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You're watching CNBC On Demand.

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In this episode of American Read, it's a
dangerous job.

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But Carlos Rafael, a .k .a. the
Codfather, makes a killing in commercial

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fishing. His secret?

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Lying and cheating.

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This is his way of life, to break the
law repeatedly.

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Rafael is salty.

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Look at me.

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He's really kind of a character. He's
very funny. He's really profane.

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And he can't stop bragging, which makes
the Codfather easy

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to catch on tape.

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But how will the feds respond when they
learn that Codfather's secret sauce

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includes a sheriff's deputy smuggling
cash?

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You have to understand, that's where 9
-11 started, Boston Logan Airport.

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And now we're hearing about a law
enforcement officer circumventing

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that same airport.

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New Bedford, Massachusetts is a small
port city that typically attracts

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and fishermen.

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But in June 2015,

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two self -described Russian mobsters
show up in town.

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They say they are looking for a place to
stash more than $100 million in cash.

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Their best bet is Carlos Rafael.

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the crude boss of the new Bedford
waterfront, who has a fleet of 32

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boats worth millions.

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The Russians tell Raphael they want to
buy his business, but first, they need

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see his books.

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In response, Raphael makes a joke.

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You could be the man I am, and this
would be a problem.

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And then he thinks again.

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The Russians laugh, but the joke is on
Rafael.

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They are the IRS, and this undercover
operation is off to a good start.

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They are now confident they will learn
the secrets of the man who has earned

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nickname the Codfather.

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Rafael's story begins in the Azores
Islands off the coast of Portugal, where

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is born.

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In 1968, he convinces his family to move
to America.

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He came here from Portugal approximately
at the age of 15.

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He doesn't have much education. He
doesn't really know the language. He

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job on the docks in New Bedford, and he
just stays there.

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In coming to New Bedford, Rafael's
family is following generations of

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fishermen. who have come to this famous
port.

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It was once the center of the whaling
industry.

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But when whaling dies, the money here
moves to what is called ground fish,

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paddock, flounder, and the fish that
America was founded on, cod.

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Cod was the reason a lot of the
colonists came here because they were so

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abundant.

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It was literally the first industry in
the country.

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By the 1970s, when Raphael is settling
into New Bedford, enormous factory ships

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from around the world are close by,
making off with millions of pounds of

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each day.

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They would process fish 24 hours, 7 days
a week.

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Fishermen who were around at that time
said it looked like Manhattan out there.

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There were so many lights of the boat
parked, even just 60 or 70 miles

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The fleets of foreign boats are legally
in international waters.

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But the presence of Soviet fishing boats
lurking just offshore does not sit well

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with Americans.

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And so in 1976, Congress kicked out the
foreigners and establishes a zone of 200

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offshore miles as exclusive to the
United States.

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And then the government offers
subsidized loans to U .S. fishermen.

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Now they had to build up the American
fisheries because we were nothing, and

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they just started handing out free
money.

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At the time, Jim Kendall is well into
his career as a scallop fisherman.

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Anybody who wanted to build a boat and
find a small dial payment could go get

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it. And that is when Carlos Rafael
launches his career in the fishing

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For a young Azorean like Carlos, the
vector was a place of opportunity, and

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certainly took advantage of that.

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While working as a fish cutter, Rafael
gets a loan in 1980 and opens Carlos

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Seafood, a fish processing plant.

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Soon after, he buys his first boats,
perfectly positioning himself to rake in

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big money.

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He has his own captains on his own boat,
catching the fish.

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When those fish come into port, those
boats are selling the fish to his own

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business.

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And his timing could not be better.

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His introduction to being a fishing
operation in New England was

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the chaos of sort of a free -for -all.
And the message,

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quite literally, was there's a lot of
fish out there to catch. Go catch them.

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And while Rafael may enjoy fishing for
fun, for business, he sends his captains

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out to catch the fish.

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He stays on the shore.

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No, no, he was never a true fisherman.

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Carlos was a lot of things, but that's
one thing he can't claim.

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And for many, that is a significant
distinction.

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Because professional fishermen are
people who routinely head out into

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treacherous waters.

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in what is still one of the most
dangerous professions in the country.

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People who've been out at sea, they
learn humility.

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You look at a big wave or a big storm,
you understand humility.

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And most every fisherman I know has that
humility.

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There's not an ounce of humility in
Carlos Rafael.

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Almost everyone who meets him learns
that.

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As he tells the IRS undercover agents,
he is among the smartest guys on the

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docks.

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And one

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of the most important things Rafael

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knows is that to succeed, he needs lots
of boats.

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Bigger is always better.

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When you got 99, you still operate.

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He's really kind of a character. He's
sort of a loud, boisterous guy. He's

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funny. He's really profane.

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He is memorable.

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As Carlos Ravel's business grows, it
appears that his story is a classic tale

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an immigrant achieving the American
dream.

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There's a young man who moved here.

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From his homeland, he had a very young
age with little formal education and

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worked some very hard jobs on the dock
and eventually saved money to build up a

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business. And that's laudable in the
most fundamental ways that we Americans

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value.

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But Rafael's story is more complicated.

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Early on, people who do business with
him learn to be careful.

