PORTLAND, Maine — U.S. District Court Judge Lace E. Walker on Wednesday ruled that the Maine Lobstering Union is likely to prevail in a civil racketeering suit filed against its former CEO, Warren Pettegrow, and his parents, the former and longtime owners of the Trenton Bridge Lobster Pound.
In doing so, Walker ordered a $1.44 million "attachment," or lien, on assets held by Pettegrow and his parents, Anthony D. Pettegrow and Josette G. Pettegrow, as well Poseidon Charters and Trenton Bridge Lobster Pound.
The lawsuit, filed in December by Maine Lobstermen's Union (MLU), owner of Trenton wholesaler Lobster 207, alleges 10 counts including racketeering under the RICO (Racketeer Influenced and Corrupt Organizations) Act, conspiracy to engage in racketeering, fraud, breach of fiduciary duty and breach of contract.
The Pettegrows have denied all charges, Ellsworth attorney Jason Barrett, who represents the family, said Thursday.
An associate named in the suit, Stephen M. Peabody of Addison, who manages the Beals-Jonesport lobster co-op in Jonesport, was not subject to the attachment, according to court documents.
"We're relieved the judge ordered the attachment and security for an ultimate judgement," Portland attorney Thiri Mina, who represents the MLU, said Thursday. "Their interest in this thing from the beginning has been to work towards price consistency and transparency for the membership and, when they find instances where that hasn't occurred, they're duty-bound to pursue them."
In 2017, the MLU purchased a lobster wholesale business from Anthony and Josette Pettegrow for a reported $4 million and hired Warren Pettegrow as its CEO.
According to court documents, the contract required that Trenton Bridge end its wholesaling business.
But the suit alleges that, instead of abiding by a non-compete clause in the contract, Trenton Bridge continued to operate a wholesale business and that, with Warren Pettegrow as CEO of Lobster 207, "they embarked on a systematic scheme and pattern of racketeering activity designed to enrich themselves at Lobster 207’s expense.”
In court documents, the plaintiffs allege that as soon as the sale closed in March 2017, the Pettegrows and Peabody established a new business and embezzled funds, stole lobster products, overcharged customers and the union itself, and submitted fraudulent invoices over the next two years, ending in August 2019 when the union conducted an audit and fired Warren Pettegrow.
The union claims losses "in excess of $2.93 million" with at least $1.4 million lost to theft.
But Barrett, representing the Pettegrows, downplayed the importance of the attachment and said Thursday that three decisions by Walker this week made this "a very good week for the Pettegrows."
Barrett said Walker ruled that some of the allegations are not actionable under the RICO statute and ruled that two claims related to Warren Pettegrow's employment contract must move to arbitration. Warren Pettegrow claims Lobster 207 owes him approximately $2 million in unpaid back wages and related penalties.
And Walker reduced the amount of assets sought by Lobster 207 in the attachments from $1.9 million to $1.44 million.
"This case started out as this huge horrible thing and, very quickly, at the beginning of the case, the court has already started to trim this way back," he said. "As we move toward a trial, the truth will come out ... this is a Maine 'Mom 'n Pop' business. These people have run this restaurant and this business for 40 years, day in and day out. They work the front counter ... the people in their community know and trust them. Then they sell to this entity and ... two years in this entity sues them for RICO and essentially calls them gangsters."
But Mini pointed to the $1.4 million attachment and the standard the judge must have met that required it was 'likely' the plaintiffs would prevail.
He said all damages alleged in the original complaint remain.
