Clackamas, Oregon, U.S.A.-based Pacific Seafood is involved in at least three lawsuits related to the operation of its Galveston Shrimp Company subsidiary.
The most recent, filed 23 September, involves a suit brought by the company’s former finance director, Justin Ottman, who claims his employment was wrongfully terminated after he raised concerns about potential fraud involving Galveston Shrimp Company (GSC), a shrimp processor based in Galveston, Texas, U.S.A. that Pacific acquired in 2011.
Ottman filed a 170-page report with the company after being asked to investigate the business practices of GSC in April 2023. Ottman allegedly determined Pacific Seafood had received between USD 10 million and USD 20 million (EUR 9 million and EUR 18.1 million) in ill-gotten gains from falsifying the weight and size of shrimp it bought from local fishermen.
Ottman is seeking USD 2.3 million (EUR 2 million) from Pacific, claiming it violated the Oregon Family Leave Act and the state’s law against whistleblower retaliation, after he was first demoted as director of finance, and eventually fired in December 2023 after eliminating his position.
“Mr. Ottman is no whistleblower. He was part of a team sent to Galveston, Texas, at the direction of Pacific Seafood’s legal department to investigate concerns we had related to our business partner at Galveston Shrimp Company. The team provided their findings to legal, as requested,” Pacific Seafood Communications Director Lacy Ogan said in a statement provided to SeafoodSource. “Ottman had a very limited role in that investigation and his recollection is both factually inaccurate and an inappropriate breach of the company’s attorney-client privilege.”
Ogan said the company’s internal investigation into GSC has resulted in a separate lawsuit filed against the subsidiary’s former CEO, Nello Cassarino, and that Pacific is working to amend issues related to his misbehavior.
“Because that litigation is ongoing, we are unable to comment further. Once our investigation is complete and we have all of the facts, we are committed to ensuring accountability and if our fishing partners were affected, we will be sure to do right by them,” Ogan said. “It is absolutely false that Mr. Ottman’s separation from the company had anything to do with his limited involvement in the Galveston investigation. Mr. Ottman was very upset when his position was eliminated, and he appears to be taking his frustrations out in court. We are confident that the facts will show Pacific Seafood has done nothing wrong.”
In its suit against Cassarino, which like Ottman’s suit is being heard in Oregon's Multinomah County Circuit Court, Pacific is seeking USD 3.2 million (EUR 2.9 million), alleging multiple instances of fraud, as well as the theft of a truck. Filed 2 February 2024, the suit alleges Cassarino – a minority owner of Galveston Shrimp Company and CEO since its acquisition by Pacific in 2011 – secretly bought Bay Area Seafood from insolvency and operated it as a rival business to Pacific’s. The new business, Aquarius Cold Storage, eventually collected at least USD 650,000 (EUR 587,000) in fees from GSC for storage, transport fees, fuel, and supplies.
Pacific alleges Cassarino pulled off a similar move with another company he owned, Brownsville Shrimp Dock, charging USD 425,000 (EUR 384,000) to GSC for boat offloading fees between 2020 and 2023. And Pacific alleges Cassarino has ties to a business named Gulf Shrimp Seafood Market, and that he directed GSC to pay inflated prices, including USD 0.50 to USD 1.00 (EUR 0.45 to EUR 0.90) surcharges, to the market, rather than its previous practice of purchasing shrimp directly from vessels or other suppliers. Between 2021 and 2023, Pacific claims GSC paid Gulf Shrimp more than USD 4.8 million (EUR 4.3 million) for 1.2 million pounds of shrimp – an overpayment of between USD 614,000 and USD 1.2 million (EUR 554,000 and EUR 1.1 million), according to Pacific.
“As of July 2023, GSC had 1.5 million pounds of inventory valued at over USD 8.4 million [EUR 7.6 million], based on an average cost of USD 5.65 [EUR 5.10] per pound,” Pacific said in its suit. “As a result of GSC’s aged inventory, GSC was required to take a significant write-down and loss.”
Moreover, Cassarino allegedly altered GSC’s inventory and sales records, according to Pacific.
“Cassarino, or someone at his direction, falsified and altered GSC’s books and records by re-costing inventory in GSC’s accounting system to generate an inflated profit margin on sales. Cassarino benefited personally from the inflated profit by receiving a bonus that was in part tied to that metric,” it said. “The inventory write-downs, unnecessary inventory costs, and altering of GSC’s recorded costs resulted in losses to GSC and Pacific Seafood of at least USD 1.5 million, though the full extent of those losses is still unknown. The losses are a direct result of Cassarino’s self-interested transactions and falsification of GSC’s inventory records.”
Pacific also alleges Cassarino has retained possession of a cold storage truck acquired in 2020 by GSC, and is using it to support his other businesses. Pacific filed a police report in December 2023 reporting the truck as stolen.
Cassarino, who stepped down from his job in August 2023, refutes many of Pacific’s claims, but also asserts his employment agreement did not prevent him from doing additional work separately from his job at Pacific. Cassarino filed a USD 1 million (EUR 903,000) countersuit in January 2024 that was dismissed in February 2024.
In another related case, filed December 2023, Pacific is suing former GSC Inside Sales Manager Kolt DaPron and GSC Delivery Driver Jesus R. Estrada for breach of contract, breach of fiduciary duty, misappropriation of trade secrets, interference with existing contracts and prospective business relationships, and civil conspiracy.
The company claims DaPron and Estrada “absconded with Pacific Seafood’s confidential information and trade secrets, and began using the confidential information and trade secrets to operate an unregistered and competing business called Seafood Isle. Defendants immediately began soliciting Pacific Seafood’s customers and informing them that they needed to update contact and payment information, without disclosing that defendants were actually starting a direct competitor from scratch.”
As a result, GSC lost six of its 25 customers, resulting in a 60 percent reduction in its total sales, according to Pacific.
“Pacific Seafood’s distribution business has completely unraveled in the Gulf Coast region because of the defendants,” it said.
Pacific, which claims Seafood Isle is affiliated with Nello Cassarino, is seeking an injunction to halt DaPron and Estrada’s work at Seafood Isle and compensation for damages allegedly caused by the duo.
Pacific did not respond to a request for comment on the state of its legal actions against Cassarino or DaPron and Estrada.