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Well, if I shook hands with him, I guess
I'd count my fingers after I got

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through shaking hands with him based on
his reputation.

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It is no secret that Raphael will agree
to pay a price for a load of fish at the

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morning auction, but it is often not a
final price.

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The one time that Carlos bought my trip,
I actually ended up not selling to

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Carlos.

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because he tried to cut the price that
he had agreed to pay, and I refused to

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let him do so.

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Rafael says he is just protecting his
business.

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But it's one thing to gouge fishermen.
For years, Rafael thinks the U .S. can

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wait for his tax payments.

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But the IRS disagrees.

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He's prosecuted for tax evasion by my
office in 1986.

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And he was convicted in that case.

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Rafael serves four months in prison.

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Most people would respond to an
experience like that and say, you know

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never going to let that happen to me
again.

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But that wasn't Carlos' reaction.

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No, it's not.

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Rafael's reaction is to continue to draw
the attention of law enforcement.

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And it's not long before a second
indictment comes down.

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This time, he is charged with price
fixing.

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The allegation was he was colluding with
other commercial fishermen in New

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Bedford to set prices on certain kinds
of fish.

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But he pulls out his charm

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and, as he says, played the jury.

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His strategy works.

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The jury takes his side, and he is
acquitted.

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As he walks out of the courtroom, he has
a message for the prosecutors.

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That

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pretty

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well encapsulates his...

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feelings about authority.

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He is not going to be told what to do by
anybody at any time.

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He's his own person, and the rules just
weren't made for him.

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Next on American Greed, Raphael's
chilling prediction.

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The strong will get stronger than we
will disappear.

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In 1994, fishermen up and down the New
England coast receive stunning news.

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The fish that have been so plentiful for
hundreds of years are disappearing.

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Species like haddock, flounder, and the
mighty cod are in a dangerous state of

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decline.

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We discovered, wow, we can overfish just
as much as the Russians can.

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And, you know, bust followed boom.

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To give the fish a chance to rebound,
the National Oceanic and Atmospheric

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Administration, NOAA, comes up with a
complicated set of regulations.

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This is a national crisis.

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At the time, John Bullard is the
regional administrator of NOAA.

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And the rules are complex, to say the
least. I mean, our rules are

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literally that thick.

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The fishermen are furious.

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They see not only their livelihood, but
an entire way of life on the brink of

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extinction. The new regulations means
you're out of business.

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Everyone knows everything.

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Everything I've worked for for 35 years
is only a matter of time. We're trying

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to survive here.

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Think about what kind of a person wants
to go out and brave the elements.

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They're fiercely independent people.

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They're not the kind of person who says,
oh, hey, regulate me.

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I got no money!

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And while fishermen with small
operations are yelling, Carlos Rafael

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knows he will survive.

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And Rafael's mind, the weak are the
hundreds of fishermen

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who operate one or two boats.

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People like Rodman Sykes.

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Sykes is a third -generation fisherman
operating near New Bedford in Point

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Judith, Rhode Island.

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The only other thing I ever wanted to do
was play second base for the Red Sox,

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and that didn't work out, so I became a
fisherman.

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Sykes begins his fishing career at the
same time Raphael enters the industry,

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the good old days.

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Back then, you could do whatever you
wanted to do. I mean, you'd throw the

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off and go fishing wherever you wanted,
catch wherever you wanted.

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But then he is faced with regulations
that limit the horsepower on his boat

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dictate that he use nets with wider mesh
to decrease his catch.

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We'd just be going from no restrictions
to that. It was scary.

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You know, you're hauling that in and you
see these great big flounders swimming

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right through the meshes and swimming
away. We can't possibly do this.

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But the most severe restriction for some
fishermen is a limitation on the number

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of days a boat can be at sea.

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Over time, as the fish don't rebound,
the number of days gets smaller and

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smaller.

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If someone says, I'm going to reduce the
number of days you can fish,

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that hits the family budget. That has
consequences.

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The captain says, sorry, guys, we're not
going to be able to provide health

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insurance in the nation's most dangerous
job.

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And that means that thousands of
fishermen are forced out of the

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But Carlos Rafael is thriving.

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He has added scallop boats to his fleet,
and they more than make up for the

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losses in ground fish.

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He was doing quite fine running his
scallopers, no doubt about it, and

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millions and millions of dollars.

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And as for all those rules and
regulations to protect ground fish,

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It appears he simply ignores them.

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I don't think that he actively thought
to break them. They just were

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to him.

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I'm just going to do what I want to do
because I want to do it.

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And over time...

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Violations stack up.

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Exceeded haddock limit.

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Fished in closed area.

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Exceeded days at sea limit.

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Submitted false daily catch reports.

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But, as he tells the IRS, he is not
intimidated by government inspectors.

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He's incorrigible.

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This is his way of life, to break the
law repeatedly and challenge the

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federal government to catch him and then
catch him again and then catch him

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again.

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And the feds do continue to catch him.

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In 1999, there is a third indictment for
Rafael.

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This time, he is caught lying on an
application for a permit to catch squid.

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saying he has a history in the business.

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The government followed up on that
paperwork, and they found that these

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had never purchased squid from Carlos.

