Court orders $1.43 million attachment in fraud suit

TRENTON — Lobster 207, the marketing arm of the Maine Lobstering Union (MLU), has won a $1.43 million attachment against the Trenton Bridge Lobster Pound property, its owners, Anthony and Josette Pettegrow, their son Warren Pettegrow and Poseidon Charters Inc., a lobster-buying business owned by the Pettegrow family.

U.S. District Court judge Lance E. Walker ordered the attachment last week in a lawsuit filed last year in which the lobstermen’s group charged the Pettegrows, the businesses and Beals Jonesport Co-op manager Stephen M. Peabody with a variety of fraudulent activities in connection with Lobster 207’s purchase of the Pettegrows’ wholesale lobster business.

Earlier in the week, Walker dismissed several of the group’s claims but allowed the case based on its claims under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act to proceed against the Pettegrows and the corporate defendants.

Walker dismissed the RICO claims against Peabody but allowed Lobster 207 to pursue its claims against him on the grounds of his alleged fraud.

The case arose out of Lobster 207’s August 2016 purchase of the wholesale lobster business operated by Trenton Bridge, which was completed in March 2017.

At the same time, the Pettegrows and Trenton Bridge agreed to stay out of the wholesale lobster business for several years and Warren Pettegrow was hired as chief executive officer of the new wholesale business.

Trenton Bridge was allowed to buy lobsters for its retail location on the Bar Harbor Road directly from fishermen but was supposed to sell any lobsters it didn’t use there to Lobster 207 at the regular dock price. Those lobsters would then be marketed by the lobstering group.

Last April, the lobstering group fired Warren Pettegrow, claiming he and the other defendants took part in what the court described as “a variety of schemes” that “fraudulently enriched the Pettegrows at Lobster 207’s expense.”

In December, Lobster 207 filed its lawsuit and asked the court for an attachment of the defendants’ assets.

According to its complaint, while Warren Pettegrow was supposed to be working for Lobster 207, he and his parents continued to operate a wholesale lobster business through Trenton Bridge Lobster Pound. Pettegrow and Peabody also allegedly engaged in a scheme to overcharge Lobster 207 for lobsters purchased from the Beals Jonesport Co-op.

An attachment prevents a defendant from disposing of real estate. The related “trustee process” ties up financial assets such as funds in a bank account or securities account.

To be entitled to an attachment in a lawsuit in federal court, a party must show that it has “a greater than 50 percent chance” of winning, the judge wrote last week.

In December, Lobster 207 asked for an attachment in the amount of $1,940,170.33, the damages it allegedly suffered as at the hands of the Pettegrows. In its order last week, the court found that “the reasonable estimation of Lobster 207’s losses” was $1,438,181.23 and that the group had a better than 50 percent chance of winning its case.

In its complaint, Lobster 207 based its RICO claims, in part, on the “labor management embezzlement” provision of the law that makes embezzlement from a “labor organization” by one of its officers or employees, direct or indirect, a violation of the RICO statute. According to the court, Lobster 207, a Maine limited liability company (LLC) is not itself a labor organization and neither is the MLU, its only member.

Although the MLU requires that its individual members join the International Association of Machinists and Aerospace Workers (IAMAW), unquestionably a union, “the IAMAW is not, and cannot be, a member of the MLU,” a fish marketing association organized under Maine law that limits its membership to individuals.

“The mere fact that the MLU’s members have separate membership in the IAMAW does not transform the MLU into a labor organization,” the judge wrote.

Still pending before the court is Lobster 207’s request to deposit monthly payments of the purchase price still owed the Pettegrows into a special escrow account. A response to that request is due later this month.

No trial date has been set.

Stephen Rappaport

Stephen Rappaport

Waterfront Editor at The Ellsworth American
Stephen Rappaport has lived in Maine for nearly 30 years. A lifelong sailor, he spends as much time as possible messing about in boats. [email protected]

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