A new complaint filed in Florida state court alleges M. Slavin & Sons, along with company officials, fraudulently transferred funds to its new company, Ocean Box, in an attempt to avoid paying funds owed to seafood suppliers.
The complaint also individually names Mitchell Slavin, Herbert Slavin, and Barry Slavin, “which all have an ownership interest in Slavin & Sons and its successor entity Ocean Box E-Commerce Corp,” according to the complaint.
Fort Lauderdale, Florida-based Netuno USA, a 25-year-old importer and supplier of a variety of fresh seafood, alleges that M. Slavin owes the company more than USD 20,000 (EURO 18,000), and is asking for nearly USD 50,000 (EUR 45,000) in damages. Herb Slavin asked Netuno’s CEO for a line of credit that M. Slavin did not intend to repay, the complaint said.
“Unbeknownst to plaintiff and others in the seafood industry, Slavin & Sons was incurring high amounts of debt that it did not intend to pay because it had revamped a company, Ocean Box Corp., which Herb Barry and Mitchell and rebranded on April 16, 2019, as Ocean Box E-Commerce Corp," the complaint states.
Other M. Slavin & Sons creditors also told SeafoodSource they believe Slavin & Sons’ executives knew they were not going to continue operating Slavin & Sons, but continued to place orders representing themselves as either Slavin & Sons or Ocean Box. Last month, SeafoodSource revealed the ties between M. Slavin & Sons and Ocean Box.
In addition to Netuno, USD 169,760 (EUR 152,000) of unpaid invoices and dishonored checks by Slavin & Sons have been reported to seafood industry credit monitoring agency Seafax, the complaint said.
“In American corporate law, there is a lot of room for bad management, and bad decision-making, but [this is different],” Vinicius Adam, attorney for Netuno, told SeafoodSource. “It seems that they started a new company [Ocean Box] through debt … It seems like they were trying to use the limits of their credit with almost every single major creditor they had.”
Using lines of credit that “they knew they were not going to have to pay back. gives them a tremendous advantage over competitors,” Adam added.
In early June, a representative of Ocean Box told Adam that they are “trying to figure out who will be handling issues regarding returned checks and invoices of Slavin & Sons”,” the complaint said. Mitchell Slavin would be handling accounts moving to Ocean Box and Herb Slavin would handle accounts staying with Slavin & Sons. “Counsel understood that this meant accounts critical to Ocean Box’s operations would be paid in full, whereas the others would not be paid in full, if at all,” the complaint said.
Netuno alleges that M. Slavin & Sons placed a USD 11,850 (EUR 10,600) order for seafood from Netuno in late February and that Slavin & Sons’ purchasing agent, “N.I.”, operated from the same phone number as Ocean Box.
While N.I. made several additional attempts to order from Netuno, “these orders could not be fulfilled because Slavin & Sons had reached the limits of its credit line with Netuno,” the complaint stated.
N.I. placed an order with Netuno for an additional USD 9,063 (EUR 8,000) worth of seafood in late April, but that check was dishonored by M. Slavin & Sons’ bank for insufficient funds.
Herb Mitchell contacted Netuno CEO Luciano Bonaldo requesting an increase in credit and a release of the order. “Herb promised that the debt would be paid in accordance with the terms of Netuno’s invoices … and further assured Bonaldo that insufficient funds was an error and that a check was in transit for the amounts owed due to a dishonored instrument,” the complaint said.
With the line of credit, N.I. attempted to purchase red snapper several times from Netuno. “Slavin & Sons, now operating as Ocean Box, maintained the rouse as long as possible in order to purchase red snapper from Netuno at the beginning of the season in May. Red snapper is a high-selling item and Netuno is one of the largest importers of the fish, selling roughly 4.5 million pounds per year,” the complaint said. According to Netuno's Bonaldo, the supplier's yearly volume is slightly over 25 million pounds.
However, when Netuno’s bank contacted M. Slavin & Sons’ bank, the bank confirmed that the account lacked funds to pay Netuno’s open invoices and replace the dishonored check.
Netuno is demanding three times the value of the worthless check, as well as an unpaid invoice and other damages, totaling USD 47,992.50 (EUR 43,000).
Meanwhile, Herbert Slavin, Barry Slavin, and Mitchell Slavin are named personally in the complaint because “… they placed these orders knowing that they would not pay them back. We could leverage their personal assets,” Adam said.
Image coutesy of Ocean Box