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One of the businesses said, I wasn't
even in business at the time that he

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allegedly sold me the squid.

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Rafael has no defense this time. He
pleads guilty to five counts of false

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statements and is sentenced to probation
and six months house arrest.

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And when the punishment ends, it's back
to business as usual.

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And his fines amount.

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$25 ,000 here, $30 ,000 there.

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Those monetary penalties probably would
have put the average fisherman out of

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business.

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But Rafael can afford the fines.

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At the time, he says he is worth at
least $10 million.

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And that is when the Codfather is born.

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He called himself the Codfather.

237
00:18:24,490 --> 00:18:30,490
So he modeled himself over a crime
family.

238
00:18:31,290 --> 00:18:35,270
He wasn't ashamed of being a lawbreaker.

239
00:18:35,570 --> 00:18:37,510
He bragged about it.

240
00:18:39,650 --> 00:18:45,669
And while Raphael continually thumbs his
nose at law enforcement, most other

241
00:18:45,670 --> 00:18:48,390
fishermen make a different painful
choice.

242
00:18:49,230 --> 00:18:54,349
None of us like the regulations, but
they're not just for some people and not

243
00:18:54,350 --> 00:19:00,670
others. And I try to go by them as well
as I know them.

244
00:19:03,450 --> 00:19:09,130
Next, Carlos Rafael gets his big chance
to destroy his competition.

245
00:19:31,820 --> 00:19:36,999
By 2009, Carlos Rafael is running one of
the largest commercial ground fish

246
00:19:37,000 --> 00:19:38,820
businesses in the United States.

247
00:19:39,100 --> 00:19:42,780
He proudly attributes his success to his
hard work.

248
00:19:45,320 --> 00:19:49,459
At this

249
00:19:49,460 --> 00:19:55,220
point, he is a fixture on the new
Bedford waterfront,

250
00:19:55,320 --> 00:19:59,100
often entertaining visitors at a
waterfront festival.

251
00:19:59,690 --> 00:20:02,810
with his tips on cutting and buying
fresh fish.

252
00:20:03,030 --> 00:20:08,009
It appears

253
00:20:08,010 --> 00:20:14,889
that Rafael is doing

254
00:20:14,890 --> 00:20:19,889
exceedingly well, but many of his
competitors are struggling to eke out a

255
00:20:19,890 --> 00:20:22,250
as the fish fail to rebound.

256
00:20:29,340 --> 00:20:34,259
And as more and more fishermen call it
quits, Raphael is there to take their

257
00:20:34,260 --> 00:20:35,720
boat off their hands.

258
00:20:36,260 --> 00:20:41,099
And that makes him a kind of hero in New
Bedford, credited with keeping a dying

259
00:20:41,100 --> 00:20:42,820
industry afloat.

260
00:20:43,200 --> 00:20:48,540
He kept vessels fishing, which employed
four or five fishermen for a boat,

261
00:20:48,660 --> 00:20:50,720
several people on the shore.

262
00:20:51,600 --> 00:20:53,780
There was a big upside to it.

263
00:20:56,240 --> 00:21:00,700
But Rafael repeatedly makes it clear
that he doesn't care about other

264
00:21:02,600 --> 00:21:06,859
At a meeting where a proposal to provide
emergency relief money to suffering

265
00:21:06,860 --> 00:21:10,200
fishermen is discussed, Rafael speaks
up.

266
00:21:10,201 --> 00:21:14,499
Carlos said to hell with them. He says
they're just going to spend it on booze

267
00:21:14,500 --> 00:21:15,550
or drugs anyways.

268
00:21:15,760 --> 00:21:17,740
I mean, that was Carlos' opinion.

269
00:21:18,880 --> 00:21:23,240
There was a young man who said that he
wanted to be able to get into fishing,

270
00:21:23,300 --> 00:21:24,600
and Carlos said...

271
00:21:25,160 --> 00:21:29,159
you know, this guy is never going to get
into fishing. I am going to squash him

272
00:21:29,160 --> 00:21:30,210
like a bug.

273
00:21:30,840 --> 00:21:32,040
Quintessential Carlos.

274
00:21:32,220 --> 00:21:33,660
I'll squash him like a bug.

275
00:21:35,020 --> 00:21:41,619
He would get up at the mic and say, I
don't give a damn about you small

276
00:21:41,620 --> 00:21:44,080
fishermen. I'm going to get it all.

277
00:21:44,420 --> 00:21:49,020
I mean, it was not a veiled state of
mind.

278
00:21:51,040 --> 00:21:52,700
And then in 2010,

279
00:21:53,820 --> 00:21:58,979
A new set of rules is put in place for
ground fish that gives him the edge he

280
00:21:58,980 --> 00:22:00,030
looking for.

281
00:22:00,180 --> 00:22:03,960
For many, the days at sea regulation is
gone.

282
00:22:05,060 --> 00:22:09,499
Now, government scientists will
determine how many fish of each species

283
00:22:09,500 --> 00:22:10,550
caught in a year.

284
00:22:10,860 --> 00:22:15,559
And each fisherman will be given a
percentage of that number, a quota for

285
00:22:15,560 --> 00:22:18,340
many they can catch of each kind of
fish.

