Seafood mislabeling draws felony charges

Advocate photo by DERICK HINGLEDoRan Sea-Pak, of Independence, above, and Worldwide Shrimp Co., of Highland Park, Ill., face federal charges of allegedly mislabeling more than $100,000 worth of shrimp from November 2007 to December 2008. Shrimp from Mexico were falsely identified by the companies as products of the United States, according to federal bills of information.

The relationship between an Independence shrimp processor and an Illinois distributor soured long before the recent charges were filed against the two companies for mislabeling Mexican-caught shrimp as products of the United States, representatives of both companies said.

Owners of neither DoRan Sea-Pak, of Independence, nor Worldwide Shrimp Co., of Highland Park, Ill., would discuss the specific reasons for the fractured partnership Thursday, but as Worldwide co-owner Bill Appelbaum put it, “there’s definitely some bad blood there.”

U.S. Attorney Jim Letten filed bills of information against the businesses Tuesday, charging each with one count of violating the Lacey Act based on the mislabeling of more than $100,000 worth of shrimp between November 2007 and December 2008.

The felony charges, if proven, could cost the companies up to $500,000 each in fines.

But both parties said it’s unlikely to come to that.

Worldwide has entered a plea agreement in which the company would pay only $50,000, if the court approves the deal, Appelbaum said.

DoRan also agreed to a deal that would entail “a small fine,” owner Randy Pearce said, although he declined to state how much.

The agreement goes before the court for approval on June 6, he said.

Anna Christman, spokeswoman for Letten’s New Orleans office, said the government can neither confirm nor deny any plea agreements, but noted that the investigation is ongoing.

Pearce said Thursday the charges stem from a misreading of an exemption in federal labeling laws.

“We thought we had a processing exemption where we didn’t think it was a problem” to label the Mexican-caught shrimp as products of the United States, Pearce said.

State and federal fisheries authorities disagreed.

In June 2009, agents raided the Independence plant as part of a regional investigation into illegal repackaging of foreign shrimp as domestic product, investigators said at the time.

The agents went through computers and file cabinets, interviewed dozens of employees and seized questionable product, authorities said.

“Once the government came to our office and we laid it out on the table for them, they explained we weren’t doing it (labeling) to their standards,” Randy Pearce said.

The confusion about the exemption is not surprising, said Harlon Pearce Jr., Randy Pearce’s father and chairman of the Louisiana Seafood Promotion & Marketing Board.

The state-created board is charged with identifying and responding to threats to the state’s seafood industry.

The panel is currently working on traceability programs and the creation of “authentic Louisiana” and “authentic Gulf” logos to help consumers reliably identify seafood from the state or region, Harlon Pearce Jr. said.

The current labeling laws, and the processing exemption in particular, aren’t clear enough, he said.

“The exemption says if you process a product from another country — process it, as in change its form — you can label it as ‘Product of U.S.A.’ because it’s processed here,” Harlon Pearce Jr. said.

In this case, DoRan packaged and labeled Worldwide’s Mexican-caught shrimp as “Product of U.S.A.” because Worldwide insisted the exemption applied, he said.

Pearce said his son made a mistake in following Worldwide’s advice.

“But when he realized the exemption might not apply, he stopped processing shrimp for them and refused the Illinois company’s requests,” Harlon Pearce Jr. said.

Randy Pearce said DoRan’s refusal to continue mislabeling the shrimp was only partly to blame for the split.

“We really weren’t happy with their business tactics over time,” Randy Pearce said. “They tried to push the envelope and ride the line. It got to the point where we realized it was best not to go any further with that relationship.”

Appelbaum disputes that assessment.

“We stopped doing business with them for multiple reasons,” Appelbaum said. “But they’re going to throw stones right now, and we’re just going to sit back and stay quiet. The truth will come out eventually.”