moore & co complaint.pdf

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

UNITED STATES OF AMERICA

Ex rel. MOORE & COMPANY, P.A.

Plaintiff,

vs. C.A. No. 1:12-cv-01562-SLR

MAJESTIC BLUE FISHERIES, LLC,PACIFIC BREEZE FISHERIES, LLC,DONGWON INDUSTRIES COMPANY,LTD, JAYNE SONGMI KIM, JOYCEJUNGMI KIM, and JAEWOONG KIM,

Defendants.

PLAINTIFF’S FIRST AMENDED COMPLAINT PURSUANT TO

31 U.S.C. §§ 3729-3732, FEDERAL FALSE CLAIMS ACT

The United States of America (“United States”), by and through qui tam Relator Moore

& Company, P.A., brings this action under 31 U.S.C. §§ 3729-3732 (the “False Claims Act”) to

recover all damages, penalties and other remedies established by the False Claims Act on behalf

of the United States and itself and, in support thereof, states as follows:

INTRODUCTION

1. This action arises from false and fraudulent statements made by Defendants to the United

States Government for the purpose of obtaining United States vessel documentation and

tuna fishing licenses for two Korean owned and operated purse seiner tuna fishing vessels

(the “Vessels”). Defendants set up sham ownership structures using U.S. citizen

strawpeople, and fraudulently certified the Vessels would be controlled by U.S. citizens.

This fraudulent certification allowed Defendants toobtain United States Certificates of

Documentation, which allowed Defendants to obtain fishing licenses under the South

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Case 1:12-cv-01562-SLR Document 23 Filed 01/10/14 of 50 PageID #: 1064



Pacific Tuna Treaty (SPTT), which were available to U.S. registered vessels, but not

vessels registered in the Republic of Korea.

2. 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 (the “Island Nations”). 1 The SPTT was first

entered into force in 1988. After an initial 5-year agreement, the SPTT was extended in

1993 and again in March 2002, when the Parties agreed to amend and extend the treaty

and to extend the related Economic Assistance Agreement between the United States and

the Island Nations as represented by an international body designated as their

“Administrator”, the Forum Fisheries Agency (FFA).

3. Under the SPTT and the related Economic Assistance Agreement, the United States pays

approximately 18 Million dollars yearly in economic assistance to the FAA, which then

distributes the assistance funds to the individual Island Nations. In return, the United

States receives fishing licenses for exclusive use of U.S. registered and owned vessels.

This structure promotes the Government’s dual goals of promoting the U.S. fisheries

industry and providing economic assistance to the struggling economies of the Island

Nations.

4. The Treaty provides for licenses for up to 40 U.S. purse seiners, with an option for 5

additional licenses reserved for joint venture arrangements, to fish for tuna in the

exclusive economic zones (EEZs) of the Island Nations. The Treaty establishes a vessel

monitoring system (VMS); and a system establishing fishing capacity, revenue sharing,

1 See International Agreements Concerning Living Marine Resources of Interest to NOAA Fisheries, Office ofInternational Affairs, pp. 69-70 http://www.nmfs.noaa.gov/ia/intlagree/docs/2012/international_agreements.pdf

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http://www.nmfs.noaa.gov/ia/intlagree/docs/2012/international_agreements.pdf





and linkages between the Treaty and the Western and Central Pacific Fisheries

Convention (WCPFC), among others.

5. The parties to the Treaty all agree that it is working efficiently and has benefited all

involved. It is viewed as a model of international and fishery cooperation. Issues that

arise typically are addressed in formal annual consultations between U.S. Government

and Island Nations’ representatives, or during informal discussions which also have taken

place on an annual basis. The United States Department of State has specific authority to

act for the United States. The parties to the Treaty are Australia, Cook Islands, Federated

States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, New Zealand, Niue, Palau,

Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and the United States.

6. Beginning in 2008, Defendants’ fraud has exploited the negotiated benefits of this treaty

and diverted Government funds and property. The fraud continues through today with

yearly misrepresentations to the United States Government and yearly renewals of the

Vessels’ documentation and fishing licenses.

7.

This action also 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”).

8. Defendants violated the False Claims Act by knowingly presenting or causing to be

presented false claims for U.S. vessel registration and for FFA tuna fishing licenses.

9. Defendants also violated the False Claims Act by knowingly concealing and improperly

avoiding fees and fines resulting from their violation of APPS which should have been

paid to the Government.

{GFM-00547851.DOC-}3




10. Plaintiff/Relator, in the name of the United States, brings this action to recover damages

and penalties attributable to Defendants’ false certifications of compliance with the

Vessel Documentation Act, fraudulent concealment of violations of the Vessel

Documentation Act, fraudulent concealment of violations of APPS, and conspiracy to

commit acts which violate the False Claims Act.

PARTIES

11. Plaintiff/Relator, Moore & Company, P.A. (“Relator” or “Moore & Co.”), is a Florida

professional association of attorneys with its principal office located at 355 Alhambra

Circle, Suite 1100, Coral Gables, 33134.

12. Defendant, Majestic Blue Fisheries, LLC (“Majestic Blue”), is a Delaware limited

liability corporation with its principle place of business at 1026 Cabras Highway, Suite

110, Piti, Guam 96915 and is the sham, record owner of the F/V Majestic Blue.

13. Defendant, Pacific Breeze Fisheries, LLC (“Pacific Breeze”), is a Delaware limited

liability corporation with its principle place of business at 1026 Cabras Highway, Suite

110, Piti, Guam 96915 and is the sham, record owner of the F/V Pacific Breeze.

14. Defendant, Dongwon Industries Co., Ltd (“Dongwon”), is a Korean corporation with its

principle place of business at 275 Yanglae-Dong, Seocho-gu, Seoul, Korea and is the

entity that actually controlled both the F/V Majestic Blue and the F/V Pacific Breeze.

15. Defendant, Jaewoong Kim, is an individual citizen of Korea who currently resides in

Korea. He is the father of defendants Joyce and Jayne Kim and is a former executive of

Dongwon, the Korean entity which controlled the F/V Majestic Blue and the F/V Pacific

Breeze. Jaewoong Kim is also the brother of Dongwon’s chairman, J.C. Kim. [ Exhibit 1,

Deposition of K.Y. Hwang, pp. 21:6-25, 22:1-2].

{GFM-00547851.DOC-}4




16. Defendant, Jayne Songmi Kim, is a Korean born, naturalized citizen of the United States

who currently resides in Korea. Jayne Songmi Kim is the sister of defendant, Joyce

Jungmi Kim, and daughter of defendant, Jaewoong Kim. She is the majority shareholder

and President of Majestic Blue, as well as the minority shareholder and Treasurer of

Pacific Breeze.

17. Defendant, Joyce Jungmi Kim, is a Korean born, naturalized citizen of the United States

who resides at 278 East Colorado Boulevard #1609, Pasadena, California 91101. Joyce

Jungmi Kim is the sister of defendant Jayne Songmi Kim and daughter of defendant

Jaewoong Kim. She is the majority shareholder and President of Pacific Breeze, as well

as the minority shareholder and Treasurer of Pacific Majestic Blue.

18. Nonparty, F/V Pacific Breeze f/k/a Eastern Kim, is a 1975, 1,091 ton purse seiner fishing

vessel formerly registered in the Republic of Korea, which received U.S. Documentation

and tuna fishing licenses through Defendants’ false claims.

19. Nonparty, F/V Majestic Blue f/k/a F/V Costa de Marfil, is a 1972, 1,172 ton purse seiner

fishing vessel formerly registered in the Republic of Korea, which received U.S.

Documentation and tuna fishing licenses through Defendants’ false claims.

JURISDICTION AND VENUE

20. This Court has jurisdiction pursuant to the False Claims Act. 31 U.S.C.S. § 3729 et seq,

which states in part: “[a]ny action under section 3730 [(Civil Actions for False Claims)]

may be brought in any judicial district in which the defendant or, in the case of multiple

defendants, any one defendant can be found, resides, transacts business, or in which any

act proscribed by section 3729 occurred.” See 31 U.S.C.S. § 3729(a).

{GFM-00547851.DOC-}5




21. This Court also has jurisdiction pursuant to 28 U.S.C. § 1355 which confers original

jurisdiction “exclusive of the courts of the States, on any action or proceeding for the

recovery or enforcement of any fine, penalty, or forfeiture, pecuniary or otherwise,

incurred under any Act of Congress.” 28 U.S.C. 1355 (1994). See, e.g., Stinson, Lyons &

Bustamante, P.A, v. United States, 79 F.3d 136, 138 (Fed. Cir. 1996) (“suit [under the

False Claims Act] must be brought in district court”).

22. This Court also has jurisdiction and venue over this case pursuant to 28 U.S.C.S. § 1331

as it arises from the laws of the United States, specifically 31 U.S.C.S. §3729 et seq.

23.

The Relator is authorized to bring these claims on behalf of the United States of

American in this action pursuant to 31 U.S.C.S. § 3730(b).

