With the Carlos Rafael sentenced to nearly four years in prison, what will become of his fleet and coveted groundfish permits?
In the now-notorious 2013 profile of Carlos Rafael by Vice — the one in which he describes New Bedford, Mass., fishing operations smaller than his own as “mosquitoes on the balls of an elephant” — his business is equated to the American Dream.
The article paints a picture of Rafael as a by-the-bootstraps immigrant who was built for life in this country, a man with the business know-how to climb the commercial fishing industry ladder and create his own empire with ease.
Rafael is said to be “perpetually at war with someone,” whether that be federal regulators, other fishermen or environmentalists, and he talks as if everyone is out to get him. He tells of a four-month stint in jail for federal tax evasion in the ’80s, a failed attempt to hook him on price-fixing in the mid-90s and other battles with regulators over the years.
“That’ll be a fight to the death. I’ll have them doing somersaults up there,” he said. “They’re fucking with the wrong guy because when I’m right, I’m right. I don’t fuck around.”
Little did he know, just under three years later he’d be arrested by undercover federal agents who had discovered an elaborate scheme to skirt fishing quotas and evade taxes.
The Codfather gets caught
In January 2015, Rafael announced he was looking to cash out of his business and retire.
Just five months later, undercover IRS agents met with Rafael posing as Russian mobsters interested in buying his fleet. When agents questioned the high price tag on the business, Rafael let loose the details of his illegal system in which he falsified his landings reports, entering high-value, low-quota species as more abundant species, like haddock, before selling them in private markets.
On Feb. 26, 2016, federal agents arrested Rafael in a raid on Carlos Seafood on South Front Street in New Bedford.
In May 2016 he was indicted on 27 counts, including conspiracy, falsifying federal records and bulk cash smuggling. After a whirlwind of trial delays, Rafael pled guilty in March 2017.
“I am not proud of the things I did that brought me here, but admitting them is the right thing to do, and I am prepared to accept the consequences of my actions,” he said before he appeared in the U.S. District Court in Boston.
In September, Rafael was sentenced to 46 months in prison, including a three-year probation period and a $200,000 fine.
Before his sentencing, Rafael’s lawyer read a statement from him describing his crimes as “the stupidest thing I ever did.”
“I just hope whatever I get doesn’t hurt the people on the waterfront,” Rafael wrote. “They don’t deserve that.”
Though Judge William Young reduced the punitive damages in the case, he made it clear that his decision was a result of federal sentencing guidelines, not a lack of responsibility for the actions.
“This was not stupid. This was corrupt. This was a corrupt course of action from start to finish,” Young said to Rafael. It was “designed to benefit you. To line your pockets. That’s what it was, and that’s why the court has sentenced you as it has.”
Unsurprisingly, Rafael’s statement was not met with universal forgiveness.
“The fact that he didn’t read his statement himself is telling. The judge didn’t buy it. No one is buying it,” said Patrick Shepard, a fourth-generation Maine commercial fisherman and manager of the Northeast Coastal Communities Sector. “He’s a self-described pirate, and he’s said multiple times that it’s NMFS’ job to catch him. Well, we caught him. And only now is he apologizing?”
Rafael’s long history in the New Bedford industry has secured him some sympathy in town. Not all fishermen see him as a generous leader, though few testified against him.
“There was a fear of boats being sunk, boats being lit on fire, family members being harassed,” said Brett Tolley, a community organizer with the Northwest Atlantic Marine Alliance, who had a list of volunteers set to issue victim statements before the trial. “One by one, fishermen backed out in fear of retaliation. It wasn’t much of a surprise though. The pressure was understandably too much.”
Since Rafael pleaded guilty earlier this year, the debate over what should become of the boats and permits used in his illegal operations has been in full swing.
The prosecution in Rafael’s criminal case sought the forfeiture of 13 vessels and 13 groundfish permits used in the crimes. In early October, Young ordered Rafael to surrender “all right, title and interest” to four boats and their attached 34 permits, of which only four were groundfish permits: the 75-foot Bulldog and its eight permits, the 71-foot Olivia & Rafaela and its 11 permits, the 75-foot Lady Patricia and its four permits and the Southern Crusader II and its 11 permits. Only four of these permits are for groundfish. The reported value of these assets is reportedly $2.6 million.