286
00:22:19,200 --> 00:22:22,680
And then the boat can pick and choose
when it goes out.

287
00:22:23,240 --> 00:22:27,680
how many days it goes out to catch its
allotment for the year.

288
00:22:28,960 --> 00:22:33,639
It's made to order for Carlos Rafael
because the percentage a fisherman gets

289
00:22:33,640 --> 00:22:39,559
a species like cod, for example, is
based on how many cod a fisherman caught

290
00:22:39,560 --> 00:22:40,610
recent years.

291
00:22:41,080 --> 00:22:47,979
So the people who fished the hardest on
the most stressed fish were given the

292
00:22:47,980 --> 00:22:51,160
biggest percentage of the future quota.

293
00:22:51,840 --> 00:22:52,890
on that fish.

294
00:22:54,280 --> 00:23:00,379
And so Rafael is able to obtain around
50 permits to catch millions of pounds

295
00:23:00,380 --> 00:23:01,430
fish.

296
00:23:02,100 --> 00:23:07,239
These quotas, these permits, were the
lifeblood of commercial fishing after

297
00:23:07,240 --> 00:23:11,559
2010. If you had a lot of permits, you
could do a lot of fishing, you could

298
00:23:11,560 --> 00:23:14,839
a lot of money. If you didn't have a lot
of permits, then you couldn't do a lot

299
00:23:14,840 --> 00:23:16,460
of fishing and make a lot of money.

300
00:23:17,200 --> 00:23:18,480
It sounds simple.

301
00:23:19,180 --> 00:23:21,680
But it is not when it comes to ground
fish.

302
00:23:22,040 --> 00:23:24,960
And that is because ground fish swim
together.

303
00:23:25,380 --> 00:23:29,640
And when the nets go down, different
species get caught together.

304
00:23:30,900 --> 00:23:37,140
So whatever fish is the lowest quota,
once you caught your quota of that fish,

305
00:23:37,360 --> 00:23:38,500
you had to stop fishing.

306
00:23:38,800 --> 00:23:43,419
So if you caught all the yellowtail you
were allowed to catch, you couldn't cast

307
00:23:43,420 --> 00:23:47,359
your nets anymore because you were going
to pull in more yellowtail among

308
00:23:47,360 --> 00:23:48,909
everything else that you caught.

309
00:23:48,910 --> 00:23:50,530
And so you had to stop right there.

310
00:23:50,990 --> 00:23:55,990
And inevitably, some fishermen do not
have enough permits to stay in business.

311
00:23:56,370 --> 00:24:02,050
And once again, Carlos Rafael is there
to buy their boats and their permits,

312
00:24:02,410 --> 00:24:07,250
ostensibly bailing them out, but also
serving his personal ambition.

313
00:24:25,780 --> 00:24:29,400
This may be Rafael's moment to get total
control.

314
00:24:30,380 --> 00:24:33,980
But that does not mean he will stop also
trying to steal.

315
00:24:35,280 --> 00:24:42,200
In October 2013, one of his boats
reports a catch of 1 ,850 pounds of

316
00:24:42,920 --> 00:24:48,519
But a check by Noah of what is really on
board reveals that the boat has 12

317
00:24:48,520 --> 00:24:54,040
,794 pounds over six times what he
reports.

318
00:24:54,400 --> 00:24:59,520
He gets caught again, and Noah finds him
$70 ,000.

319
00:25:01,540 --> 00:25:06,679
Rafael can afford that fine, and so he
is willing to take risks that other

320
00:25:06,680 --> 00:25:08,840
fishermen would not dare take.

321
00:25:09,320 --> 00:25:10,480
I'd be scared to death.

322
00:25:12,300 --> 00:25:16,860
He had a lot of permits, so maybe he
could afford to lose one or two. I got

323
00:25:17,560 --> 00:25:22,059
If I lose that, a boat without permits,
not totally worthless, but not worth

324
00:25:22,060 --> 00:25:23,110
much.

325
00:25:23,560 --> 00:25:25,300
They're trying to follow the rules.

326
00:25:25,720 --> 00:25:29,480
They're trying to eke out a living with
maybe three boats.

327
00:25:30,460 --> 00:25:33,240
Here you have Carlos Rafael with 40
boats.

328
00:25:33,860 --> 00:25:36,040
He's cheating. You know he's cheating.

329
00:25:37,000 --> 00:25:38,360
And he's prospering.

330
00:25:38,620 --> 00:25:41,440
You're not cheating, and you're not
prospering.

331
00:25:43,150 --> 00:25:45,510
And there seems to be just one
conclusion.

332
00:25:46,770 --> 00:25:48,630
He's untouchable. He's the Godfather.

333
00:25:50,590 --> 00:25:51,640
Next,

334
00:25:51,950 --> 00:25:55,790
Raphael lures in co -conspirators.

335
00:25:57,070 --> 00:26:02,229
At a time where some of your compatriots
are starving to death, you'll pretty

336
00:26:02,230 --> 00:26:03,850
much do what the hell you're told.

337
00:26:19,790 --> 00:26:23,870
For years, Carlos Rafael is a thorn in
the side of law enforcement.