24. At all relevant times, one or more of the Defendants could and can be found, residing in,

and/or transacting business itself and/or through its agents in the District of Delaware.

Defendants Majestic Blue and Pacific Breeze are Delaware limited liability corporations.

25. Defendants’ violation of the False Claims Act occurred in part in Delaware as the

Delaware corporations Majestic Blue, LLC and Pacific Breeze, LLC were the entities that

received the benefit of U.S. vessel registration and fishing licenses which were received

based on Defendants’ false claims to the United States Government.

BACKGROUND FACTS

Majestic Blue and Pacific Breeze’s Establishment and Vessel Documentation Process

26. Dongwon is a Korean company engaged in the business of purchasing and processing

tuna and selling tuna products; Dongwon also operates tuna purse seine fishing vessels.

27. Prior to April 2008, Dongwon directly owned the F/V Pacific Breeze and F/V Majestic

Blue as part of its purse seiner tuna fishing fleet. At that time, the Vessels were known as

{GFM-00547851.DOC-}6




the F/V Eastern Kim and the F/V Costa de Marfil, respectively, and were registered in the

Republic of Korea. [ Exhibit 2 - Certificate of Vessel Nationality dated April 7, 2006]

28. In or about the spring of 2008, Jaewoong Kim, a former Dongwon executive and brother

of Dongwon’s chairman, approached his daughters, Jayne and Joyce Kim (collectively,

the “Kim Sisters”), with an “investment opportunity.” This “opportunity” consisted of

the Kim Sisters (both U.S. naturalized citizens) acting as straw owners of Majestic Blue

and Pacific Breeze so as to allow Korean Dongwon to fraudulently register the Vessels in

the United States so they could obtain fishing licenses available only to a certain number

of vessels owned and controlled by United States citizens. [ Exhibit 1, Deposition of K.Y.

Hwang, pp. 21:6-25, 22:1-2].

29. As part of a program to promote the United States fisheries industry, the United States

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 the (“Island

Nations”). These areas are some of the most tuna rich waters in the world.

30. The treaty governing the issuance of the licenses is the South Pacific Tuna Treaty

(SPTT). The United States is a signatory to this treaty, but the Republic of South Korea

is not, which means that Dongwon could gain access to these lucrative fishing grounds

only by obtaining U.S. registration for the Vessels.

31. To obtain a license under the SPTT, applications are submitted to the United States

government (the “Government”), specifically the National Marine Fisheries Service

(NMFS), and the licenses are then issued by the Forum Fisheries Agency (“FFA”), an

{GFM-00547851.DOC-}7




international body designated by the Island Nations as the SPTT’s “Administrator.” 50

CFR § 300, subpart D.

32. A limited number of fishing licenses are allocated to the signatories including the U.S.

Government in return for, among other things, payment of approximately $18 million in

economic assistance to the FAA for distribution among the Pacific Island nations who are

signatories to the South Pacific Tuna Treaty.

33. The major requirement for eligibility to obtain an FFA fishing license is that the vessel

have a United States Coast Guard Certificate of Documentation with a registry

endorsement. See 50 CFR § 300.32(h)(7). U.S. Vessel Documentation is only available

to Vessels under the ownership and control of U.S. citizens. See 46 U.S.C.S. § 12103.

34. For this reason, the Kim Sisters, born in Guam but citizens of Korea, were instructed,

after becoming U.S. Citizens, to form two United States limited liability companies

(LLCs) to take ownership of the F/V Costa de Marfil and F/V Eastern Kim. [ Exhibit 3 -

Deposition of Joyce Kim, 27:10-15, 58:7-16, 20-25, 59:1-7].

35.

Only through this fraudulent ownership structure could Dongwon obtain U.S.

registration, thereby qualifying the Vessels for FFA fishing licenses and ultimately to fish

for tuna in waters governed by the SPTT. Id.

36. On March 25, 2008, Joyce and Jayne Kim formed Majestic Blue Fisheries, LLC and

Pacific Breeze Fisheries, LLC (together, the “LLCs”) in Delaware. [ Exhibit 4 – Majestic

Blue and Pacific Breeze Corporate Documents].

37. The only capital investment Joyce and Jayne Kim contributed to the LLCs was an initial

contribution to each LLC of approximately fifty dollars ($50.00) each. [ Exhibit 3 -

Deposition of Joyce Kim, 27:25, 28:1-4].

{GFM-00547851.DOC-}8




38. On April 4, 2008, Jayne Kim, as representative of Majestic Blue, and Jong Koo Lee, as

representative of Dongwon, signed a purchase and sale agreement whereby Majestic Blue

agreed to pay $4,400,000.00 to buy the F/V Costa de Marfil via installments over ten

years. Despite Majestic Blue’s negligible capital funds, the agreement does not hold

either Joyce or Jayne Kim personally responsible for paying or otherwise securing the

multi-million dollar debt, and no mortgage was taken on the Vessel as would be usual

and appropriate. [ Exhibit 5 - Majestic Blue Purchase and Sale Agreement].

39. This is because Dongwon always retained true ownership and control over the Vessels.

No purchase funds were ever paid by the LLCs or the Kim Sisters to Dongwon and

possession of the Vessels was never really transferred from Dongwon to the Kim Sisters.

[ Exhibit 3 - Deposition of Joyce Kim, 85:6-16].

40.

Upon information and belief, a similar purchase and sale agreement was entered into by

Pacific Breeze to “purchase” the F/V Eastern Kim (renamed the “F/V Pacific Breeze”)

from Dongwon.

41.

On April 23, 2008, Dongwon executed bills of sale “selling” the F/V Majestic Blue and

F/V Pacific Breeze, each to their eponymous LLC, for $10.00. [Composite Exhibit 6 -

Majestic Blue and Pacific Breeze Bill of Sale].

42. Shortly thereafter, these entities took record ownership of the F/V Costa de Marfil (later

renamed the “F/V Majestic Blue”) and the F/V Eastern Kim (later renamed the “F/V

Pacific Breeze”) (together, the “Vessels”), respectively. [Composite Exhibit 7 – U.S.

Certificate of Documentation, Majestic Blue and Pacific Breeze].

43. The Kim Sisters are held out as the sole owners and shareholders of both LLCs. Jayne

Kim owning 51% of Majestic Blue and 49% of Pacific Breeze, and Joyce Kim owning

{GFM-00547851.DOC-}9




49% of Majestic Blue and 51% of Pacific Breeze. [ Exhibit 4 – Majestic Blue and Pacific

Breeze Corporate Documents].

44. However, this purported “ownership” of the LLCs by the Kim Sisters was a sham

perpetrated by Dongwon and its U.S. national confederates, the Kim Sisters, to defraud

the United States government into issuing FFA fishing licenses reserved for U.S. flagged

vessels to be used instead for the benefit of a Korean company that was barred from

obtaining the licenses in its own right.

45. Joyce Kim testified at her deposition that she has never received any return from either

LLC despite the fact that the Vessels owned by the LLC’s should have been providing

hundreds of thousands of dollars in revenue per year through their tuna fishing

operations. [ Exhibit 3 - Deposition of Joyce Kim, 32:18-22].

46.

The Kim Sisters are also held out as the sole directors and officers of the LLCs. On

paper, Jayne Kim serves as President and Director of Majestic Blue, as well as Treasurer

and Director of Pacific Breeze. Likewise, Joyce Kim is held out as the President and

Director of Pacific Breeze and the Treasurer and Director of Majestic Blue. [ Exhibit 3 -

Deposition of Joyce Kim, 29:13-24].

47.

However, in actuality, the Kim Sisters know virtually nothing about the business

operations of the LLCs or even how and why the LLCs were formed. Instead, Joyce Kim

testified at her deposition that she and her sister rely entirely on their father, a former

Dongwon executive and Korean citizen, to handle the business of the LLCs. [ Exhibit 3 -

Deposition of Joyce Kim, 46:16-51:3, 86:20-87:24, 94:16, 103:24-104:16].

48. The nature of the Kim Sisters’ status as strawpeople and the true purpose of the Vessels’

ownership structure - orchestrated and operated by Dongwon - are evidenced by

{GFM-00547851.DOC-}10




Dongwon’s direct efforts to obtain FFA fishing licenses following the Vessel’s paper

transfer from Dongwon to the LLCs.

49. Beginning April 29, 2008, a series of emails were sent by William Phil, who claimed to

be “Manager: Majestic Blue Fisheries & Pacific Breeze Fisheries” to the United States

Coast Guard and to the National Oceanic and Atmospheric Administration (NOAA) with

the purpose of obtaining fishing licenses under the SPTT. Although Joyce Kim was one

of only two “owner/directors” in charge of both LLCs and William Phil purported to act

on behalf of both LLCs, Ms. Kim testified under oath in 2011 that she did not know who

William Phil was. [ Exhibit 3 - Deposition of Joyce Kim, 68:13-14].

