Court Revives Restitution Claims in Smuggling Ring

(CN) - The South African government is entitled to restitution from three men who illegally harvested the country's rock lobsters and then shipped them to the United States, the 2nd Circuit ruled.

Arnold Bengis, David Bengis and Jeffrey Noll were convicted for smuggling rock lobsters from the south and west coasts of Africa from the late 1980s until 2001, when the South African authorities scuppered the scheme.

Arnold Bengis headed up a lobster-harvesting operation in the country known as Hout Bay Fishing Industries, while Noll and David Bengis brought the lobster to the American market through two U.S.-based businesses.

The South African government chose not prosecute the three men but went after Hout Bay, an operational manager for the company and a lobster fisherman who poached lobsters from the country's seas. Authorities also identified 14 fish inspectors as having taken bribes from Bengis' company.

Hout Bay was forced to pay a $1.2 million fine in South Africa, while a U.S. court jailed the defendants and ordered them to pay $13.3 million in penalties.

In the interim, a federal judge denied the South African government's application for restitution, ruling that the smuggled lobsters were not the country's property and South Africa was not a victim of any crime under U.S. law.

The Manhattan-based federal appeals court disagreed and threw out the district court ruling under the both the Mandatory Victims Restitution Act and the Victim and Witness Protection Act.

"Arnold Bengis, Jeffrey Noll and David Bengis' conspiracy to conceal their illegal trade in lobster deprived South Africa of money it was due," Judge Peter Hall wrote for the court's three-judge panel.

"Had the defendants not undertaken efforts to conceal their overharvesting, including off-loading overharvested lobsters at night and under-reporting the amounts of their catch to South African authorities, those lobsters caught in excess of the legal limits would have been seized and sold by the government."

"The defendants' conduct in depriving South Africa of that revenue is, therefore, an offense against property." Hall added.

Hall also rejected the notion that the country emerged unharmed from the defendants' scheme.

"The defendants' conduct facilitated the illegal harvesting of the lobsters by providing access to the United States market and enabled the poaching to go undetected by the South African government by, for example, off-loading the overharvested lobster at night, under-reporting catch amounts to South African authorities, bribing officials, and submitting false export documents," the ruling states.

"In doing so, the defendants' criminal conduct 'directly harmed' the South African government," Hall concluded.

On remand, the district court may impose restitution and forfeiture awards, the 2nd Circuit advised. Hall noted that the U.S. government may wish to transfer the previous forfeiture award to South Africa since the market value of the illegally harvested lobsters may be duplicative.

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