Features

The Gloucester Fish War


(Corrects fishing location off Newfoundland in 8th paragraph.)

The bidding starts early at the seafood auction in Gloucester, Mass. Each day about 30 tons of fish—mostly cod, haddock, and flounder—come in by boat on Cape Ann, a fist jutting into the Atlantic Ocean. Fishermen motor up to the concrete docks behind the beige-and-white warehouse, then wait while workers in rubber boots hoist their catches and weigh them out on a stainless-steel digital scale. At 4 a.m. grocery store buyers, restaurant owners, and distributors file in to inspect and bid on the haul.

The traders and graders were wrapping up their business just after 9 a.m. on Dec. 7, 2006, when 16 federal agents in Crown Victorias and Ford Expeditions pulled into the parking lot. They entered the building in pairs. Although most of them worked for National Oceanic and Atmospheric Administration, they wore bulletproof vests and carried Glock pistols, according to interviews with participants and the NOAA investigative report.

They were looking for the auction’s founder and chief executive officer, a mustached man named Larry Ciulla. When they found him in an office off the auction floor, they officially informed him of their search warrant. They suspected he had illegally bought and sold cod, one of the world’s most valuable, most threatened, and closely watched stocks of fish. The agents were there to seize the auction’s last three years of records and had rented a U-Haul for the mountain of evidence they intended to truck away. In raiding the Gloucester Seafood Display Auction, the largest fish dealer on the Gulf of Maine, which extends from Cape Cod up to the southern tip of Nova Scotia, they hoped to send a message to the fishermen of Gloucester: Overfishing doesn’t pay.

Within minutes the feds herded everyone—longtime auction employees, Central American dockworkers, and three generations of Ciullas—to the auction floor, a high-ceilinged room with rows of folding desks outfitted with laptops. Drivers loading trucks with frosty cod, haddock, and flounder were told to turn off their engines. Restrooms were off-limits for fear papers would get flushed down toilets. While some agents went looking for records, others stood guard at the docks.

The auction’s curly-haired bookkeeper, Nina Jarvis, was printing invoices from the morning’s sales to Whole Foods Market (WFM) and other buyers when two agents strode in. They asked whether any records were kept offsite. “I’m not saying anything,” she replied, according to the NOAA investigation report. The agents hunted under the stairs and in rooms around the auction floor before discovering that an entire year, 2004, was missing. “We need to see those records,” they demanded of Ciulla. Eventually they found them at a nearby self-storage facility and loaded 38 boxes into their truck.

All day the agents checked in with their boss, Andy Cohen, the man responsible for policing NOAA’s northeastern fisheries. Cohen was at a fish farming conference in Connecticut, but even from a distance he sensed that things might not work out the way he had hoped. Several local politicians had shown up at the auction house. The Ciullas’ friends were bringing the family sandwiches. The Gloucester mayor sent a veteran police detective to watch over the feds. A representative from Democratic U.S. Representative John Tierney’s office had stopped by for half an hour.

Cohen knew that fishing was the business of Gloucester, but the next five years would reveal just how powerful the industry could be. The battle between Cohen and Ciulla had begun many years earlier and would end this past summer with NOAA’s enforcement powers severely compromised and with Cohen out of a job. Starting that day in Gloucester, much would be revealed about the balance between the world’s fisheries and the businesses that harvest them. “I don’t think the fishing industry is ever going to be the same,” says Cohen.

 

At the time of the raid, cod, haddock, flounder, and other groundfish, which are all caught by dragging a net along the ocean bed, were being harvested so heavily that the stock was in danger of collapsing, as it seems to have in the much larger Grand Banks off Newfoundland. Dennis M. King, an economist at the University of Maryland, estimated that 12 percent to 24 percent of the total trawl catch in the Northeast was illegal. One-third of the fishermen King surveyed in 2007 believed that illegal fishing was “significant enough to reduce long-term economic returns from fishing.” The Gloucester community had its share of habitual offenders, but the low likelihood of getting caught made it more tempting for otherwise honest fishermen struggling to profit from depleted stocks. “There’s a fine line when it comes to breaking the law,” says Jack Lakeman, whose family has owned and fished from dozens of boats over the years. “You’re trying to make a living.”

Gloucester, founded in 1623, is the nation’s oldest fishing port. Small family-owned boats catch lobster, scallops, and the occasional shark, but mostly they trawl for cod, a species with flaky white flesh that fed humanity for millennia and was once the most important industry in Massachusetts. Globally, the cod harvest peaked in 1968, when bottom trawlers gathered up 3.9 million metric tons. Gloucester’s fishermen saw their fortunes crest in 1981 with a catch of about 81 million pounds of groundfish. By the spring of 1992 they were returning to port with their hulls three-quarters empty. Cod stocks had dropped to less than 5 percent of their historic levels, and Canada completely shut down fishing on much of the Georges Bank, 62 miles off the coast.