338
00:26:24,290 --> 00:26:29,449
He has been prosecuted three times with
two convictions, and he has paid

339
00:26:29,450 --> 00:26:33,010
hundreds of thousands of dollars in
fines for civil violations.

340
00:26:33,690 --> 00:26:37,749
You can cite him for doing this and
that, and for him it's like a parking

341
00:26:37,750 --> 00:26:38,800
ticket.

342
00:26:38,970 --> 00:26:40,370
Something more was needed.

343
00:26:42,790 --> 00:26:47,170
And the chance to do something more
comes in January 2015.

344
00:26:48,540 --> 00:26:53,279
When the IRS agents see an article in
the New Bedford paper saying that

345
00:26:53,280 --> 00:26:59,179
wants to sell his business, he tells the
reporter, I'm going to cash in and

346
00:26:59,180 --> 00:27:00,230
screw.

347
00:27:01,220 --> 00:27:07,959
So I saw that article and thought, if he
wants to sell his business, maybe we're

348
00:27:07,960 --> 00:27:09,160
interested in buying it.

349
00:27:10,240 --> 00:27:15,260
And so IRS undercover agents place a
call to Raphael.

350
00:27:15,261 --> 00:27:18,349
They just picked up the phone and called
him.

351
00:27:18,350 --> 00:27:21,489
and said, we're a bunch of guys from New
York. We're thinking about buying your

352
00:27:21,490 --> 00:27:23,410
business. Would you sit down with us?

353
00:27:25,010 --> 00:27:28,970
Rafael takes the bait and agrees to a
meeting in June.

354
00:27:29,790 --> 00:27:32,910
There are three undercover agents
working the operation.

355
00:27:33,790 --> 00:27:36,450
One is playing the part of a financial
broker.

356
00:27:36,850 --> 00:27:41,570
The other two are his clients, who claim
to be Russian investors.

357
00:27:42,290 --> 00:27:44,650
They meet Rafael at his office.

358
00:27:45,520 --> 00:27:48,060
He wasn't anybody like I ever met
before.

359
00:27:49,160 --> 00:27:54,080
Because the agents work undercover, they
ask that their faces be concealed.

360
00:27:54,980 --> 00:27:58,410
If you give it an opportunity, he'll
talk about himself constantly.

361
00:27:59,220 --> 00:28:02,220
Larger than life. Very in your face.

362
00:28:02,420 --> 00:28:05,620
Lots of vulgarity, swearing, yelling,
screaming.

363
00:28:06,840 --> 00:28:12,339
I didn't realize that the F word could
be used in so many ways in a sentence,

364
00:28:12,340 --> 00:28:13,390
be quite frank.

365
00:28:14,830 --> 00:28:19,530
The Russians first questioned to
Raphael, what does he want for his

366
00:28:19,810 --> 00:28:23,030
His answer, $175 million.

367
00:28:24,710 --> 00:28:27,530
And they said to him, well, we'd have to
see your books.

368
00:28:28,330 --> 00:28:34,130
So when Carlos showed them his
legitimate books, it did not support

369
00:28:35,050 --> 00:28:40,550
So they said to him, why would we pay
you $175 million for this business?

370
00:28:42,510 --> 00:28:48,189
And to answer that question, he needs to
reveal his scheme, how he gets around

371
00:28:48,190 --> 00:28:50,690
the law and keeps his profits high.

372
00:28:55,741 --> 00:28:57,389
So

373
00:28:57,390 --> 00:29:06,129
that

374
00:29:06,130 --> 00:29:07,180
is his secret.

375
00:29:07,330 --> 00:29:08,870
It's called lies.

376
00:29:09,890 --> 00:29:11,090
This is what he does.

377
00:29:12,140 --> 00:29:16,879
If a captain catches 3 ,000 pounds of
cod, which is a fish for which Rafael

378
00:29:16,880 --> 00:29:22,899
a low allotment, he calls the cod
something else, like haddock, a fish for

379
00:29:22,900 --> 00:29:24,380
he has a huge allotment.

380
00:29:32,840 --> 00:29:37,900
It's just a simple matter of falsifying
official reports that are sent to NOAA.

381
00:29:38,980 --> 00:29:42,800
Rafael tells the boat captains how to
lie about what they catch.

382
00:29:43,260 --> 00:29:45,440
He lies about what he buys.

383
00:29:46,240 --> 00:29:51,539
So back at NOAA, when they compare the
two, they don't detect any fraud because

384
00:29:51,540 --> 00:29:52,590
they match.

385
00:29:53,040 --> 00:29:59,259
And so Rafael can catch whatever he
wants and not be limited by his quota,

386
00:29:59,260 --> 00:30:01,000
the government allows him to catch.

387
00:30:01,900 --> 00:30:06,079
When law -abiding fishermen reach the
end of their allowable share of the

388
00:30:06,080 --> 00:30:12,139
catch... they are forced to stop
fishing, or they have the option to buy

389
00:30:12,140 --> 00:30:13,190
quota.

390
00:30:13,760 --> 00:30:20,720
They gave me, I think, 6 ,000 pounds of
winter flounder for the whole year,

391
00:30:20,800 --> 00:30:22,180
which starts May 1st.

