GLOUCESTER — The stunning arrest of New Bedford fishing mogul Carlos Rafael last Friday on federal conspiracy and fraud charges may have a Gloucester connection.

The affidavit submitted in support of the federal criminal complaint against Rafael and bookkeeper Debra Messier by Internal Revenue Service Special Agent Ronald Mullett, one of the undercover operatives involved in stinging Rafael, includes an oblique reference to Gloucester.

The reference takes place in a quote attributed to a New York man that federal investigators allege to be the wholesale buyer of Rafael’s illicit, off-the-books fish. The man initially is referred to only as “Michael,” but later in the affidavit also is called “Perretti.”

The reference, according to the 18-page document filed in U.S. District Court in Boston, occurs during a Jan. 20 meeting in a New York City restaurant between federal undercover agents — posing as prospective buyers of Rafael’s far-flung network of fishing businesses along the New Bedford waterfront — and the man referred to as “Michael.”

During the discussion, according to the affidavit, the talk turned to laundering money.

Gloucester talk

“During the meeting, the UCs (undercover agents) also told Perretti that they had cash on hand from an insurance fraud they perpetuated,” according to the affidavit. “Perretti explained that he could launder money from the UCs, suggesting he could reach out to individuals he used to charge 15 percent in the past.”

The undercover agents pressed Perretti on whether he could actually help them with laundering the cash.

“Perretti replied, ‘Yeah, I could do that. I can do that. I can move some of that.’” the affidavit stated. “When asked how much cash Perretti could ‘move,’ Perretti said, ‘I don’t know because I haven’t reached out for a long time for anybody so now...it’s always doable. I haven’t reached out to anybody. Like I said, I’m only using him (Rafael) and the other guy in Gloucester.”

It is unclear from the quote whether Perretti is referring to someone in Gloucester also involved in providing illicit fish to Perretti or someone potentially involved in money laundering. Or both.

The only other reference to Gloucester in the affidavit occurs in a description of Rafael’s business holdings.

“Rafael, who is a U.S. citizen born in Portugal and now living in New Bedford, Massachusetts, owns over 40 fishing vessels ported in New Bedford and Gloucester, Massachusetts,” the affidavit stated.

A spokeswoman for the U.S. Attorney’s Office in Boston did not immediately respond Monday to an interview request for a clarification of who the “other guy in Gloucester” is mentioned in the affidavit, or whether the U.S. Attorney expects to make more arrests in the case.

Feds describe scam

Rafael, the 64-year-old sole owner of Carlos Seafood, is being held without bail after federal authorities charged him and Messier with conspiracy and submitting falsified records related to the volume and species of Rafael’s reported groundfish landings. Messier has been released on a $10,000 bond.

According to the affidavit and information from the U.S. Attorney’s office, Rafael admitted to undercover agents that he has been operating an intricate scam that circumvented the established system of observer and inspection coverage in an end-run designed to help him exceed his quota limits on more lucrative groundfish species.

The scam relied upon his vessels catching “certain species of fish subject to strict federal quotas” and then falsifying “federally-mandated forms to misrepresent that catch as other species subject to more lenient quotas,” according to the affidavit.

“As to the catch itself, Rafael sells it for cash to a wholesaler in New York City, transporting the fish to New York by truck on a daily basis,” the affidavit stated.

In the affidavit, Rafael is quoted as boasting to the undercover operatives that he cleared roughly $668,000 in a three-month period from what he came to call “the dance” of misrepresenting and selling the illicit fish.

Rafael also allegedly talked openly of his strategies for smuggling large amounts of cash out of the country to Portugal — through Boston’s Logan Airport and with the assistance of an unidentified law enforcement officer.

Fuel for monitor debate

The arrest has sent shock waves through the Massachusetts and New England fishing communities. Rafael, a member who serves on the board of directors for the Gloucester-based Northeast Seafood Coalition, has emerged as one of the largest single fishing stakeholders along the East Coast with his extensive holdings of groundfish vessels, scallopers, a warehouse and the other elements of Carlos Seafood.

“We’re upset,” Gloucester Mayor Sefatia Romeo Theken said Monday of the arrest and charges. “But we’re going to hold our heads up and keep going forward as we have been doing. Our fishermen here haven’t done anything wrong. In every industry, there’s always going to be someone who goes off on their own and does something. That’s the only way I can look at this.”

Rafael’s arrest also comes at a time when the necessity, scope, efficiency and funding of the National Oceanic and Atmospheric Administration’s at-sea monitoring program (ASM) for the Northeast multi-species groundfish fishery is under hot debate, fueled by two lawsuits that challenge the program’s current state and NOAA Fisheries’ plan to transfer responsibility for paying for ASM to the fishing permit holders as of today.

In New Hampshire, Hampton fisherman David Goethel and the South Dartmouth-based Northeast Fishing Sector 13 are suing the Commerce Department, NOAA and officials within those federal agencies to block the transfer of funding responsibility — estimated at about $710 per day per vessel — to the fishing industry.

In Washington, D.C., Oceana has sued Commerce Secretary Penny Pritzker, NOAA and NOAA Fisheries, challenging NOAA’s current bycatch rule and charging that the current ASM is woefully inadequate, with “loopholes that would guarantee that observer coverage will never meet its performance standards, ultimately failing to fix current insufficient low levels of monitoring in the region.”

Contact Sean Horgan at 978-675-2714, or shorgan@gloucestertimes.com. Follow him on Twitter at @SeanGDT.

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