October 31, 2008

Two Virginia residents found guilty of conspiracy involving the importation and sale of falsely labeled fish

WASHINGTON – Peter Xuong Lam, of Fairfax, Va., was found guilty late yesterday by a federal jury in Los Angeles of conspiring to import mislabeled fish in order to avoid federal import tariffs, the Justice Department announced. Lam also was found guilty on three counts of dealing in fish that he knew had been imported contrary to law. Arthur Yavelberg, of Reston, Va., a co-conspirator, also was found guilty of conspiracy to trade in misbranded food. This case was a result of an investigation by U.S. Immigration and Customs Enforcement (ICE) Washington field office.

"Mislabeling fish to dupe buyers and causing economic damage to American catfish farmers cannot be tolerated," said James A. Dinkins, Special Agent in Charge for ICE, Washington field office "This conviction highlights the outstanding work by ICE agents and our local and national partners to protect the economic interests of our country and the health and safety of its people."

According to evidence presented during the two week trial, two Virginia-based companies, Virginia Star Seafood Corp., of which Lam became president, and International Sea Products Corporation, illegally imported more than ten million pounds, or $15.5 million worth, of frozen fish fillets from Vietnamese companies Binh Dinh, Antesco and Anhaco between May 2004 and March 2005. These companies were affiliated with Cafatex, one of the largest producers in Vietnam of a fish called Pangasius hypophthalmus.

Although the fish imported by Virginia Star and International Sea Products was labeled and imported as sole, grouper, flounder, snakehead, channa and conger pike, a type of eel, DNA tests revealed that the frozen fish fillets were in fact Pangasius hypophthalmus. Pangasius hypophthalmus is a fish in the catfish family marketed under approved trade names including swai or striped pangasius.

An anti-dumping duty or tariff was placed on Pangasius hypophthalmus imports from Vietnam in January 2003, after a petition was filed by the catfish farmers of America. The petition alleged that this fish was being imported from Vietnam at less than fair market value. None of the species names the defendants used to label the imported fish were subject to any federal tariffs.

Further evidence presented at trial showed that Kich Nguyen, the head of the Vietnamese producer, Cafatex, imported the fish to his son, Henry Nguyen who oversaw Virginia Star, International Sea Products and a third company, Silver Seas, of which Yavelberg was titled president.

Lam then knowingly marketed and sold millions of dollars worth of the falsely labeled and illegally imported fish to seafood buyers in the United States as basa, a trade name for a more expensive type of Vietnamese catfish, Pangasius bocourti, and also as sole. All of the fish sold was invoiced to match the false labels that were still on the boxes. The jury convicted Yavelberg of marketing the fillets, without necessarily knowing they had been mislabeled.

Many of the purchasers knew, or in the exercise of due care should have known, that the fish they were purchasing at less than market value was falsely labeled. Henry Yip, T.P. Company, David Wong, True World Foods, Inc., David Chu, Dakon International, Du Sa Ngo, Southern Bay, Joseph Xie and Agar Supply all have entered guilty pleas related to their participation in these transactions. Sentencings in all but two of these cases remain pending.

Lam faces a statutory maximum of five years in jail and fines of up to $250,000 for each of the counts on which he was convicted. Yavelberg faces a statutory maximum of up to one year in prison and $100,000 fine. Sentencing is scheduled for Feb. 23, 2009.

To date, 12 individuals and companies, including Lam and Yavelberg, have been convicted for criminal offenses related to a scheme to avoid paying tariffs by falsely labeling fish for import and then selling it in the United States at below market price.

The case was also investigated by Special Agents of the National Oceanic and Atmospheric Administration Fisheries Office of Law Enforcement, and Food and Drug Administration's Office of Criminal Investigations.

-- ICE --

U.S. Immigration and Customs Enforcement (ICE) was established in March 2003 as the largest investigative arm of the Department of Homeland Security. ICE is comprised of five integrated divisions that form a 21st century law enforcement agency with broad responsibilities for a number of key homeland security priorities.

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