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Forensic Accounting &
Seafood Investigations
“THE PAPER CHASE”
Special Agent Sara M. Block, NOAA-OLE, United States
OBJECTIVES
• Discuss the role of forensic accounting
within seafood investigations and a
forensic accountant’s skills
• Discuss the importance of computer
forensic accounting evidence
• Gain an understanding of how
accounting and business records
flow with the movement of illegal
product, “The Paper Chase”
What is “Forensic Accounting”?
“The use of intelligence-gathering
techniques and accounting/business
skills to develop information and
opinion for use by attorneys involved
in … litigation and give trial
testimony if called upon.”
(D. Larry Crumbley, Lester E. Heitger, G. Stevenson Smith , Forensic and
Investigative Accounting, 3rd edition (CCH 2007), p 13-1.)
Forensic Accountant’s Skills
Ability to identify fraudulent schemes
Identification of financial issues
Knowledge of investigative techniques
Knowledge of evidence
Interpretation of financial information
Presentation of findings
Investigative mentality to prove intent
Interviewing skills
(D. Larry Crumbley, Lester E. Heitger, G. Stevenson Smith , Forensic and Investigative
Accounting, 3rd edition (CCH 2007), p 13-2.)
What is “Computer Forensics”?
“the analysis of electronic data and
residual data for the purposes of its
recover, legal preservation,
authentication, reconstruction, and
presentation to solve or aid in
solving technology-based crimes.”
(D. Larry Crumbley, Lester E. Heitger, G. Stevenson Smith , Forensic and
Investigative Accounting, 3rd edition (CCH 2007), p 13-2.)
Where to find electronic evidence-
thumb drive external drive
work OR personal
cellular telephone
computer
networked pager digital camera
PDA computer
Business
TRANSACTION
occurs
Business
DOCUMENT
prepared
Entry
recorded in
JOURNAL
Entry
posted to
LEDGER
SOURCE DOCUMENTS
Printed or written forms that are
generated when a business enters
into a business transaction
• Sales ticket
• Seller’s invoice
• Cash register tape listing sales for the day
• Bank deposit slip
• Customer’s checks, received for payment
• Bill of Lading
• Government required form for purchases from fishing
vessel/imports
------------------------------------------------------
What documents exist to this point?
Import Documents
•Grand Jury Subpoena to broker
•Search Warrant
•Pick Up and Delivery
Order - Broker
•Trucking
records
Freezer Warehouse Records
•Receiving Reports •Release Order Requests
Downstream Purchasers
Documents
Lot History Transfer/Release
Order Request
ACCOUNTING RECORDS
CONTAINER INSPECTION
CONTAINER
NUMBER
These numbers are also
found on the Bills of
Lading and should be
verified
SEAL NUMBER
Physical Inspection/Sampling
TAKE SAMPLES IF
NECESSARY
CONTAINERS MAY INCLUDE
DIFFERENT PRODUCT. FIND WHAT
YOU’RE INTERESTED IN
SEND SEAFOOD SAMPLES TO
FORENSIC LAB FOR ID
INTERVIEWS
SAMPLES
TEST RESULTS
Putting it all in a
Spreadsheet
Proving that the Subject had “Knowledge
and Intent” is the difference between a
Felony and Misdemeanor
Finding “Knowledge” evidence
should always be your goal when
searching documents, e-mails,
computer files or when you are
conducting interviews !
Illegal Product in Codes Falsely Labeled Fish to Knowledge e -mails
= Knowledge Disguise = Intent can hurt them
CASE EXAMPLE
Fulton Market, New York, New York, United States
FULTON FISH MARKET, NEW YORK
Fish Tickets
Stapled to Fish Boxes
-Front label indicates
destination.
-Back lists fisherman,
species and quantity
Fish Tickets
Fulton Market Queuing Sheet
-Shipping Co. name What it tells us:
and license plate
Date and time truck
recorded by New
queued up for market
York Dept. of
delivery. From order
Business Services
number can retrieve
the Shipper’s Manifest
from NY DBS.