50. Relator has since discovered that “William Phil” is actually a pseudonym for three

Korean nationals who are also employees of Dongwon who operated under the false

name in order to sound more like an American citizen. All three of the Korean nationals

were solely paid by Dongwon during the entire period they operated as “manager” of the

LLCs under the pseudonym “William Phil.” [ Exhibit 1, Deposition of K.Y. Hwang, pp.

12:19-25, 13:1-9, 24:2-16, 30:5-25, 31:1-25, 32:1-25, 34:3-6, 36:1-4].

51. On May 15, 2008, Jayne Kim, on behalf of Majestic Blue, and Joyce Kim, on behalf of

Pacific Breeze, requested U.S. documentation for the Vessels by submitting Applications

for Initial Issue, Exchange, or Replacement of Certificate of Documentation (Form CG –

1258) (“Application for Documentation”) for the F/V Majestic Blue and F/V Pacific

Breeze, respectively, to the National Vessel Documentation Center (NVDC). [Composite

Exhibit 8- 5/15/2008 Signed Application for Majestic Blue Fisheries; 5/15/2008 Signed

Application for Pacific Breeze Fisheries].

{GFM-00547851.DOC-}11




52. On each of the LLCs’ Application for Documentation, Jayne and Joyce categorized the

Majestic Blue and Pacific Breeze as a “limited liability company not managed by

members and not similar to general partnership.” In particular, Jayne and Joyce both

averred on the applications they each submitted:

I (we) certify that any person elected to manage the LLC or who isauthorized to bind the LLC, and any person who holds a positionequivalent to the chief executive officer, by whatever title, and thechairman of the board of directors in a corporation, and any personsauthorized to act in their absence are citizens of the United States; and non-citizens do not have authority within a management group, whether

through veto power, combined voting, or otherwise, to exercise control

over the LLC.

[Composite Exhibit 8 - 5/15/2008 Signed Application for Majestic Blue Fisheries;

5/15/2008 Signed Application for Pacific Breeze Fisheries].

53. Based on these misrepresentations made in each of the Vessel’s Application for

Documentation, the NVDC granted the F/V Majestic Blue and F/V Pacific Breeze

temporary Certificates of Documentation and Official Numbers on May 20, 2008.

[Composite Exhibit 8 - 5/15/2008 Signed Application for Majestic Blue Fisheries;

5/15/2008 Signed Application for Pacific Breeze Fisheries].

54.

The very next day, on May 21, 2008, less than one week after Joyce and Jayne Kim

certified that non-citizens do not have authority to exercise control over Majestic Blue or

Pacific Breeze, both LLCs signed Crew Manning Agreements, Ship’s Maintenance,

Supply, and Insurance Service Agreements, and Tuna Supply Agreements with Dongwon

(together, the “Agreements”), which collectively authorize Dongwon, a Korean-owned,

controlled and based corporation, to exert total control over the LLCs and the Vessels.

[Composite Exhibit 9 - Crew Manning Agreement, Ship’s Maintenance, Supply, and

Insurance Service Agreement, and Tuna Supply Agreement].

{GFM-00547851.DOC-}12




55. Despite the comprehensive web of Agreements with Dongwon, Joyce Kim testified that

she did not know whether the LLCs had any contracts with Dongwon, once again

illustrating that her only contribution to the LLCs was her U.S. citizenship and further

demonstrating that Dongwon exerted actual control over the LLCs. [ Exhibit 3 - Excerpts

from Joyce Kim, Deposition, 51:12-17].

56. In late May 2008, former Dongwon employee, Jaewoong Kim, approached Captain

Jurgen Unterberg to become the general manager of the two LLCs. Captain Unterberg

accepted the position and served as the LLCs’ general manager until his death in August

2012. Concurrently, Captain Unterberg operated a marine surveying business, Oceaneer,

Inc. (“Oceaneer”), in Piti, Guam, and both LLCs have the same primary place of business

as Oceaneer. [ Exhibit 10 - Excerpts from Jurgen Unterberg’s 5/2/2012 Deposition, 15:6-

25, 16:1]

57. Mr. Unterberg testified at his deposition that despite being the “general manager” of both

LLCs during the same period William Phil was allegedly the “manager” of these LLCs,

he did not know who William Phil was, again confirming that Dongwon controlled the

LLCs to the exclusion of the U.S. citizens that purported owned and operated them

according to the LLCs’ corporate documents and the

Vessels’ documentation. [ Exhibit 11 - Excerpts from Jurgen Unterberg’s 5/11/2011

Deposition, 59:6-9]

58. On June 3, 2008, Raymond Clarke (who worked for an agency of the United States of

America within the Department of Commence known at the National Oceanic and

Atmospheric Administration or “NOAA” sent an email to “William Phil” stating that he

had met with J.K. Lee, an officer of Dongwon, who showed him “what appeared to be a

{GFM-00547851.DOC-}13




temporary [United States Coast Guard] Documentation document for your vessel(s).”

[ Exhibit 12 - 6/3/2008 Email from Clarke to Phil]. None of the LLCs’ Agreements with

Dongwon authorized Dongwon to manage the Vessels’ USCG documentation or fishing

licenses and this level of control by a non-U.S. citizen proves again the LLCs were

actually controlled by Dongwon rather than U.S. Citizens as certified under penalty of

perjury. Additionally, Captain Unterberg invoiced Dongwon for reimbursement of the

Vessels’ USCG documentation and licensing fees, including: 1) the Vessels’ American

Tunaboat Association (ATA) membership application fees; 2) the Vessels’ United States

Federal Communication Commission licensing fees (the obtaining of this license is

arguably another fraud on the United States); 3) the Vessels’ NOAA High Seas Fishing

permit application fees; 4) the Vessels’ USCG Certificate of Financial Responsibility

fees; again showing the Korean owned and controlled ownership of the Vessels and total

control over the LLC’s management structure and funding. [Composite Exhibit 13 -

Majestic Blue and Pacific Breeze Invoices to Dongwon].

59.

William Phil responded to Raymond Clarke by sending an email with the Vessels’ USCG

Certificates of Documentation attached and stating “We are going to send you the

application [for the SPTT licenses] and necessary documents tomorrow and we will

submit any additional documents or amendments upon your request.” [ Exhibit 14 -

6/3/2008 Email from Phil to Clarke]. Again, Dongwon, through the concocted persona of

William Phil, was exerting a level of control over the operation of the LLCs and the

LLCs’ only assets that shows the true nature of the sham ownership structure orchestrated

by Defendants.

{GFM-00547851.DOC-}14




60. On July 1, 2008, based on the false statements Defendants made to the United States

Government, including certifying control over the LLCs was by U.S. Citizens only, the

FFA issued Certificates of Registration to both Vessels. [ Exhibit 15 - Majestic Blue and

Pacific Breeze FFA Certificates of Registration].

61. A year later, when the Vessels’ FFA fishing licenses were due to expire, one of the

Dongwon employees who had earlier posed as “William Phil”, K.Y. Hwang, no longer

bothering to keep up the charade, contacted Paul Krampe of the American Tuna

Association (ATA) directly about renewing the licenses, stating that he was “in charge of

care for F/V Majestic Blue & Pacific Breeze” and noting he was contacting the ATA

directly because Unterberg was unavailable. [ Exhibit 16 - 6/9/2009 Email from Hwang

to Krampe].

62.

Dongwon, realizing that contacting the ATA directly was a mistake for future contact

with ATA directed its shill, Captain Unterberg, do their bidding, instructing him to

contact Mr. Krampe and Gordon Yamasaki, of NOAA, on their behalf. In particular,

K.Y. Hwang wrote to Captain Unterberg, “We are studying the possibility of our US

flagged fishing vessel’ operation in Atlantic Ocean. In relation to this study, we need to

check several points as follows. Please check these points with ATA and NMFS and

advise us at your earliest time. [ Exhibit 17 - 5/26/2010 Email from Hwang to Capt.

Unterberg (emphasis added)]. Clearly, Dongwon, rather than any U.S. Citizen,

maintained operational control over the LLCs and made all major decisions for Majestic

Blue and Pacific Breeze.

{GFM-00547851.DOC-}15




63. By Dongwon’s own admission above, the Vessels are part of Dongwon’s “US flagged

fishing vessel operation” and were not really owned or controlled by U.S. Citizens

despite Defendants’ contrary certifications to the U.S. Government. Id.

64. Further, the nature of the inquiries Dongwon ordered Captain Unterberg to make show

that Dongwon, rather than a U.S. Citizen, made essential operational decisions for the

LLCs including even what ocean the Vessels (the LLCs’ only assets) would fish. For

example, Dongwon asked Captain Unterberg: “Please check with ATA & NMFS whether

we need any permission or licenses from US government to operate tuna Purse Seiners in

Atlantic Ocean same as Pacific Also Check whether there is any treaty with costal

countries like Africa countries same as US Multi Treaty in Pacific.” Id. The NMFS or

National Marine Fisheries Service (NMFS) is a United States federal agency. A division

of the National Oceanic and Atmospheric Administration (NOAA) and the Department of

Commerce, NMFS is responsible for the stewardship and management of the nation's

living marine resources and their habitat within the United States' Exclusive Economic

Zone, which extends seaward 200 nautical miles from the coastline (about 370

kilometers). Guam and the 85,523 squares miles around it are within the United States

Exclusive Economic Zone. The two Vessels at issue herein are based in Guam.

