GloucesterTimes.com, Gloucester, MA

February 4, 2013

Ex-AG defends probe of fish fund

By Richard Gaines
Staff Writer

---- — Former state Attorney General Scott Harshbarger says he was aware that he cited a disbarred lawyer as a character witness for Vito Giacalone’s altruism in an investigative report that cleared Giacalone — fisherman, shoreside Gloucester businessman, head of the Gloucester Fishing Community Preservation Fund and policy head of the Northeast Seafood Coalition — of abusing his influence in collusion with other powerful industry figures.

And Harshbarger conceded Friday that he had uncovered evidence similar to one second-hand allegation — that business partners of Giacalone’s, brothers Richard and Raymond Canastra of New Bedford — used financial inducements to shift business away from a longstanding fish auction to an outlet operated on property owned by Giacalone and run by his three sons.

But in a telephone interview Friday, Harshbarger said the disbarment of Bruce Nicholls in 2010 for “intentionally” misappropriating $77,000 to be held in escrow in a divorce case, “had nothing to do with his assessment of Vito’s work.”

Nicholls, counsel to the preservation fund until his disbarment by the Supreme Judicial Court in February 2010, was grouped with five others in the report by Harshbarger, who “emphatically commend Giacalone for his independence when acting for the fund and insisted he goes out his way to give up personal gain for the good of the fund.”

Also among the group agreeing with Nicholls about Giacalone’s selflessness was Mike Walsh. He heads a small group of fishermen based in Boston organized into a fishing cooperative or sector associated with the Northeast Seafood Coalition to which the preservation fund gave nearly $1 million in cash and permits from a state grant of $12 million to mitigate fishing opportunities lost to the construction of a liquefied natural gas terminal about 10 miles from Gloucester.

The Times reported in January 2012 that Gicacalone confirmed that Walsh had threatened to sue the Gloucester permit bank for a share of the LNG mitigation money, in an effort to get Giacalone to deliver on a agreement with the state covering the mitigation grant to “address the interests” of groundfishermen “south of the North Shore.”

At the same time, the preservation fund made its transfer to Sector 6, it also distributed $939,260 to Sector 10, a larger group of fishermen spread along the South Shore.

Others named as vouching for Giacalone’s independence and altruism were former Mayor John Bell, president and founder of the seafood coalition and a catalyst for the creation of the preservation fund and the LNG mitigation money, and attorneys Stephen Ouellette and David Smith, who until last year had a professional relationship with each other and handled the legal work on the transfers.

In his 48-page report — aimed at “clearing the name” of Giacalone and the permit fund from allegations centering on reported conflicts of interest involving Giacalone’s intertwined roles —Harshbarger not only exonerated Giacalone, he concluded that the leader of the nonprofit preservation fund, or fishing permit bank — which commissioned the investigation and owns the work product under “attorney-client” privilege — has been the victim of a smear campaign. Yet, while the report is titled as capping an “independent investigation,” Harshbarger’s work was commissioned and paid for by the Preservation Fund, which owns the work and holds attorney-client privilege to it, the report itself indicates. Neither Giacalone nor anyone else with the Preservation Fund has said what the nonprofit paid for the former attorney general’s services.

Like Harshbarger, Giacalone and Angela Sanfilippo, president of the Gloucester Fishermen’s Wives Association and the the unpaid president of the preservation fund, said they did not see how Nicholls’ disbarment affected his ability to evaluate Giacalone’s character and integrity.

”Everything he did for us was pro bono and good advice, before his disbarment,” said Giaclaone.

”He helped us in the beginning, mostly with Vito,” said Sanfilippo. “When we were putting the fund together, he was still a lawyer.”

Smear campaign

The allusion to a smear campaign against Giacalone was made in the general findings and comments section.

”Most of the campaign against the (preservation fund) board,” said Harshbarger, who was state attorney general for eight years through 1999, “falls on a small number of individuals who have knowingly spread incorrect and inaccurate information about the fund,” he wrote after a five month investigation.”

The Harshbarger report made clear that the main conduit of allegations was attorney Paul Muniz, who represented the Ciulla family in a long struggle to clear its reputation from a series of charges and unfounded accusations made by federal fisheries law enforcers. But the legal battle took its toll financially and physically. And after a lawsuit was filed against the Ciullas and their Gloucester Seafood Display Auction in 2011 by fishermen represented by attorney Smith — then in partneership with Ouellette — charging “skimming” at the auction, the Ciullas filed for bankruptcy and sold the business to Kristian Kristensen.

Kristensen changed the name to the Cape Ann Seafood Exchange for the struggle with the Giacalones and Canastras for the diminishing volume of fish landed in Gloucester. The suit evaporated after Smith and Ouellette were forced to step off the case to avoid creating a conflict of interest stemming from Ouellette’s previous representation of the Ciulla’s auction.

Deal for $100K

According to the Harshbarger report, Muniz passed on to him the allegation that “the Canastras, through Giacalone, offered fishermen $100,000 to take their business to his sons during an informal meeting of carefully selected fishermen.”

While stating that “we have seen no evidence that Giacalone has in fact influenced any fishermen to patronize his sons’ business, let along divert them from other auctions,” Harshbarger later wrote that “we were able to confirm” that Richard and Raymond Canastra provided a loan of approximately $100,000 to one of the fishermen alluded to in Muniz’s second hand description.

”The conditions of this loan” provided that the fisherman, Joe DiMaio would drop his fish at (Giacalone’s) Fishermen’s Wharf (operated by Giacalone’s sons for the Canastras) for a period of a year,” the Harshbarger report reads.

’A close call’

In an interview Friday, Harshbarger termed the allegation and the evidence as “a close call,” adding that few if any other allegations held water. Still, he recommended that the preservation fund be strengthened by doubling the size of its board from four to eight with “independent” members. The current board is made up of Dale Brown, who was on Mayor Bell’s senior staff, and Jackie Odell, executive director of the Northeast Seafood Coalition, along with Giacalone and Sanfilippo.

In an email, Muniz said he was pleased that “the consultant (Harshbarger) chose to adopt many of the fundamental recommendations we discussed after he reached out to me for assistance last September.

”Those included, but were not limited to, expanding the board of directors to include those with no financial stake in the fund’s business and increasing transparency and public involvement,” Muniz said. “However,” he added, “I have also expressed to Mr. Harshbarger my concerns about the report’s accuracy in some important respects and he has agreed to conduct a further review. Therefore, out of respect for Mr. Harshbarger and this process, I intend to limit my comments to the foregoing.”

Richard Gaines can be reached at 978-283-7000, x3464, or at rgaines@gloucestertimes.com.