sea Star could borrow from the bank,” the District Attorney’s Office for the District of Massachusetts said in a statement.
In August 2012, Sea Star informed the bank that it had discovered a “discrepancy” of more than USD 3 million (EUR 2.4 million) in its reported versus actual assets, according to the statement. Sea Star discontinued its business operations approximately one week later.
Todd Provost, current president of National Fish, told SeafoodSource that Faro is no longer with National Fish, “and we do not know his present activities.” Provost did not say whether National Fish executives were aware of Faro’s actions when he owned Sea Star.
“Jim did not, at any time, have any role relating to the finances of National Fish, and the case involving Sea Star has no connection to National Fish whatsoever,” Provost said.
Faro and Crowley could face up to 30 years in prison, five years of supervised release, and a fine of up to USD 1 million (EUR 807,000). U.S. District Court Judge Timothy S. Hillman scheduled Faro’s sentencing hearing for 8 June and Crowley’s sentencing hearing for 13 June.