392
00:30:23,200 --> 00:30:24,660
So I've already used that up.

393
00:30:24,960 --> 00:30:31,239
So in order to stay in business, I have
to lease the rights to catch

394
00:30:31,240 --> 00:30:35,780
more flounder from another fisherman.

395
00:30:37,200 --> 00:30:41,979
Honest fishermen like Rodman Sykes are
forced to pay for the right to catch

396
00:30:41,980 --> 00:30:43,030
fish.

397
00:30:43,480 --> 00:30:48,900
Because he is lying to the government,
Carlos Rafael does not have that

398
00:30:51,420 --> 00:30:53,140
And Rafael claims...

399
00:31:06,120 --> 00:31:11,499
His captains profit from the scheme as
well, because he requires them to chip

400
00:31:11,500 --> 00:31:13,900
on any quota that he is forced to buy.

401
00:31:15,280 --> 00:31:21,239
The captain knows, and the captain is
the one that loves to do that, because

402
00:31:21,240 --> 00:31:26,339
doesn't want to go buy that quota. So
every time I do the charade, they're

403
00:31:26,340 --> 00:31:27,390
making money.

404
00:31:28,880 --> 00:31:31,760
And later, when the scheme is
discovered...

405
00:31:32,170 --> 00:31:35,910
Some people on the waterfront understand
a captain's choice.

406
00:31:36,530 --> 00:31:38,070
I can tell you one thing.

407
00:31:39,110 --> 00:31:45,989
If you're a captain of a fairly good
vessel that's making fairly good

408
00:31:45,990 --> 00:31:51,249
money at a time where some of your
compatriots are starving to death or

409
00:31:51,250 --> 00:31:55,829
out of business or losing their homes,
you'll pretty much do what the hell

410
00:31:55,830 --> 00:31:56,649
you're told.

411
00:31:56,650 --> 00:32:00,630
And I don't want people to think that,
you know, that I approved of it.

412
00:32:01,210 --> 00:32:03,930
But I think I understand it.

413
00:32:05,470 --> 00:32:11,929
By January 2016, the IRS agents know
they need to get more proof of Rafael's

414
00:32:11,930 --> 00:32:12,980
scheme.

415
00:32:13,170 --> 00:32:16,830
And at their last meeting, he provides
it all.

416
00:32:17,610 --> 00:32:22,250
He pulled out trip reports. He pulled
out bills of lading and dealer reports.

417
00:32:22,590 --> 00:32:28,389
All the documents that identify what was
being caught, which boat was landing

418
00:32:28,390 --> 00:32:30,860
it. And to whom it was being sold.

419
00:32:32,520 --> 00:32:35,040
It's as if he is showing off a great
achievement.

420
00:32:35,280 --> 00:32:37,180
He is proud of his scheme.

421
00:32:38,120 --> 00:32:39,200
I've seen it all.

422
00:32:40,500 --> 00:32:41,840
And I've done it all.

423
00:32:42,520 --> 00:32:43,660
That's the other thing.

424
00:32:43,700 --> 00:32:45,300
I've done it all. I wrote the book.

425
00:32:47,160 --> 00:32:52,600
Next on American Greed, Rafael tries tax
evasion again.

426
00:32:53,220 --> 00:32:56,759
The bags of cash were so heavy that
sometimes they would struggle to

427
00:32:56,760 --> 00:32:57,810
carry them.

428
00:32:59,370 --> 00:33:05,350
Hear how Carlos Rafael talks to his
customers at AmericanGreed .CNBC .com.

429
00:33:06,890 --> 00:33:09,130
Want inside information from the show?

430
00:33:09,410 --> 00:33:11,310
Join the Greed social network.

431
00:33:11,790 --> 00:33:14,210
Like us on American Greed's Facebook
page.

432
00:33:14,750 --> 00:33:15,930
We'll be right back.

433
00:33:27,440 --> 00:33:32,159
Anyone seeing Carlos Rafael on the New
Bedford waterfront would not suspect

434
00:33:32,160 --> 00:33:33,960
the man is worth millions of dollars.

435
00:33:35,380 --> 00:33:37,620
He drives an old pickup truck.

436
00:33:38,440 --> 00:33:43,280
His house is a modest home in nearby
Dartmouth that he bought in 1980.

437
00:33:44,800 --> 00:33:49,999
And while he typically keeps the details
of his finances close to his chest, in

438
00:33:50,000 --> 00:33:54,520
2016, he is forced to open his books to
two Russians.

439
00:33:55,310 --> 00:33:57,690
who say they want to buy his business.

440
00:34:00,261 --> 00:34:01,869
It

441
00:34:01,870 --> 00:34:08,329
is

442
00:34:08,330 --> 00:34:15,329
a receipt of sorts for $600

443
00:34:15,330 --> 00:34:21,448
,000, money that he says he receives
from a wholesale fish dealer in New York

444
00:34:21,449 --> 00:34:22,499
City.

445
00:34:23,949 --> 00:34:30,189
The dealer is not in on Rafael's fraud.
He simply buys his fish from Rafael at a

446
00:34:30,190 --> 00:34:34,130
discount because he pays with cash and
delivered to Rafael.

