With undercover-agent ‘mobsters’ enlisting ‘The Codfather,’ can bags of cash be far behind?


page image

MA fishing-fleet magnate doing prison time after bragging up criminal operation to undercover agents

When a newspaper headline trumpets the “Codfather” and fake Russian mobsters, you know that stories about bags of cash and money-laundering schemes can’t be far behind.

A Washington Post feature story in late August detailed how Massachusetts “seafood kingpin” Carlos Rafael ensnared himself in a criminal scheme that included talk of laundering money for Russian mobsters, who were really undercover agents for two branches of the U.S. Government.

A longtime resident and local legend of New Bedford, MA, Rafael had worked his way from fish cutter to boat owner to millionaire fishing-fleet owner. He had made clear over the years his disdain for regulations and catch limits that hurt his bottom line. And he had had various runs-in with the law. But in 2015, according to the Post feature, he welcomed a visit from men he believed to be Russian mobsters seeking a deal to launder money and commit other crimes.

According to court records and recordings, Rafael expressed interest and promoted his business as an exceptional cover for money laundering.

The indictment against Rafael and co-conspirator Antonio M. Freitas details a massive effort to falsify catch records in order to take more than allowed of certain high-value species. And the indictment details allegations of the money laundering related to the proceeds from the falsified records.

The Post story describes how Rafael “volunteered to sell [the undercover agents posing as mobsters] the business for $175 million — a staggering sum considering that he had been telling the IRS that the company made only $3 million to $4 million a year, and that its total assets were worth around $21 million. To prove that it was worth that much, he pulled out a second set of ledgers, showing that he had made more than $600,000 in off-the-books cash in only six months.”

Rafael detailed to the undercover agents that his fishing vessels would catch whatever they wanted but self-report the catch as haddock, which was cheap and plentiful and only lightly regulated. Rafael used a New York broker to sell the actual and much more valuable catch at much higher prices than haddock.

The seafood broker paid Rafael with bags of cash, much of which Rafael smuggled to his native Portugal.

Unbeknownst to Rafael, the agents recorded his detailing of his criminal activities. The joint operation by the IRS and the National Oceanic and Atmospheric Association (NOAA) resulted in the arrest of Rafael in early 2016. He pleaded guilty to falsifying fishing records, tax evasion, and conspiracy. He also settled a lawsuit with NOAA in which he agreed to sell his fleet, not fish again, and pay a fine.


SURETY CDD for CDD/KYC Onboarding in AML Compliance

RegTech Platform powers super-charged solution for KYC/CDD

With AML Partners’ platform technology for RegTech, AML and GRC software solutions are easier, faster, and so much more efficient. Contact us today to learn how platform technology and our SURETY-CDD can transform the efficiency and effectiveness of your unique AML/KYC Compliance efforts. Contact us today to learn more or schedule a demo of SURETY-CDD or the RegTech Oneplatform. With extraordinary configurability and built for API extensibility, the RegTech One platform powers a range of AML/KYC tools but also CECL workflows, vendor management, cyber risk workflows, FCPA workflows, and so much more.