Investigators' Reports

Two Companies Caught in Fish Fraud Case

by Carol Lewis

For mislabeling fish to get off the hook from FDA-required testing, two major Miami seafood importers were fined $650,000. In the largest case of fraudulent representation of seafood the U.S. Customs Service has ever investigated, Fresh Cargo Handling Co. Inc. and its parent company, Kenbourne International Inc., tried to pass off more than $6 million in swordfish from Uruguay as whitefish to evade FDA's mandatory methyl mercury testing requirements.

Because of health risks associated with methyl mercury in swordfish, federal law requires that all imported swordfish be automatically detained upon entry into the United States unless one of two conditions has been met: An FDA-approved shipper is the importer, or the importer has provided independent laboratory results demonstrating that the swordfish is within the FDA-established tolerance for methyl mercury.

In a judgment handed down last July in the U.S. District Court for the Southern District of Florida, the two companies were fined and placed on four years' probation. On behalf of the two companies, president Carlos Sanchez pleaded guilty in June 1999 to charges of mislabeling and misrepresenting swordfish to import officials. He admitted that the ruse was an attempt to avoid methyl mercury testing to save the cost of the testing and to get the company's product on the market faster than its competition.

"Although no reports of injury were received as a result of Kenbourne and Fresh Cargo actions," says Chuck Boyd, a special agent with FDA's Office of Criminal Investigations (OCI), "there was a very clear warning message sent to the seafood industry by the judge in this case."

The U.S. Customs Service alerted FDA's Orlando, Fla., district office in late 1994 to 47 unclaimed cases of seafood at Orlando International Airport. Fearing the product might be decomposed, FDA officials forwarded a sample of the fish to its Southeast regional laboratory, where it was determined that what was declared as whitefish was actually mako shark.

The laboratory's findings prompted follow-up by an investigator with FDA's Miami resident post. He discovered that a portion of the shipper's airway bill for the unclaimed fish matched the lot number assigned by Fresh Cargo. By reviewing company records, the investigator also learned that Fresh Cargo had not sold or distributed any whitefish between April 1994 and December 1994. This suggested that the company's intent was to misrepresent its product.

In response to the investigator's findings, OCI became involved by reconstructing both companies' importations, sales and purchase activities for the next year. OCI seized company business and banking records and interviewed Fresh Cargo and Kenbourne customers about previous purchases. None of their customers had purchased whitefish from Kenbourne or Fresh Cargo.

In February 1996, a former Kenbourne/Fresh Cargo employee who had resigned his position two years earlier agreed to cooperate with the investigation by providing further details of the intended scam. Testimony by other current and former company employees also strengthened the case.

In April 1998, a newly assigned prosecutor met with OCI and U.S. Customs special agents, defense counsel for Kenbourne and Fresh Cargo, and the former U.S. Attorney for the Southern District of Florida. After the new prosecutor described the merit of the evidence against both companies, the prosecutor struck an agreement between Kenbourne and Fresh Cargo and the government, and on April 30, 1999, a two-count criminal information was filed against the two companies.

On the day of sentencing, U.S. District Judge Frederico A. Moreno ordered both companies to immediately pay $250,000, with the remaining $400,000 to be paid in equal increments six months and 12 months following sentencing. In addition, the companies were fined a special assessment fee totaling $800.

Carol Lewis is a staff writer for FDA Consumer

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