Loss of ‘Codfather’ permits could hurt New Bedford

Carlos Rafael, seen here in 2014, was convicted on federal charges that he cheated fishing regulations to boost his profits. John Sladewski/Standard Times/AP/File

NEW BEDFORD — By late morning just before Easter weekend, three fishing vessels lined up at the docks to unload their catch, and they all belonged to one man — the local mogul known as the “Codfather,” Carlos Rafael.

“It’s a good haul,” a passing auction worker at the Whaling City Seafood Display Auction said under her breath, as crew members, some still in their orange waterproof bibs, unloaded the ice-packed fish.

For decades, Rafael’s fleet of some 40 vessels has been a staple of this city’s fishing industry, a sight as common as the seal that patrols the docks.

But now, Rafael’s recent conviction on federal charges that he cheated fishing regulations to boost his profits is putting his many vessels and permits up for grabs — potentially distributing them to ports along the New England coast. That would deliver an economic blow to New Bedford and the people who depend on the business created by Rafael’s fleet.

Rafael, 65, whose nickname given by locals derives from his brash business style, is expected to be sentenced in June to about four years in prison. Local officials are urging the federal government to keep the permits in New Bedford, home to the country’s most valuable fishing port and one of the last true ports on the East Coast.

The port brings in $369 million in seafood each year, not including the economic benefit it provides to supporting industry. Rafael himself invested $29.9 million in the local industry from 2012 to 2015, and employed 285 fishermen in 2015, according to an economic analysis by Daniel Georgianna, chancellor professor emeritus at the Departments of Economics and Fisheries Oceanography at the University of Massachusetts Dartmouth.

Every commercial fisherman needs a permit that allows them to catch a certain amount of fish, known as a quota. Though it’s not publicly known how many permits Rafael owns, it’s widely believed that he controls a quarter of the quota allotted by the government for groundfishing in New England, which covers species such as cod, grey sole, and haddock.

If his permits are seized as expected, the National Oceanic and Atmospheric Administration, the regulatory agency known as NOAA, could reissue the permits to fishermen elsewhere in the region.

“There are a lot more innocent people who could get punished by this,” said Jim Kendall, a former fisherman who runs New Bedford Seafood Consulting.

The anxiety over the potential loss of the permits has locals lobbying the US Department of Justice and NOAA to allow the permits to stay in New Bedford, saying they are the lifeblood of not only fishermen, but the fuel suppliers, the people who make nets, those who sell fishing equipment, the welders who fix the vessels, even the restaurant owners who serve seafood for dinner.

“They belong here,” said Virginia Martins, who runs Bay Fuels Inc., a diesel fuel supplier on the waterfront, who said Rafael’s fleet accounts for 70 percent of her business. “Not in Maine, or Gloucester. This is all we have, is our waterfront. This is our livelihood, this is what we live for.”

Tor Bendiksen, whose family-run business, Reidar’s Manufacturing, is one of the last in the region that makes nets for groundfish boats, known as draggers, said the loss of the permits would be devastating.

“They’re creating a collapse that’s not necessary,” he said.

Rafael, who remains free until his sentencing, would not comment for this story, but said in a previous statement released by his lawyer that he hopes to “protect our employees and all of the people and businesses who rely on our companies.”

Officials with the Justice Department and NOAA also would not comment.

Mayor Jon Mitchell, a former federal prosecutor, said he has communicated to the Justice Department and NOAA the city’s concerns about a ripple effect on the local economy, and that there are ways to keep the permits in New Bedford.

The mayor said federal authorities could let Rafael sell his permits to a company or person of his choosing, and then seize the profits.

In a separate scenario, the mayor said, the city could establish a permit “bank” at the New Bedford Harbor Development Commission, the city’s port authority, and lease the permits to local fishermen.

According to court records, the Justice Department plans to seize 13 of Rafael’s vessels and the attached permits under forfeiture laws because those vessels were used in his crimes. Mitchell said, however, that NOAA could decide to seize all of Rafael’s fishing permits.

“It’s a fairly complicated intersection of federal forfeiture law and fisheries regulations, both of which are very arcane,” the mayor said. “But the premise behind all of this is, if the permits leave New Bedford, then innocent third parties may be harmed.”

Others from within the regional fishing industry say the permits should be returned to a general pool and redistributed equally throughout New England, saying Rafael was able to manipulate a faulty permit process and stockpile permits, which allowed him to gain power at the expense of smaller fishermen and enabled him to commit his crimes.

“The impact of Carlos’s business and the consolidation of his [fishing permits] has affected fishing families and the fishing industry throughout New England; it’s not just a New Bedford issue,” said Brett Tolley, a community organizer with the Northwest Atlantic Marine Alliance in Gloucester.

Fisherman Richard Drost grabbed onto a fish caught on a boat owned by Carlos Rafael at Whaling City Seafood Display Auction.Jessica Rinaldi/Globe Staff/Globe Staff

The process is complex, and the rules were reworked in 2010 to create a “catch shares” system. What that means, generally, is that fishermen with a permit are entitled to catch a share of a total quota of fish allowed to be caught, which is set by NOAA. The size of each fisherman’s share is based on their average haul during about a 10-year period before the new system went into effect.

The system applies only to permits for groundfish, which includes 17 species.

The system “provided us with fewer options, and allowed those with more control to put profits over people, and that’s how we’ve seen this play out with Mr. Rafael,” Tolley said.

But others say that Rafael and the city should not be punished for a flawed system, saying fishermen throughout the Northeast were forced to expand their operations in order to survive.

“The regulatory process created that. It forces you to get bigger or get out,” said John Reardon, general manager at Hercules, a fishing gear supply company on the waterfront.

The groundfish industry is only a shell of what it once was, he and others said. There are 1,333 permits for groundfish in the Atlantic region, compared with 1,887 in 2000, according to NOAA.

And today, groundfish only make up about 7 percent of all of New Bedford’s landings, or seafood brought into the port, compared with 29 percent in 1994.

But the groundfish industry runs year-round, unlike the scalloping industry, maintaining a steady stream of revenue for fishermen and for the local businesses, Reardon and others said.

According to Georgianna’s analysis, Rafael’s boats bring in an average of $34.8 million in seafood a year to New Bedford’s docks. That would generate $153 million in revenue a year to fishermen and local companies who equip and supply the boats, and the employment of 1,363 people.

“Most of these boats keep it local,” Reardon said. “It will affect every [person in the industry], from the dock in.”