We're not 'sinister': Menhaden fish processers want lawsuit dismissed

As it said it would, Cooke Inc. has asked a judge to dismiss a lawsuit filed in a federal district court that claims the seafood company is defrauding the U.S. in the operation of the last East Coast menhaden processing facility.

Menhaden are a critically important filter-feeding baitfish in the ocean and estuaries along the East Coast, including here in New Jersey, where they are fed on by whales, birds and economically valuable finfish. While the menhaden are not overfished, the stock has contracted, frequently leading to dust-ups between environmental groups and harvesters over the quota.

Known colloquially as pogies and bunker, menhaden fish kills have occasionally caused a stink at the Jersey Shore.

The Canadian-based outfit said in its motion to dismiss that the two private citizens who brought the case against them are trying to make them appear "sinister."

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"From the moment we became aware of this case, we have been eager to show that the allegations are inaccurate. Our legal filing underscores several key misstatements from the complaint and offers concrete evidence that they are false," Cooke Inc. said in a prepared statement to the press. "We look forward to the court process and further opportunities to prove that the allegations are baseless."

The two private U.S. citizens, W. Benson Chiles from Atlantic Highlands and Chris Manthey from New York City, allege that Cooke Inc. is violating the American Fisheries Act or AFA, which prohibits foreign citizens from having "de facto" control over any vessel that engages in commercial fishing in United States waters.

The two filed a False Claims Act lawsuit claiming that Cooke Inc. acquired Omega Protein in December 2017 using a shell company in Delaware to mask foreign ownership of Omega Protein, which operates the lone menhaden reduction business left on the East Coast out of Reedville, Virginia.

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Ocean Harvesters, which the plaintiffs contend is one of the subsidies acquired by Cooke, uses spotter planes to find the fish on the coast, including here off New Jersey, and relay their locations to the captains of purse seine boats who then circle the fish with nets, cinch them closed and haul the menhaden out of the ocean.

They then sell the menhaden to Omega Protein, which then processes the menhaden, called reduction, turning them into fertilizer, as well as fishmeal and fish oil supplements consumed by people, pets, farm-raised animals and fish.

Ocean Harvesters is one of the subsidies listed as a defendant in the lawsuit.

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Chiles is involved in fishery management and Manthey owns a private investigation company, The two filed a False Claims Act, which deputizes private citizens to sue on behalf of the United States. The lawsuit was filed in 2021 but kept under seal until this past April. Filing-under-seal exists to give the government time to investigate the alleged fraud, determine whether it's already investigating it, and decide whether it will prosecute the suit itself, without the knowledge off the defendant, in this case Cooke Inc.

The government can also have the case dismissed if it believes it is meritless or frivolous or simply allow the plaintiffs to pursue it alone. In this case, the Department of Justice opted not to pursue the case nor have it dismissed.

The two contend that Cooke Inc. is committing figurehead fraud, to exploit a natural resource they aren't entitled to under federal law. According to the lawsuit, to get around the citizenship requirement of the AFA, Cooke Inc. created a shell company in Delaware and placed a figurehead in control of it who is a U.S. citizen but also the nephew of Cooke Inc.'s CEO.

As such they suing on behalf of the U.S to recoup penalties for violating the AFA, which could add up to millions they contend.

Cooke denied that allegations.

"Every step of this arrangement was expressly approved by the Maritime Administration ('MARAD'), which conducted a thorough pre-transaction review in 2017 to confirm compliance with the AFA’s citizenship requirements," according to Cooke Inc's motion to dismiss.

"Although (the plaintiffs) try very hard to make this simple sequence of events — the sale of the fleet, the acquisition of the land-based assets, and the approval by MARAD — seem sinister, the reality is far more mundane. The net result of the transaction, which is a U.S. citizen-owned fleet entering into an agreement to sell its catch to a foreign-owned processor, is expressly permitted under federal law," Cooke Inc. argued in its motion to dismiss filed this month before the July 9 deadline.

The case is being handled in U.S. District Court in Manhattan.

When Jersey Shore native Dan Radel is not reporting the news, you can find him in a college classroom where he is a history professor. Reach him @danielradelapp; 732-643-4072; dradel@gannettnj.com.

This article originally appeared on Asbury Park Press: We're not 'sinister': Menhaden fish processers want lawsuit dismissed