A federal grand jury in Mobile, Ala., on Thursday indicted three individuals for conspiring to mislabel and smuggle more than 325,000 pounds of seafood to avoid paying tariffs and defraud customers, according to the U.S. Justice Department.
The three individuals are Karen Blyth of Paradise Valley, Ariz., co-owner and president of CSE in Phoenix and RF in Pensacola, Fla.; David Phelps of Scottsdale, Ariz., co-owner and VP of CSE and RF; and John Popa of Pensacola, co-owner and VP of CSE and RF.
The three individuals allegedly used CSE to supply RF, among others, with mislabeled seafood that, in turn, was sold to RF's customers in Florida and Alabama. RF then sold the mislabeled seafood and substituted less expensive product for more expensive product. The three individuals allegedly removed fish from boxes that were correctly labeled and placed it into boxes that were falsely labeled or had no description.
Blyth and Phelps also allegedly arranged for CSE to purchase hundreds of thousands of pounds of frozen pangasius fillets from a Vietnamese company, knowing that the catfish would be mislabeled to avoid tariffs of up to 63.88 percent.
To do this, the two individuals allegedly provided the Vietnamese company with false shipping labels and generated purchase orders and other false documentation to conceal the product. Blyth, Phelps and Popa then had RF purchase the mislabeled seafood in small increments from CSE to sell to its Alabama and Florida customers.
The maximum penalty for each smuggling count is up to 20 years in prison and a USD 250,000 fine. The maximum penalty for each violation of the Lacey Act includes up to five years in prison and a USD 250,000 fine. The maximum penalty for each misbranding count includes up to three years in prison and a USD 250,000 fine.
The case was investigated by the National Oceanic and Atmospheric Administration's Office of Law Enforcement, the Department of Homeland Security's Immigration and Customs Enforcement, the U.S. Air Force Office of Special Investigations and the Department of Defense's Defense Criminal Investigative Service.
The case is being prosecuted by the Justice Department's Environmental Crimes Section and the U.S. Attorney's Office for the Southern District of Alabama.
January 28, 2010
