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Phillip R. Carawan pleaded guilty before U.S. Magistrate Judge Robert B. Jones Jr. in New Bern. Sentencing will take place in January 2020

Columbia seafood processor admits selling falsely labelled foreign crabmeat

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Friday, August 16, 2019, 01:40 (GMT + 9)

A Columbia seafood businessman pleaded guilty in federal court in New Bern, North Carolina, on charges that his company, Capt. Neill’s Seafood Inc., at his direction, falsely labeled millions of dollars’ worth of foreign crabmeat as “Product of USA.”

According to information in the public record, Phillip R. Carawan of Columbia, North Carolina, was the owner, President and Chief Executive Officer of Capt. Neill’s Seafood Inc., a North Carolina company engaged in the business of purchasing, processing, packaging, transporting and selling seafood and seafood products, including crabmeat from domestically harvested blue crab.

Carawan pleaded guilty to a one-count information charging him and Capt. Neill’s with substituting foreign crabmeat for domestic blue crab and, as part of the plea, Carawan admitted to falsely labeling more than 179,872 pounds of crabmeat with a retail market value of USD 4,082,841.  The falsely labeled crabmeat was then sold primarily to wholesale membership clubs, but also to other retailers.  Charges have also been filed against Capt. Neill’s and a hearing is set for Sept. 11, 2019.

As part of his guilty plea, Carawan admitted that he and his company could not and did not process sufficient quantities of domestic blue crab to meet customer demands.  To make up the shortfall, Carawan and his company used foreign crabmeat to fulfill customer orders.  During the periods when the company did not have a sufficient supply of domestic crab, Carawan and Capt. Neill’s purchased crabmeat (not live crabs) from South America and Asia.



Carawan further admitted that beginning at least as early as 2012, and continuing through June 16, 2015, he directed company employees to repack foreign crabmeat into containers labeled “Product of USA,” which Capt. Neill’s then sold to customers as jumbo domestically harvested blue crab.

As part of the plea agreements entered into by Carawan and Capt. Neill’s, restitution will be made to persons whom the government confirmed purchased Capt. Neill’s jumbo crabmeat between 2012 and June 16, 2015.  

“Today’s plea helps to ensure that American fishermen and consumers are not defrauded,” said Assistant Attorney General Jeffrey Bossert Clark for the Justice Department’s Environment and Natural Resources Division.  “We are proud to partner with the U.S. Attorney’s Office and NOAA in bringing this case.”

“Seafood mislabeling is consumer fraud that undermines efforts of hardworking, honest fisherman and the free market by devaluing the price of domestic seafood,” said Acting U.S. Attorney G. Norman Acker III for the Eastern District of North Carolina.  “In this case, the fraudulent scheme artificially deflated the cost of domestic blue crab and gave Carawan an unacceptable economic advantage over law-abiding competitors.”

“Seafood fraud and mislabeling can affect the economic value of our domestic fisheries,” said Logan Gregory, Deputy Director of NOAA's Office of Law Enforcement.  “Our office is committed to investigating these crimes to help ensure the economic value and sustainability of our fisheries.”

This case was part of an ongoing effort by NOAA’s Office of Law Enforcement, in coordination with the Food and Drug Administration and the Department of Justice to detect, deter and prosecute those engaged in the false labeling of crabmeat.

The plea took place before U.S. Magistrate Judge Robert B. Jones Jr. in New Bern.  Sentencing will take place in January 2020 before U.S. District Court Judge Louise W. Flanagan.  The maximum sentence for falsely labeling crabmeat is five years in prison and a fine of up to twice the gross gain of the offense, which in this case, is USD 8,165,682.00


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