With a catch worth $56 million per year, Gloucester is second only to New Bedford, Mass., in the Northeast. Just as the cod fishery collapse has become a textbook example of the limits to the ocean’s bounty, success in rebuilding it through effective law enforcement could make it a model for a world trying to solve the overfishing crisis.

From his office in Gloucester, Andy Cohen oversaw an industry he considered self-destructively lax. “Our focus was about protecting the resource for the industry,” he says. “We were after people who steal from their competitors.” Cohen, now 55, had grown up in Rockaway in Queens, N.Y., and worked as a park ranger in the West before joining the fisheries agency in Seattle in 1987. He once went undercover during a month-long organized crime sting, buying $1.3 million worth of illegal salmon on the high seas from a Taiwanese fleet. The bust ended with a chase across the North Pacific. After moving to Gloucester in 1998, Cohen fished, too, from his kayak, and enjoyed diving for lobsters in the summer.

His skill in handling complex cases led to his promotion to special agent in charge of the Northeast in 2002. Among his first moves, Cohen converted his regulatory officers into investigative agents, getting them a fleet of unmarked vehicles and sending them off for training in analytical techniques, such as detecting fraud, and criminal-investigative strategies such as wiretaps and warrants.

Cohen also worked closely with Charles R. Juliand, a fisherman-turned-government attorney who donned a beret for work every day and whose determination to stop overfishing seemed to equal Cohen’s. He scribbled sarcastic notes on his case files about fishermen’s lame apologies and legal defenses, and he wrote, often in unprintable terms, about “whacking” violators with hefty fines.

In the first years the two worked together, Juliand litigated a precedent-setting case against a scalloper named Larry Yacubian, who was accused of fishing in closed waters. The case was the first to use satellite technology to track the position of fishing boats. Yacubian settled with the agency for $430,000, a loss that forced him to sell his boat and home. It was a major coup for NOAA and was supposed to mark the beginning of a new, more accountable fishing industry. “They have gotten some of the most sophisticated cases with some of the highest sentences I have seen in wildlife crime cases,” says Elinor Colbourn, a U.S. attorney in the Justice Dept.’s environmental crimes section.

 

Larry Ciulla, 53, had grown up in an imposing Victorian house with a commanding view of Gloucester Harbor. He was a thrill seeker and the envy of the town, buying a Corvette, taking flying lessons, and risking life and limb in the greasy pole competition each June at the St. Peter’s Fiesta in Gloucester. He married the former Ms. Massachusetts Petite America and became a spectacle when he and his then-ex-wife sued the Gloucester Police Dept. and the city, alleging that she had been illegally strip-searched. A federal judge awarded them nothing, noting that the suit was “founded on lies.” In 1997 Ciulla secured $3 million in loans from the state and city to build an auction house on the waterfront. His sister opened Captain Carlo’s, an adjoining restaurant named after their grandfather. Some of the Ciullas’ competitors closed up shop; others bought from them.

The tighter regulations particularly stung the Ciullas, who had cornered Gloucester’s groundfish trade. The family had grown wealthy running a company called Star Fisheries, offloading vessels, filleting fish, and brokering deals with sellers for more than three decades. They thrived on volume and were always looking for more cod. And fishermen were always desperate to sell their overages.

So began a series of incidents that would culminate in the raid on the auction. In July 2000 a boat called Gloria Jean slipped into the Gloucester Auction’s docks under the cover of night and, according to an NOAA investigation report, unloaded three times the federal limit on codfish. Two fishermen and an auction employee reported some of Gloria Jean’s catch as coming from a rotting boat that had been tied to the auction’s docks. Later, according to the investigation report, they expanded this approach to include other broken-down boats. The fishermen told investigators that Ciulla was aware of the scheme and that he warned them when the “federal guys” showed up. Ciulla, who was interviewed for this story in May, could not be reached for comment on this matter.

Ciulla ultimately accepted responsibility for purchasing 20,691 pounds of illegal cod, settling with the government for $80,000 while denying direct involvement. Five months later a pair of state officers inspected the auction’s refrigerated display room around lunchtime. They noticed five totes stuffed with codfish from the Karoline Marie. Although a yellow label on the totes said they contained 500 pounds—the legal limit—the officers, along with one of Cohen’s agents, weighed them again on the auction’s digital scale and determined that they contained 575 pounds. The captain settled with NOAA, but Ciulla vowed to fight his own case.

When Juliand scoured the auction’s weekly reports, he found it remarkable that out of 395 cod landings recorded that month, 289 were exactly 500 pounds. “What is possible—in fact, assuredly so—is that [the auction] ‘fudged’ the numbers,” he wrote in a legal response.