447
00:34:35,010 --> 00:34:40,629
He would meet Carlos halfway between New
York and Boston and give him a duffel

448
00:34:40,630 --> 00:34:42,409
bag with cash in it for the fish.

449
00:34:42,730 --> 00:34:46,269
The bags of cash were so heavy that
sometimes they would struggle to

450
00:34:46,270 --> 00:34:47,320
carry them.

451
00:34:47,750 --> 00:34:51,690
And the bags of cash are deliberately
kept out of sight.

452
00:34:52,590 --> 00:34:57,270
So for Carlos, those cash payments never
made it on his books.

453
00:34:58,270 --> 00:35:00,490
So that became unreported income.

454
00:35:02,070 --> 00:35:05,850
And that's something of interest to the
IRS agency he's talking to.

455
00:35:06,210 --> 00:35:08,930
They ask, what happens to the cash?

456
00:35:10,210 --> 00:35:11,710
Carlos said, I got it overseas.

457
00:35:11,711 --> 00:35:13,409
Well, wait, wait.

458
00:35:13,410 --> 00:35:16,689
If you have it overseas, you have to
fill out paperwork and stuff, right? The

459
00:35:16,690 --> 00:35:21,209
currency report that you fill out at an
airport any time you take more than $10

460
00:35:21,210 --> 00:35:24,220
,000. What do you mean you're bringing
it out of the country?

461
00:35:25,180 --> 00:35:28,980
Rafael says he has a friend with special
credentials.

462
00:35:48,910 --> 00:35:53,749
That agent he is talking about is a
local law enforcement officer breaking

463
00:35:53,750 --> 00:35:58,350
law and getting cash past security at
Boston's Logan Airport.

464
00:35:58,850 --> 00:36:00,730
It was a very big moment for us.

465
00:36:01,150 --> 00:36:03,740
You have to understand, that's where 9
-11 started.

466
00:36:03,950 --> 00:36:08,269
And now we're hearing about a law
enforcement officer circumventing

467
00:36:08,270 --> 00:36:13,769
security at that same airport. So we,
right away, were very alarmed, very

468
00:36:13,770 --> 00:36:14,820
worried.

469
00:36:16,200 --> 00:36:20,780
The officer is Bristol County Sheriff's
Deputy Antonio Freitas.

470
00:36:22,240 --> 00:36:25,020
Rafael says Freitas owes him.

471
00:36:25,480 --> 00:36:28,859
I got him the job. I got him his raises.
Shortly

472
00:36:28,860 --> 00:36:34,960
after Rafael makes that claim,

473
00:36:35,160 --> 00:36:41,580
Freitas is caught smuggling cash for his
friend, Carlos Rafael.

474
00:36:43,630 --> 00:36:49,670
So Freitas was ultimately indicted for
conspiracy and bulk cash smuggling.

475
00:36:49,910 --> 00:36:53,510
So he was tried and convicted.

476
00:36:54,670 --> 00:36:57,250
He is sentenced to a year in prison.

477
00:36:59,250 --> 00:37:03,550
The IRS undercover operation ends in
January 2016.

478
00:37:05,070 --> 00:37:08,950
The government feels it has what it
needs to move forward.

479
00:37:10,570 --> 00:37:15,869
As the agents say goodbye to Rafael, he
thinks he has sold his business to a

480
00:37:15,870 --> 00:37:17,250
couple of Russian mobsters.

481
00:37:17,450 --> 00:37:20,430
After all, he is untouchable.

482
00:37:21,250 --> 00:37:25,869
He would brag to us over and over again
how no one was ever going to catch him

483
00:37:25,870 --> 00:37:30,430
and how everyone had been trying to
catch him for years and years and years.

484
00:37:30,910 --> 00:37:33,620
And, you know, he knew that he was
tricking everybody.

485
00:37:33,730 --> 00:37:36,740
And meanwhile, at that time, he was the
one getting tricked.

486
00:37:39,110 --> 00:37:40,160
Next.

487
00:37:40,710 --> 00:37:43,510
The danger of goading the federal
government.

488
00:37:44,150 --> 00:37:49,249
Carlos Rafael was quoted in the press as
saying, I'm a pirate, it's your job to

489
00:37:49,250 --> 00:37:50,300
catch me.

490
00:38:06,640 --> 00:38:11,819
For years, Carlos Rafael runs a criminal
operation believing he will never be

491
00:38:11,820 --> 00:38:16,540
caught. He confidently tells the
undercover agents...

492
00:38:31,470 --> 00:38:37,129
But on February 26, 2016, more than a
dozen federal law enforcement officers

493
00:38:37,130 --> 00:38:42,450
surround Carlos Seafood and move inside
to arrest Rafael.

494
00:38:43,870 --> 00:38:50,049
Carlos Rafael was quoted in the press as
saying, I'm a pirate. It's your job to

495
00:38:50,050 --> 00:38:51,100
catch me.

496
00:38:51,290 --> 00:38:53,650
I love that because that's perfect.

497
00:38:54,650 --> 00:38:55,700
We caught him.

498
00:38:58,090 --> 00:39:02,829
After the raid on Rafael's business with
hundreds of his records seized, federal

499
00:39:02,830 --> 00:39:06,250
investigators begin the work of sorting
out his lies.

