Details of Dongwon lawsuit
South Korean based Dongwon Industries, owner of StarKist Inc., and StarKist Samoa cannery, has asked a federal court to dismiss a lawsuit, which alleges the company used “U.S. citizen straw-people” to fraudulently obtain U.S. fishing vessel documentation and tuna fishing licenses to fish in the exclusive economic zone (EEZ) of Pacific Island Nations for two vessels, that are actually Korean owned.
Details of the lawsuit are surfacing at a time that StarKist is in contention with Bumble Bee Foods and Chicken of the Sea for the lucrative school lunch tuna contract. StarKist claims Bumble Bee and Chicken of the Sea supporters are attempting to weaken the ‘Buy American’ provision that is part of the USDA School Lunch Program specifications. Currently StarKist is the only supplier of canned tuna for the school lunch program.
The lawsuit was originally filed, under seal, in November 2012 by Moore & Company, a Florida based law firm and included the U.S. government, as plaintiff.
Defendants in the suit include Dongwon, Majestic Blue Fisheries LLC, Pacific Breeze Fisheries LLC, Jayne Songmi Kim and her sister Joyce Jungmi Kim and their father Jaewoong Kim.
The two sisters listed as owning the two fisheries companies, i.e. fishing vessels, are the nieces of the Chairman of Dongwon Industries, Jae-Chul Kim, as Jaewoong Kim is his brother, according to Undercurrent News, a fishing industry publication.
Court documents note that Jaewoong Kim used to be an executive of the South Korean based Dongwon Industries.
According to the plaintiffs, the suit was brought before the federal court in Wilmington, Delaware pursuant to federal False Claims Act (FCA) to recover all damages, penalties and other remedies established by federal law.
Court records show the lawsuit was sealed until last May after the federal government declined to intervene, although it requests that Moore & Company maintain the suit in the name of the U.S. government, provided, however, that the “action may be dismissed only if the court and the [U.S.] Attorney General give written consent to the dismissal and their reasons for consenting."
The government says it reserves the right to order any deposition transcripts, to intervene in this action, for good cause, at a later date, and to seek the dismissal of the Moore & Company’s action or claim.
In it’s amended complaint filed Jan. 10 this year, the plaintiff claims that the suit arises from false and fraudulent statements made by defendants to the government for the purpose of obtaining U.S. vessel documentation and tuna fishing licenses for two Korean owned and operated purse seiner tuna fishing vessels.
The vessels, owned by the Kim sisters, who are both Korean born but later naturalized U.S. citizens, are registered in Delaware as limited liability corporations (LLC). The vessels — MV Majestic Blue and MV Pacific Breeze — operate out of Guam.
Plaintiffs allege the defendants “set up sham ownership structures using U.S. citizen straw-people, and fraudulently certified the vessels would be controlled by U.S. citizens. This fraudulent certification allowed defendants to obtain” U.S. certificates, which allowed them to obtain fishing licenses under the South Pacific Tuna Treaty (SPTT).
The SPTT establishes procedures to request licenses and establishes a system to allocate a limited number of licenses to the United States and other treaty nations to fish the waters of certain Pacific Island Nations, according to the lawsuit.
The suit explains in order to promote the U.S. fisheries industry, the federal government pays $18 million annually to the Foreign Fisheries Association (FFA) in return for a limited number of licenses which allow U.S. registered vessels to fish for tuna in the exclusive economic zones of certain Pacific Island Nations.
Plaintiffs claim that Majestic Blue and Pacific Breeze are actually owned by Dongwon, a South Korean company.
Moore & Company also alleges the complaint arises from defendants’ fraudulent concealment and intentional failure to report oil discharge and dumping at sea in order to conceal, avoid, or decrease the civil fines defendants would be subject to under the Act to Prevent Pollution from Ships (APPS).
Plaintiff’s original complaint was 31 pages while the amended one — which incorporates a lot of information and allegations from the first complaint — has a total of 50 pages.
In seeking to dismiss the complaint “with prejudice” (or forbidden from filing another lawsuit based on the same arguments), the defendants first pointed out that Moore & Company has represented a client for several years in an ongoing, related litigation against some of the defendants in the current action.
In June of 2010, the Majestic Blue sank in western Pacific waters with 24 people on board. The bodies of the captain and chief engineer were never found. A wrongful death lawsuit was then filed in October 2010 in Guam by the captain’s widow against Dongwon and Majestic Blue Fisheries, the defendants said in its 44 page reply filed last November.
Additionally, Moore & Company “instituted” the wrongful death suit, representing the captain’s widow.
After obtaining, through its representation, secondhand knowledge of purported information and allegations outlined in the complaint, Moore & Company now brings this action before the court claiming “it has information of fraud against the government”, the defense argued.
However, the defendants assert the lawsuit does not even profess to have any firsthand, inside information of fraud, but instead filed the suit based upon publicly available information and allegations and therefore the complaint should be dismissed under the FCA’s public disclosure bar.
Regarding Moore & Company’s allegations that the defendants set up a sham ownership structure to obtaining fishing licenses, the defendants argued that the fishing licenses “do not constitute money or property interests of the U.S. Government” as required under FCA.
Court records show the plaintiffs have until Feb. 11 to respond to the motion to dismiss the case.
Dongwon “believes the allegations made by the Moore law firm are meritless, and intends to vigorously defend itself in this matter, including seeking a full dismissal of the action”, according to a company statement carried by Undercurrent News.
See future edition of Samoa News for more details about the suit and response from the defendants filed in court.