Dongwon’s Control Over Majestic Blue and Pacific Breeze

65. The operation of Majestic Blue and Pacific Breeze also show Dongwon exerted ultimate

control over the LLCs and Vessels in violation of U.S. law, and contrary to the

certification made by Defendants.

{GFM-00547851.DOC-}16




66. The Agreements between the LLCs and Dongwon alone ceded vast management

authority over the LLCs’ workers, vessels, and finances, to Korean owned Dongwon, and

in reality, Dongwon exerted what amounted to total control over the LLCs. [Composite

Exhibit 9 - Crew Manning Agreement, Ship’s Maintenance, Supply, and Insurance

Service Agreement, and Tuna Supply Agreement].

a. Dongwon’s control under the Agreements:

67. Pursuant to the Ship’s Maintenance, Supply, and Insurance Service Agreements, the

LLCs relinquished to Dongwon all control over the Vessels’ 1) maintenance and repair,

including dry docking, maintaining classification standards, maintaining seaworthiness;

2) parts supply, including parts for deck, machinery, navigation, electronics, and fishing

gear; 3) bunkering, including compliance with all applicable United States Coast Guard

(USCG) regulations; and 4) insurances, including hull and machinery insurance, cargo

insurance, and protection and indemnity insurance. The Vessels’ hull and machinery

insurance, cargo insurance, and crew insurance were all placed through Korean-based

insurance companies. [Composite Exhibit 9 - Ship’s Maintenance, Supply, and Insurance

Service Agreements].

68.

Pursuant to the Tuna Supply Agreements, the LLCs committed to selling all fish cargo

caught by the Vessels from the very waters the United States worked so hard to protect

and reserve for the impoverished Pacific Island Nations to Dongwon in Korea at prices

based on Dongwon’s own analysis of market conditions for the fish cargo. The Tuna

Supply Agreements are governed by Korean law and subject to binding arbitration in the

Republic of Korea. [Composite Exhibit 9 - Tuna Supply Agreement].

{GFM-00547851.DOC-}17




69. Upon information and belief, the LLCs never made any money because Dongwon,

through the Tuna Supply Agreements, would ensure it paid the LLC’s only just enough

for the fish to fund the operation.

70. Pursuant to the Crew Manning Agreements, the LLCs relinquished to Dongwon all

control over recruiting, selecting, screening, training, and supplying crew to the Vessels,

including transporting the crew to the Vessels, distributing payment to the crew, and

insuring the crew. [Composite Exhibit 9 - Crew Manning Agreement].

71. Thus, under the Crew Manning Agreement, all individuals who worked onboard the

Vessels signed their employment contract with Dongwon, not Majestic Blue or Pacific

Breeze, with the exception of the only American crewmembers, the captains. [Composite

Exhibit 9 - Crew Manning Agreement]. The Agreement specifically “exclud[es] US

crew,” and, accordingly, as the only Americans onboard, the U.S. licensed captains, who

were unwitting participants in the scheme, were the only crew out of approximately 25

who signed employment contracts with the Dongwon front organizations Majestic Blue

or Pacific Breeze, rather than Dongwon. [Composite Exhibit 9 - Crew Manning

Agreement; Exhibit 18 - Capt. Hill Employment Contract with Majestic Blue].

b. Dongwon’s actual total Control:

72. Notwithstanding the terms of the Crew Agreement which specifically exclude U.S. crew

from Dongwon’s purview, in actuality, Dongwon exerted almost total control over the

American captains’ employment, including hiring, arranging their travel, handling their

salaries and taxes, and incentivizing them to remain employed by the LLCs.

73. Dongwon’s control over the American captains was so extensive that the captains

considered themselves Dongwon employees as opposed to being employed by Majestic

{GFM-00547851.DOC-}18




Blue or Pacific Breeze. In one telling example, Tom Ridenour, captain of the F/V

Majestic Breeze from January through May 2010, wrote in a May 1, 2010 email to

Captain David Hill, “I have never broken a contract. I will complete my one year with

Dongwon because of personal honor. If you ask me today if I planned on a second year

[sic] with the company the answer would be not just no…. it would be HELL NO!!!”

[ Exhibit 19 - 5/1/2010 Email from Capt. Ridenour to Capt. Hill (emphasis added)].

74. Dongwon also contacted American captains and directly solicited them to work onboard

the Vessels, which Dongwon referred to as “our vessel.” For example, John Jeskevicius,

captain of the F/V Majestic Breeze from November 2008 through January 2009, was

hired directly by Dongwon executive K.Y. Hwang. Mr. Hwang sent Captain Jeskevicius

an introductory email stating, in pertinent part, “I welcome you to work with Majestic

Blue Fisheries LLC as captain for the F/V Majestic Blue… Our company specializes in

purse-seine fishing for tuna. The crew aboard our vessel is multi-national…” All contact

information listed in Mr. Hwang’s signature block was Korean and when Jurgen

Unterberg sent Captain Jeskevicius a fax with instructions for commencing his

employment with Majestic Blue, he CC’d a “Mr. Yu” who had a Korean fax number.

[ Exhibit 20 - 10/22/2008 Email from Hwang to Capt. Jeskevicius; Fax from Unterberg to

Jeskevicius (emphasis added)].

75. Likewise, when Captain Jeskevicius threatened to resign as captain of the F/V Majestic

Blue in December 2008, it was Dongwon officials, not anyone from Majestic Blue, who

approached him and asked him to stay; and Captain Jeskevicius submitted a list of

conditions for his remaining on board directly to Dongwon officers, not to any of the

“paper” owners/directors of Majestic Blue on paper or its general manager. [Composite

{GFM-00547851.DOC-}19




Exhibit 21 - 12/30/2008 Email from Capt. Jeskevicius to Mrs. Jeskevicius; 12/31/2008

Email from Capt. Jeskevicius to Capt. Unterberg].

76. Dongwon made the travel arrangements for the American captains to join the Vessels and

had the final say in determining the dates on which the captains would join and leave the

Vessels and superseded the opinions of the general manager of the LLCs. Captain

Unterberg acknowledged this fact when he wrote to Captain Hill on April 13, 2010, “I

have asked the head office to make your E-ticket to come here to China, but have not

heard for what date they [are] planning to do that. I wanted that you are here on 4-15-

2010!” [Exhibit 22 - 4/13/2010 Email from Capt. Unterberg to Capt. Hill (emphasis

added)].

77. Dongwon also controlled the day to day activities of the American captains and the

Vessels. For example, the form the captains filled out to record Monthly Fire,

Emergency and Boat Drills stated: “The following information must be completed and

faxed to DongWon (sic) by the first day of the following month that the drills were

conducted.” [ Exhibit 23 - 8/28/2008 Monthly Fire, Emergency and Boat Drill form

(emphasis added)]

78.

Additionally, after his first month on board the F/V Majestic Blue, on December 14,

2008, Captain Jeskevicius emailed Sam Lee, a United States based ship’s agent for the

Vessels, inquiring “Did you forward the PDF’s of my particulars to Mr. K.Y. Hwang?

He recently asked me for my social security number so he could pay the taxes,

presumably on my pay.” Hwang is a Dongwon executive, but he and Dongwon were

directly involved in the employment of the American captains even though all American

crew was specifically excluded from the Dongwon’s Crew Manning Agreements.

{GFM-00547851.DOC-}20




Around that same time, Captain Jeskevicius himself emailed K.Y. Hwang his social

security number. [Composite Exhibit 24 - 12/12/2008 Email from Capt. Jeskevicius to

Hwang; 12/14/2008 Email from Capt. Jeskevicius to Lee].

79. Further, in Captain Doug Pine’s handover notes to Captain David Hill regarding the F/V

Majestic Blue, he advised, “If you want direct deposit of your pay, send your bank

account number and the bank’s routing number to Mr. Hwang. [email protected]. …

He will set up direct deposit for you.” [ Exhibit 25 - 10/10/2009 Email from Capt. Pine to

Capt. Hill]. During Captain Hill’s second voyage on the F/V Majestic Blue, he emailed

his wife asking her to send all family members’ social security numbers so that he could

“sort out this tax situation with Dong Won.” [ Exhibit 26 - 6/7/2010 Email from Capt. Hill

to Mrs. Hill].

80.

Then, when the F/V Majestic Blue went into dry dock in Spring 2010, Captain Unterberg,

the purported manager of the LLCs, intended to have both the outgoing captain, Tom

Ridenour, and the oncoming captain, David Hill, observe the repair of the Majestic Blue

being conducted at a shipyard in China; however, Dongwon vetoed that plan because it

did not want to pay both captains for being there. Captain Unterberg admitted in an

email to Captain Hill that the decision rested with Dongwon rather than the Unterberg,

the manager of the LLCs. [Exhibit 27- 3/1/2010 Email from Capt. Unterberg to Capt.