Shipper’s Manifest
-Truck driver is What it tells us:
required to present
to Department of How many boxes went
Business Services to the dealers listed
at Fulton Market
Market Fish Tickets
What it tells us:
Receipt from
dealer to Corresponds to
fisherman fish box tickets,
addressing trucker’s
money owed manifest, and
subsequent
checks/payment,
and future sales
Sales Tickets, 3-Ply/Carbon Copy
Document sales to What it tells us:
individuals. Three
Actual weight and
ply so every party
price. Species may
receives a copy -
be mislabled.
dealer, salesman,
Should correspond
consumer
to weekly
statements,
checks/payment
received,
accounting records,
subsequent sales by
the buyer
Sales Receipt
What it tells us:
Documents
actual exchange Should correspond
of goods and to a check,
payment. trucking manifests,
Sales Invoice, and
subsequent sales of
product
Sales Invoice
Document lists What it tells us:
items sold by
dealer True weight,
species, price,
date of delivery
Weekly Statement
Document used to What it tells us:
bill customers for True species, weight,
the week’s price of the actual
purchases product, and date of
delivery
PRESENTATION FOR PROSECUTOR
•PERTINENT INVESTIGATIVE INFORMATION
•EASY TO UNDERSTAND SUMMARY
•VARIOUS FORMATS
SPREADSHEET SUMMARY
BAR CHARTS
PIE CHARTS
GRAPHIC FLOW CHART
Spreadsheet Example
Positive Investigative Results
Where
Forensic Accounting
Skills
Were Utilized
Smuggling of Undersized Lobster Tails
Lobster
Meat
Labeled as “Carne Cacho,” or
Lobster Head Meat
Nicaraguan law prohibits the
export of lobster tail meat
beginning in June 2000
Markings on the Master Boxes
Codes
The 135 cases of lobster tails are suspiciously marked as 6-9 ounce
“J” or 10 oz “H”
Nicaraguan Law is minimum 5 oz tail / 13.5 cm
Therefore all lobster tails weighing 2 oz, 3 oz, or 4 oz are illegal.
Crab Smuggling Investigation
Russian Sentenced to Seven Years in Prison for
Smuggling Crabs from Russia into the U.S.
In July 2000, two Russian fishing vessels conducted an unlawful transshipment of
crabs within the United States’ EEZ off of Alaska, offloaded the crabs in Canada and
then traveled to Seattle, Washington.
NOAA OLE SA Samuels obtained an administrative search warrant for the vessels
in Seattle, WA and the warrant was executed by NOAA OLE and multiple federal
agencies. The evidence from the search warrant led OLE agents to the discovery of a
multi-million dollar smuggling operation, managed via satellite telephone and
electronic communication by Alexei Kozlov (a Russian citizen who lived in Seattle,
WA), in which over 6,600,000 pounds of crabs, valued over $30,000,000.00, were
illegally harvested in Russia and then smuggled into the United States and Japan.
NOAA OLE agents worked in partnership with their Russian counterparts on the
joint-investigation and in July 2005, Alexei Kozlov was convicted of multiple
violations in Russia (illegal harvest of crabs, smuggling, bribery, organized crime, tax
evasion and money laundering) and was sentenced to serve seven years in Russian
prison – in addition to the two years he had already served in Russian custody while
awaiting trial.
The McNabb Lobster Investigation
B.
Deceptive Codes
A.
Example of Investigative Issues/Problems that
Law Enforcement Encounters in the Illegal
Trade of Lobster Tails
Falsely Labeled Exporting
and Importing Documents
(includes the use of deceptive
lobster size classification
codes, changing country of
origin “on paper”, and
incorrect species
identification).
Conspirators Often Utilized Codes to Mislabel
Undersized Tails to Thwart Law Enforcement
Investigation Reveals the Distribution of McNab’s Lobster in U.S.
