$10M illegal lobster lawsuit/Pure Greed!

 $10M illegal lobster lawsuit/Pure Greed

The Canadian Press - Oct 31

A Nova Scotia court has ordered a commercial fishing group seeking $10 million in damages related to alleged illegal lobster buying to name names and provide more details about its allegations.

The Unified Fisheries Conservation Alliance, a group representing thousands of independent, multi-species commercial fishers and associations across the Maritimes, filed a lawsuit against Independent Fisheries Ltd. and its president Xiaoming (Mark) Mao in November 2024.

The suit also names the owners and operators of Fisher Direct Ltd. and Seawell Holdings Ltd., both based in Shag Harbour, N.S., as defendants.

The alliance alleged that it had conducted an investigation revealing the defendants participated in a conspiracy to transport, process and sell illegally caught lobster. It claimed the alleged scheme has diminished lobster stocks in St. Marys Bay, a rich fishing ground in southwestern Nova Scotia that its members rely on, and caused them $10 million in damages.

N.S.-based Independent Fisheries and Mao argued the alliance's claims were too vague and asked the court to compel it to disclose the identities of all lobster harvesters who were allegedly harmed, as well as the names of all alleged conspirators, dates and times of their alleged acts and facts supporting Mao's liability. They argued they needed the information to properly prepare their defence.

A judge dismissed the motion in January saying Mao and his company would have opportunities for disclosure and discovery examinations as the case moved ahead.

The Nova Scotia Court of Appeal overturned most of that decision in an Oct. 15 ruling, saying the Alliance’s claims are too vague and prevent the defendants from understanding exactly what is being alleged.

“Are they facing one conspiracy or more?” wrote Justice Cindy A. Bourgeois on behalf of the three justices who heard the case. “If multiple conspiracies, are the alleged co-conspirators the same or different in each? How can the appellants attempt to establish the lobsters in question were legally caught, and therefore legally transported, bought and processed, if the identity of the fishers is not plead?”

The court gave the alliance 30 days to provide the particulars of its claim. It said the alliance must provide the names of all harvesters affected by the alleged illegal lobster buying but would not have to name every member of the organization.

An Independent Fisheries representative said in an email that it’s pleased the alliance must now provide facts the company first requested in 2024. A representative for the alliance said the group is fine with the ruling and will provide the requested information.

Independent Fisheries was one of two companies the Nova Scotia government accused of buying illegally caught lobsters in a separate proceeding earlier this month. The company has denied any wrongdoing, saying the firm operates with a robust due diligence process that ensures lobster is sourced in-season from legal licence holders, and they require proof of origin for every transaction.

Meanwhile, the alliance is pursing another case involving St. Marys Bay lobster.

In 2024 the group asked the Nova Scotia Supreme Court to rule that members of the Sipekne'katik First Nation do not have a treaty right to fish lobster in the area out of season without commercial licences. Sipekne'katik first announced plans to launch its own self-regulated fishery in 2020.

The alliance claimed in court documents that Sipekne'katik's commercial fishery was unauthorized and unlawful. It alleged the fishery had a detrimental effect on lobster stocks, claiming some fishers were forced to sell their licences or fish in other areas.

It wanted the judge to declare that the federal Fisheries Act and regulations are constitutionally valid and do not violate any treaty rights held by Sipekne'katik. The case was dismissed in August with the court ruling the alliance did not have standing to pursue a case involving Indigenous fishing rights.

The group said it plans to appeal that decision.

Who is Xiaoming Mao?

The out-of-province businessman, who often goes by Mark Mao, is rapidly buying up a large share of southwest Nova Scotia’s lobster and fish processing/shipping capacity.

He’s also the subject of two as yet unproven allegations of fomenting the illegal fishery by providing a market for unlicensed lobster and elver harvesters.

Mao and one of his companies, Independent Fisheries, are listed as defendants in a $10-million lawsuit by the Unified Fisheries Conservation Alliance. The suit alleges that lobster caught without a licence by a fleet of First Nations harvesters from the wharf in Saulnierville this summer has been heading to Independent Fisheries’ plant in Sable River.

The allegations haven’t been proven in court and no response has yet been filed.

Someone exporting eels under the government's nose

Mao was also accused of exporting juvenile American eels, known as elvers, illegally caught on Nova Scotia rivers at the House of Commons Standing Committee on Fisheries and Oceans last winter.

“(Illegally harvested elvers) are going from a company owned by a Mr. Mao, who exports this under a (Canadian Food Inspection Agency) banner,” South Shore-St. Margarets MP Rick Perkins told the standing committee Feb. 14.

“His brother-in-law is the manager of (Atlantic) ChiCan in my riding, which is owned by a Mr. He in China, who’s in jail in China for breaking Chinese law on importing illegal seafood. This is the money behind this operation.”

The Chronicle Herald was not able to independently confirm Perkins’ accusations.

Requests to speak to Mao left at Independent Fisheries and at MJM Fisheries, a Markham, Ont., importer/exporter of seafood with which Mao is associated, were not returned.

While who was exporting illegally caught elvers hasn’t been proven, they were going out en masse right under the federal government’s nose.

Incoming in Hong Kong

According to data from the Hong Kong Census and Statistics Department, 34,000 kilograms of elvers were imported as Canadian product last year, well above Canada's 9,860-kilogram total allowable catch.

Only half Canada’s quota was caught legally in 2023, when Fisheries and Oceans Canada closed the fishery early due to escalating violence on Atlantic Canada’s rivers as unlicensed harvesters intimidated licence holders, fishery officers and nearby home owners and fought with each other.