What will become of these forfeited assets is now up to NMFS. In September, NOAA Regional Administrator John K. Bullard said NOAA would not make a decision on what to do with forfeited assets until Young’s final ruling. At press time, NMFS had not issued a statement.
Industry stakeholders are divided roughly into two camps on this issue: Some want all of Rafael’s assets to remain in New Bedford and continue to support the top-value port in the country, while others see this as an opportunity to redistribute the permits and put and end to permit hoarding. There is no cap on ownership of groundfish quota under the New England system, despite requests at the council level to address the oversight.
“Removing Mr. Rafael’s permits from New Bedford would do needless, immense damage not only to hundreds of responsible, law-abiding New Bedford fishermen, but also to the economy of New Bedford at large,” wrote Sen. Elizabeth Warren (D-Mass.) in a letter to NMFS director Chris Oliver. “Mr. Rafael’s business accounts directly for three-quarters of the value of New Bedford’s groundfish, which are necessary to diversify the port’s fishing industry — as well as tens of millions of dollars in investments in the city of New Bedford and the livelihoods of hundreds of New Bedford fishermen.”
“It’s a fairly complicated intersection of federal forfeiture law and fisheries regulations, both of which are very arcane,” said New Bedford Mayor John Mitchell. “But the premise behind all of this is, if the permits leave New Bedford, then innocent third parties may be harmed.”
Mitchell has laid out a scenario in which the city is granted ownership of the permits, which they would then distribute to local fishermen through a created permit bank.
Rafael’s fleet reportedly employs about 300 workers.
But other regional stakeholders don’t agree that New Bedford should be retain access to the permits just because Rafael based his business there.
“I have sympathy for the fishermen captaining Carlos’ boats, but what they don’t realize is that Carlos’ way of doing business and the policies he helped set in place have displaced so many fishermen elsewhere,” said Tolley.
NAMA and other organizations have been outspoken in the months leading up to Rafael’s sentencing about the role they believe the catch-share system and the privatization of fishing rights played in his rise to power.
“I feel like the way catch shares and related polices work is it creates a pie, and there are now winners and losers in the fishery,” said Tolley. “A small minority can control the majority of quota, and the majority of fishermen are fighting for scraps.”
“We’ve seen it played out in a variety of ways,” he added. “Community vs. community, gear type vs. gear type, different fisheries fighting over disaster relief — and it’s a result of failed policy.”
In the Northeast Coastal Communities Sector’s victim statement, the organization called for the forfeiture of Rafael’s entire fleet, related fishing businesses and a ban from fishing forever.
Shepard says one of the biggest costs to fishermen in his sector is quota leasing.
“The fact that we have to rent paper fish from someone not fishing is asinine,” he said. “The fact that someone owns a portion of a public resource and gets paid to lease that out to fishermen … how is that legal or fair?”
These organizations believe the permits should be somehow distributed to fishermen who have missed out on the fishery since catch shares became law and are looking for a way to get their foot back in the door, avoiding the permits being piled up again with an established operation.
Soon after his sentencing, however, it was made public that Rafael has entered a memorandum of agreement with Richard and Ray Canastra, owners of the Whaling City Seafood Display Auction in New Bedford, who intend to purchase his entire fleet of 28 boats and 42 permits for $93 million.
“We know boats. We know the business. We’re doing this to keep this in New Bedford,” said Richard Canastra in an interview with WBSM, a New Bedford radio station. “My plan is to get out, hopefully, in 10 years when things lighten up and it can be sold properly instead of this fire sale where people want everything for nothing.”
Canastra attributed the motivation to pursue Rafael’s permits to altruism, to keep the assets in New Bedford.
“From my understanding, whatever line Carlos wanted them to walk, they walked,” said Tolley, adding that Rafael’s boats caught the majority of fish coming across their auction.
The sale of the fleet, including the forfeited assets, would have to be approved by NMFS.
“They’re in the spotlight right now,” said Shepard. “They’ve been doing nothing since he pled guilty, but there’s a chance here to start to make things right.”
While the reign of the Codfather is over, the industry believes there’s much policy work to be done in order to avoid a similar kingpin figure taking control of the groundfish industry.
“A lot of people think if you get rid of Carlos it’s going to be all roses and butterflies,” said Shepard. “But there will always be a spot for another Carlos within the catch-share system. The stage is already set for the Codfather II unless serious changes are made.”