Hill].

81. Dongwon, rather than any LLC manager or the Kim Sisters, had ultimate control over the

LLCs including all of the money flowing in and out of the companies. Captain Unterberg

explained to Captain Hill, “It does not take only a phone call to transfer money from the

main account to our account in Guam! There are very strict rules in place in Korea and

{GFM-00547851.DOC-}21




we need to get our money from the fish buyers from there!” [ Exhibit 22 - 4/13/2010

Email from Capt. Unterberg to Capt. Hill].

82. Following Captain Ridenour’s observation of the F/V Majestic Blue’s Spring 2010 dry

docking, Captain Unterberg conveyed to him, “Mr. Hwang [(of Dongwon)] arrived and

the company agreed to pay you a nice bonus type of money for which I had asked them!

He has that with him too.” [Exhibit 28 5/10/2010 (emphasis added)]. Again, the U.S.

captains were purportedly employed by the LLCs not by Dongwon.

83. In June of 2010, Captain David Hill died when the F/V Majestic Blue sank in the South

Pacific in broad daylight and clear weather.

84. Following Captain Hill’s death onboard the F/V Majestic Blue, Captain Unterberg again

demonstrated that Majestic Blue relied on Dongwon to pay its captains’ salaries even

though they were employed by the LLC’s not Dongwon. Captain Unterberg wrote to

K.Y. Hwang of Dongwon:

I do not understand why Capt. Dave’s wife after losing her husband at seanow has to worry about getting paid. This borders on mental cruelty inmy mind. … You informed me a few days ago that the money meanwhile

had been send , but also it should have been on his account, it was not! So

please make sure that it was send as you told me. It should be on hisaccount.

[ Exhibit 29 - 6/23/2010 Email from Capt. Unterberg to Hwang (emphasis added)]

c. The Vessels’ Captains understood Dongwon was in Control and American

Ownership was sham:

85. Furthermore, the American captains on board the Vessels understood that Dongwon

officials actually controlled the LLCs and the Vessels. In December 2008, Captain

Jeskevicius described a meeting between Captain Unterberg and Dongwon officials as a

“managers meeting.” [Composite Exhibit 30 - 12/25/2008 Email from Capt. Jeskevicius

{GFM-00547851.DOC-}22




to Capt. Unterberg; 12/25/2008 Email from Capt. Jeskevicius to The Neal Family;

12/26/2008 Email from Capt. Jeskevicius to Capt. Lup].

86. In a December 29, 2008 email to Captain Jill Friedman, Captain Jeskevicius propounded:

“There are some serious questions about this operation that need to be asked – like what

is the advantage of this vessel sailing under US flag instead of Korean flag where it was?

From what I can see, the US flag operation is now just a ‘flag of convenience’

situation.” The captains also theorized, as it turns out correctly, that the Vessels had

been reflagged in order to take advantage of United States regulations and fish in United

States waters. [Composite Exhibit 31 - 12/29/2008 Email from Capt. Jeskevicius to Capt.

Friedman (emphasis added); 12/30/2008 Email from Capt. Jeskevicius to Capt.

Friedman].

87.

Similarly, in his October 2009 handover notes for the F/V Majestic Blue, Captain Doug

Pine wrote to Captain David Hill:

This is an American ship, not a Korean ship. No one on board but youwill seem to care, and they don’t.

***

[The Fishing Master] has been the Master of this ship for eight years, andthen they re-flagged it US…. I don’t believe he respects me personally;and sadly I know he doesn’t respect my authority. If this was truly an

American ship the first thing I would have done would have been to runhim off.

***

After having had some miscommunication with the Head Office, I have

decided that it is best for me to do everything through Jurgen [Unterberg].Bringing the Head Office in on things only serves to confuse the issue.Let Jurgen deal with those guys. You will hear from time to time fromMr. Hwang and Mr. Shin [of Dongwon].

***

{GFM-00547851.DOC-}23




You won’t be doing things a “normal” Captain would be, because thefishing master does all that stuff.

[ Exhibit 25 - 10/10/2009 Email from Capt. Pine to Capt. Hill (emphasis added)].

88. All evidence, including the Kim Sisters’ lack of investment and involvement in the LLCs,

the American captains’ mere ornamental role, Dongwon’s direct involvement in

procuring FAA fishing licenses, and the actual total control exerted by Dongwon over the

Vessels’ operation and control over the LLCs including even their cash flow prove the

LLCs ownership structure was a sham and that Dongwon always remained the true owner

and operator of the Vessels.

89.

This fraud on the United States Government was knowingly perpetrated so Dongwon, a

Korean company, could reap the benefits of the U.S. Treaty, subvert the U.S. investment

and compete with the Pacific Islands nations and the U.S. fisheries, which the United

States sought to protect and promote. The substantial monetary rewards enjoyed by

Dongwon were reaped by exploiting the FFA fishing licenses Defendants’ obtained only

by falsely certifying to the government of the United States that Vessels’ owners were not

controlled by Non-United States Citizens or by citizens of the Pacific Islands nations.

90.

Defendants violated the False Claims Act by knowingly presenting or causing to be

presented a false or fraudulent claim to the United States Government for approval of

U.S. Vessel registration and SPTT tuna fishing licenses.

91. Defendants’ violation is ongoing and continues through today. The F/V Majestic Blue

continued to maintain its U.S. registration and FFA fishing licenses until it sank in June

of 2010. The F/V Pacific Breeze continues to fly the U.S. flag and take advantage of the

SPTT fishing licenses to this day. In order to do so, yearly renewals are required in

which Defendants were required to confirm none of the information on their previous

{GFM-00547851.DOC-}24




applications had changed, in effect, yearly reaffirming the misrepresentation that the

LLC’s were not controlled by non-U.S. citizens. See Exhibit 32, 2013 Report to

Congress: Distant Water Fishing Fleet; See Composite Exhibit 33, U.S.C.G Form for

Renewal and “No-Change” renewal applications.

Violations of MARPOL on the F/V Majestic Blue

92. Within three weeks of being on board the F/V Majestic Blue, Captain Jeskevicius started

noticing that the crew was engaging in illegal dumping. On December 3, 2008, he wrote

to his wife, “I am seeing too much plastic going over the side and I don’t need to lose my

license for this job.” [Composite Exhibit 34 - 12/3/2008 Email from Capt. Jeskevicius to

Mrs. Jeskevicius].

93. In an email to his wife on December 4, 2008, Captain Jeskevicius expressed concern that

the crew members on the F/V Majestic Blue had “no conscience about throwing all the

plastics overboard.” [Composite Exhibit 34 - 12/4/2008 Email from Capt. Jeskevicius to

Mrs. Jeskevicius].

94.

On December 5, 2008, Captain Jeskevicius reported to Captain Unterberg that none of

the guidelines for the F/V Majestic Blue’s waste management plan were being followed

and that crew members had been discharging garbage from the vessel without informing

vessel officers so that they could record and report it as required. [Composite Exhibit 34

- 12/5/2008 Email from Capt. Jeskevicius to Capt. Unterberg]. That same day Captain

Jeskevicius sent an email to his wife intimating that he feared losing his captain’s license

due to the illegal dumping that he discovered the crew partaking in. [Composite Exhibit

34 - 12/5/2008 Email from Capt. Jeskevicius to Mrs. Jeskevicius].

{GFM-00547851.DOC-}25




95. Captain Jeskevicius reiterated his concerns about the F/V Majestic Blue’s crew’s

violations of MARPOL to Captain Unterberg on December 8, 2008, stating in relevant

part:

When I did my turnover, I did look to see that the Garbage Record Bookwas being kept up, and on the surface it was. Closer inspection of thegarbage records revealed that no entries were being made at sea. Whatfurther roused by suspicions was that there were no indications of trashhaving been sent to a facility in Noro. Lo and behold, I discovered thatthey were dumping everything over in plastic bags, completely ignoringMARPOL ANNEX V.

************

The bottom line is that [the senior South Korean officers on the vessel]

knew exactly what they were doing.

[Composite Exhibit 35 - 12/8/2008 Email from Capt. Jeskevicius to Capt. Unterberg].

Captain Jeskevicius sent an email containing the same information, virtually verbatim, to

Dongwon Representative Sam Lee that same day. [Composite Exhibit 35 - 12/8/2008

Email from Capt. Jeskevicius to Sam Lee].

96. On December 10, 2008, Captain Jeskevicius reported to Captain Unterberg that he

noticed an oily sheen coming from under the F/V Majestic Blue and observed that the

vessel’s bilge pumps were being operated with a non-functioning oily water separator.

[Composite Exhibit 36 - 12/10/2008 Email from Capt. Jeskevicius to Captain Unterberg].

