Lawsuit alleges fraud, demands $2 billion fine for seafood giant Cooke Inc.

A U.S. subsidiary of Cooke Inc., one of the world’s largest seafood conglomerates, could face fines of up to $2 billion after government watchdogs filed a lawsuit alleging that the company has violated foreign ownership laws for at least seven years. 

Cooke Inc., a Canadian-based seafood giant, has a large presence in the U.S. fishing industry, including on the Port of New Bedford. 

The plaintiffs, both of whom have worked for conservation groups that target the commercial fishing industry, described violations of foreign ownership limits as a widespread but routinely unenforced issue in the industry — and allege that Cooke is among the most brazen examples. The case could set a precedent for the government to step up lax enforcement of these laws aimed at fending off foreign exploitation of national resources. 

Cooke has harvesting and processing operations spanning 15 countries and operates dozens of boats and processing plants. It is owned by the family of Canadian billionaire Glenn Cooke, who said in an interview this year the company’s annual revenues exceed $4 billion. 

The lawsuit focuses on Cooke’s Virginia-based subsidiary, Omega Protein, which harvests menhaden, an important forage fish, for processing fish-oil supplements, fish meal, animal feed and other commercial products. The subsidiary Omega alone owns 37 fishing vessels each over 100 feet in length, 48 smaller vessels, 27 spotter aircrafts, three processing plants and a shipyard, according to the complaint. 

The lawsuit lays out allegations that Cooke concocted an elaborate corporate shell-game to circumvent the American Fisheries Act when acquiring Omega Protein. The 1998 law restricts foreign entities from controlling more than 25% of a vessel fishing in U.S. waters. When Cooke acquired Omega in 2017, the lawsuit alleges that Cooke circumvented the law by transferring the Omega vessels to a shell corporation owned 80% by Seth Dunlop, who is a nephew of Glenn Cooke and a U.S. citizen, as well as other family members. It alleges: “Dunlop is just a figurehead; Cooke and Omega retained control.” 

“Each Defendant knew that the plan was for Seth Dunlop and Gregory Dunlop to be figureheads that would cede de facto control over the shell and the Omega Vessels to Cooke and Omega,” the plaintiffs wrote. 

It further alleges that, in order to obtain government approval to operate the fishing vessels, Cooke leadership submitted fraudulent documentation to the Coast Guard and other regulatory agencies charged with enforcing the American Fisheries Act. It also claims Cooke leadership “bragged to potential investors” about the scheme in order to reassure the investors of the business plan. The $500 million Omega acquisition was financed by BMO Capital and Norwegian bank DNB. 

“As a result of their fraudulent scheme, Defendants have illegally harvested from the United States waters many millions of dollars’ worth of fish to which they are not entitled,” the lawsuit states. 

Violations of these rules carry a statutory penalty of $154,000 per vessel, per day of fishing in U.S. waters, according to the lawsuit. If the court rules against Cooke, the total penalty will likely exceed several hundred million dollars and could exceed $2 billion, the plaintiffs asserted. 

“Cooke has no comment except that it denies any and all allegations of wrongdoing in the recently filed lawsuit,” Claire Ryan, Cooke’s director of public relations, wrote in a statement to The Light. 

In recent years, Cooke has “embarked on an aggressive plan for growth,” according to the lawsuit. Since 2015, it has acquired multiple other U.S. fishing companies in addition to Omega. That includes Wanchese Fish Company, a southern scallop fleet that often offloads in New Bedford, and Mariner Seafood, now known as True North Seafood, a salmon import and processing company that shut down its New Bedford plants this year amid labor turmoil. The company also recently partnered with Cassie Canastra, director of operations for BASE Seafood, to acquire two scallop and groundfish vessels from Quinn Fisheries. 

The lawsuit was first filed in New York’s Southern District Court in 2021 and unsealed last month. It was brought by Chris Manthey and W. Benson Chiles, two professional investigators with a background working for conservation groups targeting the commercial fishing industry. The two sued Omega Protein in 2010, before it was owned by Cooke, alleging that several fish oil supplements exceeded the state limits for PCBs. Chiles and Manthey reached a settlement with the company. 

Manthey and Chiles are now suing Omega on behalf of the U.S. government, which they claim has been defrauded by Cooke’s alleged scheme. Under the False Claims Act, private parties can file actions alleging the defendants defrauded the federal government. The suit remained under seal as the Justice Department reviewed the allegations. The agency recently decided not to join as a party to the complaint, but it did not dismiss the case from proceeding. 

The menhaden fishery is a politically charged fishery and often the focal point of tensions between recreational fisherman and the commercial fishing industry. Menhaden are sometimes called “the most important fish in the sea” due to their role in the ocean food-chain for recreationally targeted species like striped bass. By tonnage, menhaden are also the second largest commercial fishery in U.S. waters. The lawsuit describes the fishery as a duopoly, in which “Omega is the dominant player.” 

Plaintiffs in the case described Cooke’s allegedly fraudulent scheme as a longstanding “open secret” in the industry. 

Legal experts say that violations of foreign ownership restrictions are common but rarely investigated or penalized. Though the lawsuit places blame on Cooke for submitting fraudulent information to obtain federal permitting, some say the blame should also be put on the government regulatory agencies that have failed to enforce their own rules. 

The Light previously published an investigation of Blue Harvest Fisheries, which found that it was ultimately owned by one family of Dutch billionaires, raising questions about its compliance with the American Fisheries Act. The investigation also found that the Coast Guard lacks the resources to vet businesses’ paperwork and as a result relies on companies’ own assurances that they are in compliance. Blue Harvest declared bankruptcy last year and its assets were dissolved in court. 

“There should be more transparency in ownership. But there isn’t. It’s basically an honor system,” Charlie Papavizas, a Washington, D.C., attorney specializing in maritime law, told the Light. “As a result, there is a big gray area in what is permissible.”

In addition to the lofty fines, the plaintiffs are demanding that the government revoke Omega’s fishery endorsements. Now that the lawsuit has been unsealed, Cooke has 60 days to file a response to the initial complaint with the court.

“Support for this lawsuit will demonstrate to the courts, the fishing industry, and the public, that the U.S. will not tolerate illegal foreign exploitation of our nation’s valuable public natural resources,” they wrote. “Prosecuting Cooke and its conspirators to the fullest extent of the law, and fining them billions of dollars, will serve as an important deterrent to future foreign prospectors and establish a key precedent for law enforcement.” 

Email reporter Will Sennott at [email protected].

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