The first judge who handled the case found in favor of Ciulla in 2006, agreeing that mistakes could be made in the process of handling such a large volume of fish. “Did we celebrate? Heck, no,” says Ciulla. “If we had lost, we’d be out of business, but we also had a feeling, collectively, that there were going to be repercussions.”

He was right. With just 30 investigators handling all fishing from North Carolina to the Canadian border, Cohen had managed to make the Northeast one of the best-policed fisheries regions in the country. His office was handling more than 100 cases per year with fines worth as much as $1 million, more than twice as much as any other region.

Even as Cohen tightened the screws on lawbreakers, he realized that not all the rules were really working. “Frankly, some of the regulations are wacky,” he says. “They are very convoluted, they are constantly changing, and sometimes they don’t make a lot of sense.” By 2006 tensions between Cohen and Ciulla were growing. Cohen’s agents popped into the auction, measuring fish lengths down to the quarter-inch and taking part in a multi-agency training drill called Operation Blitz. Some agents felt Ciulla was not always cooperative in handing over records. For his part, Ciulla felt like he was being unfairly targeted and was living in a “police state.” He launched a counteroffensive, orchestrating a meeting between Tierney, the congressman whose district includes Cape Ann, and Cohen’s boss outside Washington, Dale Jones. The meeting fell through, however.

The dramatic showdown at the auction netted less than Cohen had hoped for. Evidence turned up in the auction’s records showed that while several boats had been overfishing, others had been flagged only because of an error by one of Cohen’s rookie agents. On Feb. 13, 2009, NOAA fined Ciulla $355,200 for a string of minor violations. Several months later, in the midst of the auction’s busiest season, it ordered a temporary shutdown over the lingering probation violation from Ciulla’s earlier cases.

By 2009 the town was in open rebellion. That October, fishermen marched on NOAA’s Gloucester headquarters, a sparkling modern glass cube, and erected a float showing Jane Lubchenco, the chief of NOAA, lynching two fishermen in yellow-and-orange rain jackets. At Lubchenco’s urging, regulators had voted to implement catch shares for groundfish, a kind of cap-and-trade system for fishing. Gloucester fishermen felt the program would make it even harder for small boats to eke out a living.

Their anger was also directed at Andy Cohen. The local newspaper was squarely in the corner of the fishermen. Richard Gaines, a reporter with the Gloucester Daily Times, had been printing a stream of articles that lambasted NOAA enforcement and later questioned whether Cohen had improperly used his government-issued cell phone as his contact for an EBay (EBAY) auction. “You can run, but you can’t hide,” Gaines wrote to Cohen in an e-mail.

Ciulla’s former lawyer, Ann-Margaret Ferrante, was now a Massachusetts state representative, and she played a political card. At the urging of Ferrante and her statehouse colleagues, Tierney and four other members of the Massachusetts congressional delegation, including Senators Edward M. Kennedy and John Kerry, drafted a letter to Lubchenco demanding an investigation into Cohen’s office. “There is the appearance among fishermen that the federal government is being heavy-handed,” they wrote. “The current level of mistrust between the industry and [NOAA] is now at an all-time high.”

 

On Mar. 2, 2010, inside Gloucester’s red-brick city hall, Dale Jones, Cohen’s boss, sat crossing and recrossing his hands as the congressmen grilled him about two reports from the Commerce Dept.’s Inspector General. The reports described overzealous enforcement in Cohen’s office, stiff penalties from Chuck Juliand’s office, and lax accounting practices in a slush fund obtained from fishermen’s fines and used to pay for equipment and travel. It was a stinging public rebuke. Representative Dennis Kucinich (D-Ohio), then chairman of the House Oversight and Government Reform Committee’s subcommittee on domestic policy, asked Jones whether specific individuals would be disciplined over the reports. “You repeatedly say you’ve looked at it, you’ve studied it, but do you get it?” Kucinich barked at Jones. At another point in the hearing, the congressman wanted to know what Jones really thought of fishermen, asking him whether he thought fishermen were “criminals.”

Cohen says NOAA offered little support to him or his team. Jones was suspended after it emerged that he had shredded documents during the investigation and was then reassigned to NOAA’s science office. Juliand was reassigned from his enforcement role, in part because of the much-repeated allegation that he called Ciulla a “lying piece of s— scumbag.”

As seems to have been the intention, the called-for investigation successfully diminished NOAA’s will to regulate. Cohen retired in late August as word spread that NOAA’s leaders would be shifting law enforcement’s emphasis from investigators back to uniformed officers. “Had I stayed another month,” he says now, “somebody would have found a reason to help me along.”