97. In a December 20, 2008 entry in the Captain’s Log, Captain Jeskevicius elaborated on the

rampant MARPOL violations he witnessed occurring on the F/V Majestic Blue and his

fruitless efforts stopping them, stating:

It has become quite apparent that the senior personnel on this vessel haveabsolutely no regard for the regulations imposed by MARPOL Annex V.I have communicated this to Majestic Blue Fisheries, LLC and incollaboration with the F/V PACIFIC BREEZE have revised andimplemented a new WASTE MANAGEMENT PLAN. Feeble attemptshave been made to show that the PLAN is in force; but the amount of

{GFM-00547851.DOC-}26




waste contained nowhere comes near to that of waste having beengenerated. In addition, I have personally witnessed some senior personnelthrowing plastic over the side…. [T]rash that has been collected and storedon deck has been disappearing. The types of trash waste have included but not been limited to plastics. Neither has any of this waste been

reported or recorded as I have all the GARBAGE RECORD BOOKS inmy possession. This continues to be a problem.

[Composite Exhibit 37 - Captain’s Log Entry for 12/21/2008].

98. On December 22, 2008, Captain Jeskevicius again notified Captain Unterberg of the F/V

Majestic Blue’s crew refusal to abide by his waste management plan or MARPOL V. He

wrote to Captain Unterberg, “Trash is still going over the side and NOT BEING

REPORTED. For the amount of waste generated these past six weeks there is a paltry

minimal amount being held on board.” [Composite Exhibit 38 - 12/22/2008 Email from

Capt. Jeskevicius to Capt. Unterberg].

99. Captain Jeskevicius attempted to resign as captain of the F/V Majestic Blue on December

27, 2008 “based on [his] observations of illegal trash dumping.” [Composite Exhibit 37 -

Captain’s Log entry 12/27/2008].

100.

Captain Jeskevicius again reported illegal dumping occurring on board the F/V

Majestic Blue to Captain Unterberg on December 28, 2008, stating:

In six weeks of fishing it has become painfully obvious that the seniorcrew members cannot be trusted to do the right thing with regards to USand international regulations governing waste disposal. We did a resupplytoday… I was out there for most of the deliveries and a considerableamount of packaging went over the side when I was not on deck and, infact, has been going over since I first came aboard.

[Composite Exhibit 39 - 12/28/2008 Email from Capt. Jeskevicius to Capt. Unterberg].

101. The MARPOL violations continued while Captain Doug Pine was in command of

the F/V Majestic Blue in Fall 2009.

102. On August 30, 2009, Captain Pine recorded in the Captain’s Log:

{GFM-00547851.DOC-}27




I observed an oily sheen and what appeared to be soap suds off thestarboard side of this vessel. I called the C/E to the site. He begansquirting Joy soap on the water after speaking to one of his crew in thehold. I directed him to stop applying the soap as it is illegal to do so. Iasked him what the source of the oil was and if it was from the bilge. He

said no, the source was the brine from the fish wells. I took photos for thearea. Will call Jurgen.

***

Called Jurgen – Left voicemail on his cell and office telephones.

***

I have sent an email and pictures to Jurgen and Mr. Hwang.

[Composite Exhibit 37 - 8/30/2009 Captain’s Log Entry].

103.

Captain Pine documented another pollution incident in the Captain’s Log on

September 24, 2009, writing “Someone tossed a whole mess of plastic over the side.”

[Composite Exhibit 37 – 9/24/2009 Captain’s Log Entry].

104. Again, on October 2, 2009, Captain Pine recorded in the Captain’s Log, “I

witnessed a deckhand throwing approx. 0.06 m3 Plastic (Cat 1) garbage overboard. I told

him to not do this again.” [Composite Exhibit 37 - 10/2/2009 Captain’s Log Entry].

105.

In his final entry in the Captain’s Log, Captain Pine wrote, in pertinent part:

This is my statement regarding my allegations that the Korean officers onmy ship have been, while under my command, in daily violation ofMARPOL 73/78 Annex V in that they routinely dump Category 1 (plastic)garbage at sea.

***

I know in my heart that the Korean officers on my ship intended to violatethe waste mgt. plan. I know this because on a few occasions they did thisdirectly in my presence without the slightest hesitation.

***

I have personally witnessed, on many occasions, the entire compliment ofofficers and unlicensed seamen of the Majestic Blue violate MARPOL andIOPP and CFRs by dispensing of plastic waste at sea.

{GFM-00547851.DOC-}28




[Composite Exhibit 37 - 10/19/2009 Captain’s Log Entry].

106. Despite the significant attention drawn to F/V Majestic Blue’s environmental

violations by Captain Pine’s incident, Defendants failed to implement meaningful change

to the vessel’s waste management policies. Thus, when Captain David Hill took over as

captain in May 2010, he observed the crewmembers dumping plastics and oil from the

vessel and trying to hide their actions from him.

107. On June 2, 2010, Captain Hill wrote to his wife:

Last nite the crew threw fifty gallons or so of hydrolic oil and oily ragsinto the sea. They have also been throwing plastic in. Next they lied to

me about it. The Chief Engineer just came to me now and admitted aboutthe oil, but blamed it on the bosun. The bosun lied to me about it. Themate lied to me about the plastic, and the FM [Fishing Master] lied about both.

[Composite Exhibit 40 - 6/2/2010 Email from Capt. Hill to Mrs. Hill (emphasis added].

108. Captain Hill further admitted to his wife that he and other crew members knew

about the dumping but intentionally did not report it, stating:

So the observer from Palau has agreed not to report our little pollution

incident if no more happens. I have been busy yelling at everyone I can tomake sure it don’t. I could be in real trouble already if it gets out that wespilled oil, I knew about it and did not report it.

[Composite Exhibit 40 - 6/4/2010 Email from Capt. Hill to Mrs. Hill].

109. Captain Hill informed Captain Unterberg about the crew’s illegal dumping of oil

and garbage, and Captain Unterberg relayed the information to Dongwon officials,

having no authority himself to address the situation personally.

COUNT I: VIOLATION OF THE FALSE CLAIMS ACT

{GFM-00547851.DOC-}29




31 U.S.C. § 3729(a)(2) (2008) - PRE-FERA2

AGAINST ALL DEFENDANTS

110. Plaintiff/Relator incorporates herein Paragraphs 1-109 above as relevant.

111.

Defendants knowingly presented or caused to be presented to the United States

Government a false or fraudulent claim to obtain a Government benefit and/or

Government property and/or the property of a “contractor, grantee or other recipient” to

which the United States Government provides all or part of the property or money, by

fraudulently requesting or demanding U.S. Vessel Documentation and using the

fraudulently obtained Certificates of Documentation to request or demand a FAA licenses

from the Government, specifically the National Marine Fisheries Services (NMFS).

112. As part of a Government program to financially benefit U.S. citizens and to

promote the U.S. fisheries industry, the United States pays the FAA approximately $18

million annually and in return receives an allotment of fishing licenses for the exclusive

use by United States documented Vessels.

113. An FAA license is a Government benefit and/or Government property and/or is

the Property of the FAA which is a “contractor, grantee or other recipient” to which the

United States Government provides all or part of the property or money requested or

demanded.

114. Possessing a proper U.S.C.G. Certificate of Documentation is a prerequisite for

legally obtaining an FAA license. 50 C.F.R. § 300.32(h)(7)(v). To obtain a U.S.C.G.

Certificate of Documentation for a vessel, a vessel owner must certify its compliance

with the citizenship and other requirements of the Vessel Documentation Act including

2 On May 20, 2009, the False Claims Act was amended by the Fraud Enforcement & Recovery Act ("FERA"), Pub.L. No. 111-21, § 4, 123 Stat. 1617, 1621 (2009).

{GFM-00547851.DOC-}30


https://advance.lexis.com/GoToContentView?requestid=249f3775-9262-4674-bb1c-55471eeff5a7&crid=88665cdc-ae54-64f8-3648-939714fae321






that non-citizens do not exercise control over the owning entity. 46 U.S.C.S. §§ 12101 et

seq. A United States Certificate of Documentation is Government property and/or is a

Government benefit with actual, real and substantial value.

115. Defendants’ made false and fraudulent claims for U.S. Certificates of

Documentation by falsely certifying to the United States Coast Guard in their Initial

Applications for Certificates of Documentation in 2008, that the LLCs were not

controlled by non-citizens, when in fact the LLCs were controlled by the Korean

company Dongwon.3

116.

Defendants then presented the fraudulently procured Certificates of

Documentation (a false record) to the Government, specifically the National Marine

Fisheries Services (NMFS), for the purpose having the NMFS request the FFA issue FFA

licenses.

