Caviar scheme nets record fine of $10.4 million

Maryland importer doctored documents, falsely labeled tins

Fake deceived grocers

July 22, 2000|By Gail Gibson | Gail Gibson,SUN STAFF

A Maryland caviar importer who used a far-reaching smuggling scheme to skirt conservation laws agreed yesterday to pay a $10.4 million criminal fine, the biggest ever in a federal wildlife case.

The fine against the company, U.S. Caviar and Caviar Ltd., was part of a plea bargain entered yesterday in U.S. District Court in Greenbelt. Three company officials will also get jail sentences for smuggling thousands of pounds of Russian sturgeon roe worth millions of dollars into the United States.

Federal prosecutors described a scheme of smuggling and product switching that violated "virtually every" import law regarding caviar. And court papers painted an ugly picture of how the glamorous appetizer, as synonymous with the good life as champagne and cigars, reached store shelves and first-class airline cabins.

Prosecutors said that between 1995 and 1999, U.S. Caviar smuggled black market Russian roe to the United States through the United Arab Emirates, where the company pasted forged Russian labels on the tins to make them look like legally exported caviar. The defendants also bought import permits that had been obtained by others through bribery and by supplying prostitutes to foreign officials.

In the United States, the Rockville-based company sometimes substituted tiny black eggs from the domestic American paddlefish and shovelnose sturgeon in tins purporting to hold authentic Russian caviar.

U.S. Caviar then sold the smuggled or fake Russian caviar to buyers such as American Airlines and upscale grocers Sutton Place Gourmet and Fresh Fields, "who had no idea they weren't buying a legitimate product," said Assistant U.S. Attorney Richard A. Udell.

The company, its president, secretary and main trading partner in the United Arab Emirates were indicted in November on a range of federal charges, including mail fraud and customs violations. They also were charged with violating sturgeon conservation laws that require importers to prove the caviar was legally harvested overseas.

Under yesterday's plea agreement, company president Hossein Lolavar, 46, of Bethesda, will spend 41 months in prison. His brother-in-law and lead supplier, Ken Noroozi, 43, of Silver Spring, will spend 15 months in prison, and U.S. Caviar secretary Faye Briggs, 53, also of Silver Spring, will spend 21 months in prison.

Noroozi - who operated Kenfood Trading, based in the United Arab Emirates - and Briggs also agreed to cooperate with ongoing federal investigations of the U.S. caviar market.

U.S. District Judge Alexander Williams Jr. accepted the plea agreement and scheduled formal sentencing for Dec. 12. The three defendants and their attorneys declined to comment.

The case marked the first large-scale caviar fraud investigation in the Baltimore area, said Thomas J. Healy, senior resident agent in the U.S. Fish and Wildlife Service's Baltimore office. Healy said he was pleased with the terms of the plea bargain, which "sends a strong message to the industry."

The investigation of U.S. Caviar started in 1998 at the Baltimore-Washington International Airport, one of 13 designated U.S. ports where caviar is inspected to make sure it meets import and conservation restrictions.

Fish and Wildlife officers at the airport raised questions after they noticed labels on the U.S. Caviar tins peeling off. Traditional Russian caviar labels are printed on the tin. Investigators sent the caviar for DNA tests, which were inconsistent with the company's import declarations, court papers say.

To further disguise the smuggling scheme, U.S. Caviar had submitted fake Russian health certificates and submitted false invoices to avoid import duties on some 18,000 pounds of Caspian Sea sturgeon caviar shipped into the United States from the United Arab Emirates, court papers show.

When suspected black market shipments were stopped in Maryland, the defendants then smuggled a separate shipment of about 415 pounds of caviar through Miami, using false names for the buyers and shippers.

What reached the United States wasn't always in pristine condition. In one case, court papers said, Noroozi bought some 7 tons of caviar smuggled out of Russia in suitcases without refrigeration. Court papers say the caviar shipped to the United States "frequently came in used, rusted and dented tins." It was transported to Maryland "unrefrigerated, frequently of poor quality and showed signs of being subject to temperature abuse."

But the black market roe could still bring high prices on America's gourmet market. In all, Fish and Wildlife officers seized five smuggled caviar shipments of more than 3,800 pounds, with a market value estimated between $1.5 million and $2.5 million.

It was not clear yesterday whether the now-closed U.S. Caviar could afford to pay the $10.4 million fine. Assistant U.S. Attorney W. Warren Hamel said the money would go to a special fund designed to help enforce environmental laws.

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