The lucrative fishery for elvers, which are used as seed stock in Chinese aquaculture facilities, wasn’t opened at all this spring by DFO due to concerns it wouldn’t be able to control all illegal activity.

Mao's Nova Scotia connections

Mao appears to have begun his involvement in this province’s fishery with Atlantic ChiCan, which was the first major Chinese investment in the province’s processing sector.

The He family, which owns seafood operations in China, bought the large plant at Newellton about 10 years ago. During the early years, Mao was tasked with running it.

Atlantic ChiCan soon ran afoul of the law.

In 2017 and then again in 2019, fisheries officers inspecting Atlantic ChiCan's pound on the Orion Wharf Road found crates holding egg-bearing female lobsters, which are not supposed to be removed from the water. Atlantic ChiCan pleaded guilty to the charges and was slapped with fines totalling $75,000.

The company also pleaded guilty to having imported 63,000 pounds of live lobster from Maine and exporting it to China as Canadian lobster in 2019, a period during which China had placed tariffs on American lobster.

A representative of the company told Nova Scotia Supreme Court in 2022 that Atlantic ChiCan had fired its assistant manager and grading supervisor. It brought in John Crandall Nickerson, a processing industry veteran, to take over its growing operations.

Departing and purchasing

Nickerson told The Chronicle Herald this spring that Mao was “let go” from Atlantic ChiCan in 2019, the same year as the second instance of berried females being identified and the mislabelling of American lobster.

“We’ve been buying everything above board,” said Nickerson of how Atlantic ChiCan has been running its operations since.

“We’ll never, ever take a chance of forfeiting our business, our licences on doing something under the table. One hundred per cent no.”

According to provincial business records, Mao bought Independent Fisheries and its Sable River plant in 2020.

“Mr. He called around telling people Mark didn’t have anything to do with Atlantic ChiCan anymore,” said an area buyer who doesn’t want his name used for fear of being blackballed.

“Mark maybe took some of the customers (from Atlantic ChiCan with him). The volume at Independent went through the roof. They had the door wide open in China, had preferred access. They couldn’t get enough lobster. They were paying 85 cents above the shore price when other buyers could only pay 25 cents above the shore price.”

Increasing purchasing power

Mao began buying up other plants with money coming from unknown investors.

According to provincial property records, in 2023 he became a director of B.M.C. Seafoods Ltd., which owns a large plant in Meteghan. In April this year he became president of Oceans Edge Seafoods, which owns a plant in Salmon River.

In May a numbered company of which Mao is a director, 10695807 Canada Inc., was one of three firms that purchased the American company Lobster Boys LLC, which owns a lobster-buying and processing facility in Dipper Harbour, N.B., as part of a bankruptcy sale.

As markets in China have grown and buyers compete over boats, an out-of-season fishery also grew on St. Mary’s Bay. Some 25 boats fished lobster through this summer from the federal government-owned wharf at Saulnierville (the commercial season for the area is soon to open).

Indigenous impact

According to statements made to the media by Sipekne’katik First Nation Chief Michelle Glasgow, her community is fishing their food, social and ceremonial quota. Unlike the community's communal commercial licences provided to Sipekne’katik by Fisheries and Oceans Canada, that quota is not allowed to be sold.

Sipekne’katik fishers spoken to by The Chronicle Herald in September as they fished lobster from the Saulnierville wharf said they are pursuing their treaty rights to make a moderate livelihood.

“We’re just trying to make a living and provide for our families,” said one of the fishers, who did not give his name for fear he would be targeted.

“They’re trying to demonize us. I’m not trying to demonize non-Natives, but they have to accept that we have a treaty right.”

Enforcement and evidence

The southwest Nova Scotia buyer didn’t provide evidence linking Independent to the purchasing of lobster caught without a commercial licence, but he said that for the players involved, which are numerous, it’s been lucrative.

“The fines are so low. The likelihood of being caught is so low. There are these political twists, lots of little bumps that made it hard to get caught and if you didn’t get caught you weren’t going to pay a lot so it’s just a cost of doing business,” said the buyer.

“They’re paying cash to (unlicensed fishers). Paying a much lower price than the shore price. They get it into their business and then it lowers their overall cost, so they can get the (lobster) out the door cheaper than anyone else.”

The Chronicle Herald has seen a receipt from this summer from a lobster buyer not named in the suit to an exporter selling thousands of pounds of lobster for $6.50 a pound, far below last winter’s shore price to commercial fishermen of around $10 a pound.

With little to no federal enforcement, the United Fisheries Conservation Alliance hired private investigators this summer to follow the lobster from Saulnierville.

“The lobster obtained by the defendants at the Saulnierville wharf is not caught by a licence-holder and therefore cannot be legally sold,” reads the notice of action filed by the group representing commercial fishermen.

“The illegal lobster is transported by various means to a fish plant owned by Independent Fisheries Ltd. in Sable River, Nova Scotia. Independent knowingly takes delivery of the illegal lobster and subsequently profits from its sale.”

Beyond Mao and Independent Fisheries, also listed as defendants in the lawsuit are Fisher Direct Ltd., Sea Well Holdings Ltd., Jason Lamrock, Tyler Nickerson, Sandra Nickerson, Shawna Nickerson, David Nickerson and Wesley Nickerson. As of late this week, none of the parties had filed a response to the allegations.

According to UFCA president Colin Sproul and fisheries lawyer Michel Samson, the private investigators also identified other parties involved not listed in the suit.

“The one message that I have for everybody involved (in the movement of illegal lobster) in Atlantic Canada is that we know who you are, we have more evidence, the investigations are ongoing and you are next,” Sproul told The Chronicle Herald earlier this month.