117. Defendants have successfully perpetrated this fraud every year since 2008,

renewing their U.S. Documentation by recertifying (falsely) each year that the LLCs were

not controlled by non-U.S. Citizens; and by yearly presenting their fraudulently obtained

Certificates of Documentation to the NMFS to obtain a renewal of the FAA licenses

purchased by the Government.4

3 Despite Defendants’ certifications of compliance, in truth the LLCs were never operated in compliance with theVessel Documentation Act because they were actually controlled by a Korean company and were owned on paper

only by Korean born U.S. naturalized citizen straw men who purchased the Vessels in a less than arm’s lengthtransaction without paying any money for the Vessels. Defendants falsely certified that “non-citizens do not haveauthority within a management group, whether through veto power, combined voting, or otherwise, to exercisecontrol over the LLC,” despite knowing that Dongwon would actually exercise ultimate control over the LLCs.Defendants also falsely “certified” that the Vessels “will at all times remain under the command of a U.S. citizen,”even though the LLCs only ever hired inexperienced “paper” captains from the United States as window dressing, infact leaving the Korean “fishing masters” to exert actual command over the Vessels.

4 On June 14, 2010, the F/V Majestic Blue sank. After this date renewals occurred only for the F/V Pacific Breeze.

{GFM-00547851.DOC-}31




118. The Government fisc was and continues to be harmed by Defendants’ false claims

because the FAA licenses were purchased by the Government for $18 million (yearly) for

the exclusive use of vessels beneficially owned and controlled by U.S. citizens as part of

a program to support the United States’ global economic and political objectives, as well

as the U.S. fisheries industry, and a portion of these funds and property have been and

continue to be fraudulently diverted by Defendants to foreign (Korean) controlled and

owned Vessels.

WHEREFORE, the Plaintiff/Relator, on behalf of itself and the United States, requests that:

A.

The Defendants be cited to appear and answer and, upon final trial or hearing,

judgment be awarded to Plaintiff/Relator and imposed on the Defendants, jointly and

severally, for:

i.

All actual, incidental, and/or consequential damages sustained by the United

States;

ii. Treble damages pursuant to 31 U.S.C. § 3729(a);

iii.

Civil penalties pursuant to 31 U.S.C. § 3729(a); and

iv. Post-judgment interest at the highest legal rates, where applicable.

B.

The Plaintiff/Relator be awarded:

i. Reasonable and necessary attorneys’ fees, litigation expenses and court costs

though the trial and any appeals of this matter;

ii. An amount of at least 25%, but no more than 30%, of the proceeds of the

action or settlement for originating and prosecuting this action and collecting

the civil penalties; and

iii. Post-judgment interest at the highest legal rates, where applicable;

{GFM-00547851.DOC-}32




C. This Court grant such other and further relief, both at law and in equity, that it deems

fit.

COUNT II: VIOLATION OF THE FALSE CLAIMS ACT

31 U.S.C. § 3729(a)(1)(B) (2009) – POST-FERAAGAINST ALL DEFENDANTS

119. Plaintiff/Relator incorporates herein Paragraphs 1-109 above as relevant.

120. Defendants knowingly presented or caused to be presented to the United States

Government a false or fraudulent claim to obtain a Government benefit and/or

Government property and/or the property of a “contractor, grantee or other recipient” to

which the United States Government provides all or part of the property or money, by

fraudulently requesting or demanding U.S. Vessel Documentation and using the

fraudulently obtained Certificates of Documentation to request or demand a FAA licenses

from the Government, specifically the National Marine Fisheries Services (NMFS).

121. In the alternative, Defendants made false claims to the FAA, by presenting

fraudulently obtained Certificates of Documentation to claim property or money from the

FAA which was to be spent or used on the Government’s behalf and/or to advance a

Government program or interest; and the United States Government provided a portion of

the money or property requested or demanded.

122. As part of a Government program to financially benefit U.S. citizens and to

promote the U.S. fisheries industry, the United States pays the FAA approximately $18

million annually and in return receives an allotment of fishing licenses for the exclusive

use by United States documented Vessels.

123. An FAA license is a Government benefit and/or is Government property and/or is

the Property of the FAA which is a “contractor, grantee or other recipient” provided the

{GFM-00547851.DOC-}33




money or property to be spent or used on the Government’s behalf or to advance a

Government program or interest and the Government has provided a portion of the

money or property requested or demanded.

124. Possessing a proper U.S.C.G. Certificate of Documentation is a prerequisite for

legally obtaining an FAA license. 50 C.F.R. § 300.32(h)(7)(v). To obtain a U.S.C.G.

Certificate of Documentation for a vessel, a vessel owner must certify its compliance

with the citizenship and other requirements of the Vessel Documentation Act including

that non-citizens do not exercise control over the owning entity. 46 U.S.C.S. §§ 12101 et

seq. A United States Certificate of Documentation is Government property and/or is a

Government benefit with actual, real and substantial value.

125. Defendants’ made a false and fraudulent claims for a U.S. Certificates of

Documentation by falsely certifying to the United States Coast Guard in their Initial

Applications for Certificates of Documentation in 2008, that the LLCs were not

controlled by non-citizens, when in fact the LLCs were controlled by the Korean

company Dongwon.5

126. Defendants then presented the fraudulently procured Certificates of

Documentation (a false record) to the Government, specifically the National Marine

5 Despite Defendants’ certifications of compliance, in truth the LLCs were never operated in compliance with the

Vessel Documentation Act because they were actually controlled by a Korean company and were owned on paperonly by Korean born U.S. naturalized citizen straw men who purchased the Vessels in a less than arm’s lengthtransaction without paying any money for the Vessels. Defendants falsely certified that “non-citizens do not haveauthority within a management group, whether through veto power, combined voting, or otherwise, to exercisecontrol over the LLC,” despite knowing that Dongwon would actually exercise ultimate control over the LLCs.Defendants also falsely “certified” that the Vessels “will at all times remain under the command of a U.S. citizen,”even though the LLCs only ever hired inexperienced “paper” captains from the United States as window dressing, infact leaving the Korean “fishing masters” to exert actual command over the Vessels.

{GFM-00547851.DOC-}34




Fisheries Services (NMFS), for the purpose having the NMFS request the FFA issue FFA

licenses.

127. In the alternative, Defendants presented the fraudulently procured Certificate of

Documentation (a false record) to the FAA, for the purpose of obtaining FAA licenses

paid for by the Government.

128. Defendants have successfully perpetrated this fraud every year since 2008,

renewing their U.S. Documentation by recertifying (falsely) each year that the LLCs were

not controlled by non-U.S. Citizens; and by yearly presenting their fraudulently obtained

Certificates of Documentation to the NMFS to obtain a renewal of the FAA license

purchased by the Government.6

129. The Government fisc was and continues to be harmed by Defendants’ false claims

because the FAA licenses were purchased by the Government for $18 million for the

exclusive use of vessels beneficially owned and controlled by U.S. citizens as part of a

program to support the United States’ global economic and political objectives, as well as

the U.S. fisheries industry, and a portion of these funds and property have been and

continue to be fraudulently diverted by Defendants to foreign (Korean) controlled and

owned Vessels.


D. The Defendants be cited to appear and answer and, upon final trial or hearing,


severally, for:

6 On June 14, 2010, the F/V Majestic Blue sank. After this date renewals occurred only for the F/V Pacific Breeze.

{GFM-00547851.DOC-}35




i. All actual, incidental, and/or consequential damages sustained by the United

States;


iii. Civil penalties pursuant to 31 U.S.C. § 3729(a); and


E. The Plaintiff/Relator be awarded:



ii.

An amount of at least 25%, but no more than 30%, of the proceeds of the



iii.

Post-judgment interest at the highest legal rates, where applicable;

F. This Court grant such other and further relief, both at law and in equity, that it deems

fit.

COUNT III – REVERSE FALSE CLAIM FOR VIOLATION OF VESSEL

DOCUMENTATION ACT – 31 U.S.C. § 3729(a)(7) PRE-FERA

AGASINT ALL DEFENDANTS

130.

Plaintiffs incorporate herein Paragraphs 1 - 109 as relevant.

131. Beginning in 2008, and in each subsequent year, Defendants knowingly and

intentionally made or used false records and/or statements to conceal, avoid, or decrease

an obligation to pay or transmit property to the Government.

132. Defendants presented false initial applications and subsequent renewal

applications to the U.S.C.G. and other government agencies, denying foreign nationals

{GFM-00547851.DOC-}36




exerted control over the LLCs, despite knowing the LLCs were controlled by Korean

nationals rather than United States citizens.

133. Defendants used these false statements and/or records to conceal, avoid, or

decrease their obligation to pay civil fines and forfeiture of the Vessels and their

equipment, which obligation resulted from Defendants’ violation of the Vessel

Documentation Act’s citizenship requirements.

134. The United States government suffered damages because the false statements

prevented the government from collecting civil fines and receiving forfeited vessels and

equipment owed to the Government as a result of Defendants’ violation of the Vessel

Documentation Act.


A.


judgment be awarded to Plaintiff and imposed on the Defendants, jointly and

severally, for:

i.


States;

ii.

Treble damages pursuant to 31 U.S.C. § 3729(a);



B. The Plaintiff/Relator be awarded:



{GFM-00547851.DOC-}37









fit.

COUNT IV – REVERSE FALSE CLAIM FOR VIOLATION OF VESSEL

DOCUMENTATION ACT – 31 U.S.C. § 3729(a)(1)(G) POST-FERA

AGASINT ALL DEFENDANTS

135.


