Seafood Wholesaler Owners Sentenced in Alabama for Selling Falsely Labeled Fish, Smuggling and Misbranding of Seafood Products

WASHINGTON– Karen L. Blyth and David H. M. Phelps were sentenced yesterday in federal court in Mobile, Ala., to 33 months and 24 months in prison, respectively. The pair was also fined $5,000 each, and barred for three years from working in the seafood industry or owning any seafood related business.

Blyth and Phelps had been convicted in January 2011 of 13 felony offenses for their roles in purchasing and selling farm-raised Asian catfish and Lake Victoria perch falsely labeled as grouper, selling foreign farm-raised shrimp falsely labeled as U.S. wild caught shrimp, selling shrimp they falsely claimed to be larger, more expensive shrimp than they actually were, and for buying fish they knew had been illegally imported into the United States. Blyth and Phelps, on the eve of trial on January 24, 2011, pleaded guilty to the offenses, which included one conspiracy count, nine violations of the Lacey Act, two counts of receiving smuggled goods and one count of misbranding. A third defendant charged in the case, John J. Popa, of Lisbon, Conn. had previously pleaded guilty to similar offenses, and is scheduled to be sentenced on May 26, 2011.

“These significant sentences are appropriate penalties for Blyth and Phelps, who committed multiple felonies in conspiring to scam consumers with falsely labeled, cheaper fish substitutes from Asia and Africa,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Their fraudulent scheme artificially deflated the cost of wild-caught fish, and gave them an unacceptable economic advantage over law abiding fisherman.”

“These prosecutions and the sentences that were imposed today should send a clear message that instances of consumer fraud will not be tolerated and that this U.S. Attorney’s Office will continue to aggressively protect local seafood consumers and all components of the local seafood market and industry,” said Kenyen R. Brown, U.S. Attorney for the Southern District of Alabama.

Blyth, of Paradise Valley, Ariz., was the co-owner and president of two companies, Consolidated Seafood Enterprises Inc., located in Phoenix, and Reel Fish and Seafood, Inc., located in Pensacola, Fla., which traded in a variety of seafood products. Phelps, of Scottsdale, Ariz., co-owned Consolidated Seafood and Reel Fish and served as a vice president in both companies. John J. Popa of Pensacola, managed and co-owned Reel Fish with Blyth and Phelps and served as the company’s vice president.

The defendants used Consolidated Seafood to buy frozen fillets of a type of farm raised catfish from Vietnam within the genus Pangasius, called sutchi, that they knew had been imported into the U.S. and falsely declared as wild caught sole, in order to avoid anti-dumping duties that were owed on this product. Anti-dumping duties went into effect on frozen fillets of sutchi, basa and swai in Jan. 2003, after an investigation by the Department of Commerce established that this product was being sold in the United States at less than fair value and were therefore injuring domestic catfish producers. In all, the defendants conspired to falsely label and buy approximately 283,500 pounds of farm raised sutchi, which was imported without $145,625 of anti-dumping duties having been paid.

Some of the fish seized during the investigation tested positive for malachite green and Enrofloxin, both of which are prohibited from use in U.S. food. Malachite green is a chemical compound often used in overseas fish farming, and Enrofloxin is an antibiotic used in some foreign fish farming but for which there is zero tolerance by the FDA in food sold in the U.S. The defendants ultimately received 81,000 pounds of this illegally imported sutchi, and sold 34,100 pounds of it to Reel Fish, which in turn sold it to customers in Alabama, Florida and elsewhere.

The defendants changed the marking on this sutchi and other imported basa to grouper, and sold it to customers in Alabama, Florida and Mississippi as more desirable grouper, at a higher cost. The defendants sold over 100,000 pounds of this falsely labeled basa and sutchi to these customers.

Blyth and Phelps also were sentenced for buying over 25,000 pounds of Lake Victoria perch from Africa, mislabeling and selling this fish as grouper and snapper to customers in Alabama and Florida at a higher cost, and in greater quantities than if it had been accurately labeled.

The defendants also conspired to mislabel and create false labels for shrimp they sold to customers in these areas. The defendants, through Reel Fish, would repackage farm raised foreign shrimp as U.S. wild caught shrimp. The defendants would also falsely label the shrimp as being larger than they were. By falsely labeling the shrimp in these manners, the defendants were able to sell more and charge more for the shrimp that they sold.

The case was investigated by the National Oceanic and Atmospheric Administration, Office of Law Enforcement; the Department of Homeland Security, Immigration and Customs Enforcement; the U.S. Air Force Office of Special Investigations; the Department of Defense, Defense Criminal Investigative Service. The case was prosecuted by Wayne D. Hettenbach and Susan L. Park of the Environmental Crimes Section of the Department of Justice Environment and Natural Resources Division, and Deborah A. Griffin of the U.S. Attorney’s Office for the Southern District of Alabama.