CARIBBEAN CLIPPER
David Henson Mcnab
DOB 1/17/52
Horizon Seafood SEAMERICA
Abner J. Schoenwetter Robert Blandford
DOB 2/14/46 DOB 4/22/45
Honduran Wife (Maria Ebanks) 589-40-6630
American Ex-Im
Diane H. Huang
DOB 4/11/65
418-31-1319
T & W Seafood Carlos Seafood ABU Fisheries B & R Freezers Christion Salvenson Q & F, Inc. Texas Pack, Inc. T & W Seafood
Diane Huidan Huang Carlos Berdeal Francisco "Peck" Bastida Cold Storage Cold Storage (Cold Storage) Port Isabel, TX Diane Huidan Huang
DOB 4/11/65 Lillian Berdeal DOB 10/28/48 Seacaucus, NJ Mobile, AL Bayou La Batre, AL DOB 4/11/65
418-31-1319 Miami, FL Miami, FL 418-31-1319
aka 22,000 lbs Flamingo Seafood NVN, Inc. 27,880 lbs, 417 bags Unknown Disposition of Unknown Disposition of
Seized by NMFS Seamerica pays freight Remaining Lobster Remaining Lobster
SeaDeli, Inc Jorge J. Pujol Cold Storage
2/4/99 c/o Amer Ex-Im 4,438 lbs, 70 bags 4,438 lbs, 70 bags
Dan Qin, Director DOB 5/22/54 Seacaucus, NJ
7/23/98 6/18/98 6/18/98
Processes for ABU
20,040 lbs, 304 bags Unknown Disposition of 2,126 lbs, 33 bags 15,580 lbs, 312 bags
Seamerica pays freight Remaining Lobster storage for Amer Ex-Im "customer Seamerica"
American Export-Import 30,000 lbs 11,419 lbs, 168 bags
Signed for by C. Berdeal 4,438 lbs, 70 bags Amer Ex-Im paid freight Seamerica paid freight
Seized by NMFS Seamerica pays freight
Parent Company 12/30/98 6/18/98 5/5-6/98 9/27/97
2/4/99 8/13/98
NY, CA, NJ based
Raymond & Jane Chao
Unknown Disposition of
Remaining Lobster Unknown Disposition of
33,169 lbs, 459 bags Unknown Disposition of
4,438 lbs, 70 bags Remaining Lobster
ABU pays freight to Remaining Lobster
30,000 lbs 6/18/98 50, 077 lbs
Flamingo Seafood 4,438 lbs, 70 bags
Seized by NMFS 9/27/97
12/30/98 6/18/98
2/4/99
Unknown Disposition of 30,392 lbs, 490 bags
11,350 lbs Remaining Lobster Seamerica paid freight
Seamerica pays freight 4,438 lbs, 70 bags 9/27/97
9 vats, marked "A" 6/18/98
12/9/98
Unknown Disposition of
Unknown Disposition of Remaining Lobster
Remaining Lobster 50, 077 lbs
27,750 lbs 9/27/97
12/9/98
4,764 lbs, 71 bags
4 vats marked "A"
to Amer Ex-Im c/o Seadeli
11/16/98
Unknown Disposition of
Remaining Lobster
4,438 lbs, 70 bags
6/18/98
McNab’s Money Laundering Scheme
Source: IRS
International Investigation Revealed:
- McNab’s Freighter Made 40 Voyages to Alabama that Contained Illegal Lobster
- McNab and U.S. Conspirators Smuggled 1.6 Million pounds of Illegal Lobster
- The Unprocessed Lobster Sent to U.S. was Never Reported to Honduran Officials
- The Value of the Illegal Lobster Exceeded $ 17.6 Million (U.S. Dollars)
- McNab and the U.S. Importer were Involved In a Money Laundering Scheme
-The Defendants Had Knowledge that the Shipments Contained Undersized
Lobster Tails and Profited from Their Sale
Defendant’s Criminal Sentences:
Robert Blandford:
• 97 Months Jail
• $ 15,000 Fine
Abner Schoenwetter:
• 97 Months Jail
• $ 15,000 Fine
David H. McNab: Diane Huang:
• 97 Months in U.S. Jail • 24 Months Jail
• $ 100,000 Fine • $10,000 Fine
•$ 1,000,000 Forfeiture Assessment
THANK YOU