136. Beginning in 2008, and in each subsequent year, Defendants made, used, or

caused to be made or used, false records or statements material to an obligation to pay or

transmit money or property to the government and/or knowingly concealed and

improperly avoided or decreased an obligation to pay money to the Government.

137. Defendants presented false initial applications and subsequent renewal

applications to the U.S.C.G. and other government agencies, denying that foreign

nationals exerted control over the LLCs, despite knowing the LLCs were controlled by

Korean nationals rather than United States citizens.

138. Defendants used these false statements and/or records to conceal, avoid, or

decrease their obligation to pay civil fines and forfeiture of the Vessels and their

equipment, which obligation resulted from Defendants’ violation of the Vessel

Documentation Act’s citizenship requirements.

139. The United States government suffered damages because the false statements

prevented the government from collecting civil fines and receiving forfeited vessels and

{GFM-00547851.DOC-}38




equipment owed to the Government as a result of Defendants’ violation of the Vessel

Documentation Act.




severally, for:


States;

ii.

Treble damages pursuant to 31 U.S.C. § 3729(a);



E.




ii.






fit.

COUNT V – CONSPIRACY TO COMMIT COUNT I

VIOLATION OF FSA - PRE-FERA


{GFM-00547851.DOC-}39




140. Plaintiff/Relator incorporates herein Paragraphs 1 - 109 as relevant.

141. Defendants knowingly and intentionally conspired to commit a violation of the

False Claims Act by having Jayne Kim and Joyce Kim falsely certify to the Government

that Majestic Blue and Pacific Breeze, respectively, were not controlled by non-United

States citizens, with the intent to fraudulently receive United States Certificates of

Documentation and FAA fishing licenses for Vessels owned by LLCs actually controlled

by South Korean nationals.


A.



severally, for:

i.


States;


iii.

Civil penalties pursuant to 31 U.S.C. § 3729(a); and


B.








{GFM-00547851.DOC-}40





fit.

COUNT VI – CONSPIRACY TO COMMIT COUNT II

VIOLATION OF THE FSA – POST-FERAAGAINST ALL DEFENDANTS

142. Plaintiff/Relator incorporates herein Paragraphs 1 - 109 as relevant.

143. Defendants knowingly and intentionally conspired to commit a violation of the

False Claims Act by having Jayne Kim and Joyce Kim falsely certify to the Government

that Majestic Blue and Pacific Breeze, respectively, were not controlled by non-United

States citizens, with the intent to fraudulently receive United States Certificates of

Documentation and FAA fishing licenses for Vessels owned by LLCs actually controlled

by South Korean nationals.

144.

In the alternative, Defendants knowingly and intentionally conspired to commit a

violation of the False Claims Act by presenting a fraudulently obtained Certificate of

Documentation to the FAA for the purpose of obtaining FAA fishing licenses available

only to U.S. owned and registered vessels.


D.



severally, for:


States;



{GFM-00547851.DOC-}41





E. The Plaintiff/Relator be awarded:







F.

This Court grant such other and further relief, both at law and in equity, that it deems

fit.

COUNT VII – CONSPIRACY TO COMMIT COUNT III

REVERSE FALSE CLAIM PRE-FERA


145. Plaintiffs incorporate herein Paragraphs 1 - 109 as relevant.

146. Defendants, conspired to use false records and to misrepresent to the United

States Government that Dongwon, a Korean entity, did not exert control over the LLCs in

order to “conceal, avoid, or decrease” the civil fines and forfeiture the LLCs would be

subject to under the Vessel Documentation Act.

WHEREFORE, the Plaintiff/Relator, on behalf of itself and the United States, request that:

A. The Defendants be cited to appear and answer and, upon final trial or hearing,


severally, for:


States;

{GFM-00547851.DOC-}42







B. The Plaintiff/Relator be awarded:








fit.

COUNT VIII – CONSPIRACY TO COMMIT COUNT IV

REVERSE FALSE CLAIM – POST-FERA


147.


148. Defendants conspired to make, use or cause to be made or used, false record or

statement material to an obligation to pay to transmit money or property to the

government and/or knowingly concealed and improperly avoided or decreased an

obligation to pay money to the Government by presenting an application to the

Government falsely certifying that non-citizens did not exert control over the LLCs.

WHEREFORE, the Plaintiff/Relator, on behalf of itself and the United States, request that:

{GFM-00547851.DOC-}43




Pollution from Ships (“APPS”) in order to “conceal, avoid, or decrease” civil fines owed

to the United States for violation of APPS. 33 U.S.C. § 1906.

151. Each violation of APPS subjects the offender to a civil fine of up to $25,000.00,

with each day of a continuing violation constituting a separate violation. 33 U.S.C. §

1908.

152. Defendants’ fraudulent concealment and intentional failure to report the oil

discharge in order to avoid civil fines constitutes an unlawful avoidance of an obligation

to pay money owed to the United States in violation of 31 U.S.C. § 3729(a)(7) (2008) and

31 U.S.C. § 3729(a)(1)(G) (2009).

153. Defendants’ unlawful conduct deprived the United States of its legal entitlement

to civil penalties and fines owed to the United States.

WHEREFORE, the Relator, on behalf of itself and the United States, request that:


judgment be awarded to Plaintiffs and imposed on the Defendants, jointly and

severally, for:


States;



iv. Pre-judgment interest at the highest legal rates, where applicable.

B. The Plaintiffs be awarded:



{GFM-00547851.DOC-}45









fit.

COUNT X – REVERSE FALSE CLAIM FOR VIOLATION OF APPS

31 U.S.C. § 3729(a)(1)(G) POST-FERA


154.

Plaintiff incorporates herein Paragraphs 1 – 109 as relevant.

155. Defendants intentionally and knowingly concealed or knowingly and improperly

avoided or decreased an obligation to pay or transmit money or property to the

government by filing to immediately report discharges of oil and other materials from the

F/V Majestic Blue in violation of the Act to Prevent Pollution from Ships (“APPS”).

156. Each violation of APPS subjects the offender to a civil fine of up to $25,000.00,

with each day of a continuing violation constituting a separate violation. 33 U.S.C. §

1908.

157.

Defendants’ fraudulent concealment and intentional failure to report the oil

discharge in order to avoid civil fines constitutes an unlawful avoidance of an obligation

to pay money owed to the United States in violation of 31 U.S.C. § 3729(a)(1)(G) (2009).

158. Defendants’ unlawful conduct deprived the United States of its legal entitlement

to civil penalties and fines owed to the United States.


{GFM-00547851.DOC-}46






severally, for:


States;



iv. Pre-judgment interest at the highest legal rates, where applicable.

E.

The Plaintiffs be awarded:



ii.




iii.

Post-judgment interest at the highest legal rates, where applicable;


fit.

COUNT XI – CONSPIRACY TO COMMIT CLAIM IX

REVERSE FALSE CLAIM - VIOLATION OF APPS – PRE-FERA



160. Defendants conspired to not report the illegal discharge of oil and dumping from

the F/V Majestic Blue as required by APPS in order to “conceal, avoid, or decrease” the

civil fines Majestic Blue would be subject to under APPS as the owner of the vessel.

{GFM-00547851.DOC-}47







severally, for:


States;



iv.

pre-judgment at the highest legal rates, where applicable.

B. The Plaintiffs be awarded:







C.

This Court grant such other and further relief, both at law and in equity, that it deems

fit.

COUNT XII – CONSPIRACY TO COMMIT CLAIM X

REVERSE FALSE CLAIM - VIOLATION OF APPS – POST-FERA



162. Defendants conspired to conceal or knowingly and improperly avoid or decrease

an obligation to pay or transmit money or property to the Government by conspiring not

{GFM-00547851.DOC-}48




to report the illegal discharge of oil and dumping from the F/V Majestic Blue as required

by APPS in order to “conceal, avoid, or decrease” the civil fines Majestic Blue would be

subject to under APPS as the owner of the vessel.




severally, for:


States;



iv.

pre-judgment at the highest legal rates, where applicable.

E. The Plaintiffs be awarded:








fit.

Dated: January 10, 2014

Respectfully Submitted,

{GFM-00547851.DOC-}49




GORDON, FOURNARIS &

MAMMARELLA, P.A. Counsel for Plaintiff

/s/ William M. Kelleher

William M. Kelleher, Esquire (DSB #3961)1925 Lovering Avenue

Wilmington, DE 19806(302) 652-2900

MOORE & COMPANY, P.A.Counsel for Plaintiff/Relator

355 Alhambra Circle, Suite 1100Coral Gables, FL 33134Telephone: (786) 221-0600

Facsimile: (786) 221-0601Michael T. Moore, Esq.(Fla. Bar No. 207845)Amber E. Ferry, Esq.(Fla. Bar No. 0014299)Blair Brogan, Esq.(Fla. Bar No. 95029)Clay M. Naughton, Esq.(Fla. Bar No. 29302)Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]


mailto:[email protected]