500
00:39:07,370 --> 00:39:13,330
Fish by fish, boat by boat, sail by
sail, thousands of transactions.

501
00:39:14,450 --> 00:39:17,610
In the end, the government comes up with
a figure.

502
00:39:18,090 --> 00:39:25,009
In four years, Rafael illegally caught
at least 782 ,000 pounds

503
00:39:25,010 --> 00:39:26,060
of fish.

504
00:39:26,520 --> 00:39:29,100
My first question was, is that a lot of
fish?

505
00:39:30,220 --> 00:39:36,839
So we asked an analyst at NOAA, and the
analyst said, if forests were your

506
00:39:36,840 --> 00:39:39,260
thing, this would be like burning down
Vermont.

507
00:39:41,020 --> 00:39:43,260
We said, okay, it's a lot of fish.

508
00:39:44,600 --> 00:39:48,500
And it's important to remember whose
fish those are.

509
00:39:49,540 --> 00:39:55,119
You know, this is really a crime against
all of us, because these fish didn't

510
00:39:55,120 --> 00:39:56,170
belong to Carlos.

511
00:39:56,520 --> 00:40:01,699
He didn't spend a dime raising them. He
didn't feed them. He just went out and

512
00:40:01,700 --> 00:40:02,619
took them.

513
00:40:02,620 --> 00:40:04,360
And he took them illegally.

514
00:40:04,920 --> 00:40:10,940
And he took them not just from his
fellow fishermen. He took them from us.

515
00:40:12,300 --> 00:40:18,519
In March 2017, faced with 15 hours of
undercover recordings made by the IRS

516
00:40:18,520 --> 00:40:24,619
agents, Rafael pleads guilty to
conspiracy, falsifying federal records,

517
00:40:24,620 --> 00:40:25,670
cash smuggling.

518
00:40:26,040 --> 00:40:27,160
and tax evasion.

519
00:40:28,520 --> 00:40:33,219
Through his attorney, he declines
American Greed's request to participate

520
00:40:33,220 --> 00:40:34,270
this report.

521
00:40:35,100 --> 00:40:41,279
At his sentencing hearing, Rafael argues
that in perpetrating his scheme, he was

522
00:40:41,280 --> 00:40:43,980
actually trying to help fishermen in New
Bedford.

523
00:40:44,300 --> 00:40:46,140
He wanted to keep them working.

524
00:40:46,580 --> 00:40:52,399
He asks for 24 months of community
confinement, claiming that his crime was

525
00:40:52,400 --> 00:40:53,800
stupid, not greedy.

526
00:40:54,540 --> 00:40:59,020
The judge disagrees, saying this was not
stupid, this was corrupt.

527
00:40:59,580 --> 00:41:03,360
He sentences Rafael to 46 months in
prison.

528
00:41:04,440 --> 00:41:09,439
I think he was convinced to give Carlos
Rafael a high sentence by the sheer

529
00:41:09,440 --> 00:41:15,719
extent of the misconduct in this case
and the fact that he had been prosecuted

530
00:41:15,720 --> 00:41:20,380
three times in the past for crimes
related to his fishing business.

531
00:41:21,380 --> 00:41:23,610
So I think we were able to convince the
court.

532
00:41:24,320 --> 00:41:29,439
that unless federal law enforcement was
going to be a complete joke, it had to

533
00:41:29,440 --> 00:41:30,490
be the last time.

534
00:41:34,660 --> 00:41:39,419
Rafael is in federal prison, but there
is a worry on New England waterfronts

535
00:41:39,420 --> 00:41:44,459
that his crimes have hurt the reputation
of all fishermen here who essentially

536
00:41:44,460 --> 00:41:46,360
operate in an honor system.

537
00:41:47,920 --> 00:41:53,160
Carlos didn't care about the honor
system. In fact, he used it.

538
00:41:54,020 --> 00:42:00,779
to his advantage, and really, in the
process, dishonored every other law

539
00:42:00,780 --> 00:42:02,580
-abiding fisherman out on the water.

540
00:42:04,880 --> 00:42:08,480
And those law -abiding fishermen believe
that is unfair.

541
00:42:09,120 --> 00:42:13,180
They have a message for anyone who hears
the story of Carlos Rafael.

542
00:42:14,080 --> 00:42:19,039
I want them to know that the vast
majority of fishermen in this port, in

543
00:42:19,040 --> 00:42:21,800
Bedford, all up and down the East Coast,
are...

544
00:42:22,270 --> 00:42:24,920
Honest, hard -working guys. Very hard
-working guys.

545
00:42:26,190 --> 00:42:31,049
And while some want to blame the system
itself for Rafael's crimes, others are

546
00:42:31,050 --> 00:42:36,090
clear. There is just one person to
blame, Carlos Rafael.

547
00:42:37,070 --> 00:42:40,150
He's the person who broke the law.

548
00:42:41,190 --> 00:42:47,869
That's where the blame needs to be, with
this person

549
00:42:47,870 --> 00:42:50,790
who's not a fisherman. He's a crook.

550
00:42:50,840 --> 00:42:55,390
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