While the scrutiny of NOAA’s inner workings has led to some positive reforms, such as clarifying the penalty schedule and improving record-keeping, there is no evidence that the agency was plagued with corruption. No agents were enriched, and the most significant problems that the Inspector General’s report identified were with the regulations themselves. Cohen was never a fan of the penalty slush fund, but Congress had explicitly chosen not to allocate funds to meet the agents’ needs.

Kurt Blanchard, deputy chief of law enforcement for the Rhode Island Environmental Management Dept., who has worked on joint operations with Cohen, says Cohen was the consummate professional. Matt Tinning, executive director of the Marine Fish Conservation Network, points out that the number of complaints from fishermen that had any merit was “comparatively small.” King, the economist, says the findings of the Inspector General were misconstrued and blown out of proportion, and he says the industry needs more, not less, enforcement. “This was political theater driven by a handful of fishermen,” he says. In 2010 the fisheries agency prosecuted just nine cases in the Northeast, down from 120 in 2008 and 82 in 2009.

 

For a time, Larry Ciulla, the former bad boy, became a local hero. The regulators “were trying to make a showpiece out of him, and he was trouble,” the fisherman Lakeman said in May of this year. “He really helped this town.” Ciulla’s success in dismantling NOAA’s enforcement helped other fishermen as well. On May 17 a retired federal judge appointed to review penalties in 31 cases handled by Cohen’s office ordered the return of $649,527 to 11 fishermen. The scallop fisherman Yacubian is slated to get back $400,000 he paid in 2005. And Ciulla no longer has to pay an $85,000 agreement he made to settle a trio of cases that dated back a decade. The “auction was clearly the target of selective enforcement and subject to excessive fines,” the judge wrote.

If politicians and the local media painted Ciulla as the face of an honest businessman battered by overzealous regulators, the situation behind the scenes was more complex. Fishermen were never really sure whether Ciulla and the Gloucester auction had worked in their favor or against it. In September of this year, Eric Hesse, captain of the Tenacious II, along with another fisherman filed a lawsuit against Ciulla in federal court, demanding $1 million for breach of contract and deceptive business practices over six years. After the lawsuit was filed, more fishermen came forward and reported discrepancies between the market price and what they were paid by Ciulla, which could add up to millions of dollars per year. On Oct. 4, Hesse’s lawyer—a partner in the firm that once represented Ciulla—brought a class action against the auction, adding two named defendants and alleging the auction violated the Racketeer Influenced and Corrupt Organizations (RICO) Act. The auction filed for bankruptcy the same day.

Paul Muniz, who currently represents Ciulla, calls the suit baseless. “I have known Ciulla for years now, and as far as I knew all he did is work on behalf of the fishermen, fought a hard battle, and I am not sure why they are turning around to sue them.” The company now running the auction, Cape Ann Seafood Exchange, established on July 20, lists a longtime tenant as president and is managed by the same employees. The Ciullas still own the building, but bookkeeper Nina Jarvis, who recently answered the phone at the Exchange, says she does not have current contact information for Ciulla.

Cohen now consults for several organizations on conservation and enforcement issues; he spent three weeks in Haiti this year with an aid organization. While he feels vindicated by the recent lawsuit against Ciulla, in some ways he’s put that battle behind him. ”I’m not going to be a criminal investigator anymore,” he says, “but I’m not gonna give up the fight.”

Gloucester may have won its war against Cohen, but it continues to grumble over catch shares. Mayor Carolyn Kirk argues that they threaten fishing communities and undermine cultural values. That’s true, to a degree: There has been some consolidation in the industry. Yet the problem is the same as it always was. There are only so many fish in the sea.

The first year of the program, however, seems to have reduced overfishing: The fisheries service was able to raise the 2011 catch limit on Georges Bank cod by 20 percent. When all 20 groundfish stocks are rebuilt, landings are expected to be four and a half times their present level, according to Sarah P. Robinson, a legal anthropologist and lawyer who has studied Gloucester fisheries. Catch shares have been adopted in 15 U.S. fisheries, including snapper in the Gulf of Mexico, and NOAA hopes to introduce them in 10 more. Rosy long-term forecasts don’t seem to matter in Gloucester: In 2010 the mayor joined a lawsuit intended to shut catch shares down. After a judge rejected her challenge in late June 2011, Tierney vowed to look into a legislative fix.

When the Gloucester auction changed hands earlier this fall, the Gloucester Daily Times ran an editorial on the Ciullas’ legacy. It ended with this: “Thanks, Larry and family, for having the courage to truly make a difference.”

Borrell is a Bloomberg Businessweek contributor.

Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • WFM
    (Whole Foods Market Inc)
    • $36.95 USD
    • -0.38
    • -1.04%
  • EBAY
    (eBay Inc)
    • $52.9 USD
    • -0.33
    • -0.62%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus