Bad News Belugas: Roe v. High Grade: Call in the Sturgeon General!

Somewhere in the depths of the Caspian Sea, nestled below the southwest corner of Russia and the northern coast of Iran, a fish swishes its tail-and the reverberation is felt all the way to the fanciest hors d’oeuvre platters in Manhattan.

The fish has been around some 250 million years. Its flesh is coarse, though delicious when smoked. But its real enticement, since Greco-Roman times, has been its eggs.

Keeping the fish alive guarantees a healthy supply of those eggs for ages to come. But keeping the fish alive also has thrown the very industry that thrives on the eggs into turmoil.

“The caviar industry,” said Eve Vega, executive director of Americas operations for Petrossian Paris, “is in crisis.”

A chain of events set off by the fall of the Soviet Union has left the sturgeon, a lowly bottom feeder, in danger, and has triggered a worldwide crackdown on the illegal trafficking of caviar. U.S. agencies, goaded by environmentalists like Robert F. Kennedy Jr., have made saving the sturgeon, which produce the best brands of caviar, their cause. Caviar shipments are routinely stopped and examined through DNA testing. Two criminal cases-including one in Brooklyn-have been brought.

The immediate consequence has been a tightening net around the approximately 45 regular caviar importers in the New York City area, America’s largest caviar market.

One of the biggest names in beluga-Caspian Star, which sells to the Russian Tea Room and Le Cirque-is now the subject of a U.S. government probe, a top federal investigator told The Observer .

Federal agents executed a search warrant at the Caspian Star office at John F. Kennedy International Airport last December, in a search for documentation confirming the fraudulent export of caviar.

A second caviar giant, Madison Avenue Caviarteria, is suing the federal government for damages of $100 million, charging that the feds have ruined four shipments of caviar held up for testing.

Such investigations are likely to mean the delicacy will become more elusive and expensive.

“The playing field has gotten very strict,” said Ms. Vega of Petrossian. “Our spring 2000 prices have gone up anywhere from 10 to 12 percent from last year’s catch.” That means a 30-gram tin (a little more than an ounce) of beluga this year at Petrossian will retail for $85, $10 more than last year, Ms. Vega said.

Law enforcement officials estimate 50 percent of the trade in caviar has been illegal, meaning it has come into the country through non-government-sanctioned means. That figure does not include shipments that government DNA testing has determined have been mislabeled.

Until two years ago, there was no such thing as the illegal importation of caviar. It was a free market: Importers could bring unlimited amounts of caviar into the United States, provided they declared it, paid duties of nearly 30 percent and the shipments cleared Food and Drug Administration testing and U.S. Customs inspections.

But between 1978 and 1994, the number of adult sturgeon living in the Caspian Sea is estimated to have plummeted at least 75 percent, according to special agent Edward Grace of the U.S. Fish and Wildlife Service.

“There is serious discussion among Russian officials about banning the catch for five years,” said Vadim J. Birstein, a Russian-born geneticist and director of Sturgeon Conservation International. “We’re talking about only a few years left.” Russian officials recently said they might have to stop all caviar exports this year, Radio Free Europe reported.

Roe, roe, roe

Until the 1920’s, Caspian caviar was truly the preserve of emperors and kings. Only after the Russian revolution did it become a much-sought-after delicacy in bourgeois Paris, to be further extolled and fetishized by the famous Americans residing there.

“Ironically, the Americans-like F. Scott and Zelda Fitzgerald, Ernest Hemingway, Josephine Baker-kind of heightened it to a new level,” said Ms. Vega.

Petrossian’s founders, the Armenian brothers Mouchegh and Melkoum Petrossian, helped fuel the craze; they struck a deal with the Soviet ministry that set off in earnest the importation of caviar from the waters of the Caspian to Paris; from the 1930’s to the fall of the Soviet Union, the Ministry of Fisheries oversaw the Caspian trade, and policing of the Caspian was shared with Iran.

But the fall of the Soviet Union left many Russians without jobs, and the thousands of fisherman who caught sturgeon for a living along the Volga River upstream of the Caspian were joined by the ranks of the newly unemployed. Suddenly, the already corruption-plagued Caspian trade ballooned.

“The fisherman fished as much as they could,” Mr. Birstein said. Anyone with a net-or a gun-could get in on the fishy free-for-all. “There was a period during the 1990’s when there was no [governmental] control of anything,” Mr. Birstein said. “The Russian Mafia was controlling the market.” Ten tons of illegally caught sturgeon were brought to Moscow every day in 1997, reported Traffic, a group affiliated with the World Conservation Union.

With so many opportunists trafficking in the eggs, contraband caviar flooded the American market.

“All of a sudden the wild, wild West days came into effect,” said Ms. Vega. “[Customs] couldn’t stop it. It was coming in from every goddamn border. A ship could go, say, to the Baltic Sea and pick up caviar in St. Petersburg, Russia, bring it here and sell it to a retailer. If you wanted to sell caviar- and I’m not saying good caviar, but decent caviar-and you went up to Zabar’s, you might have been able to do that.”

Facilitating such sales were Americans’ unsophisticated palates.

“People aren’t really that schooled in caviar; they’re afraid of it, it’s intimidating,” said Ms. Vega. Even in premium restaurants, Ms. Vega continued, many people don’t care about caviar quality: “I met with a chef and he said, ‘This is what I am getting from XYZ caviar company,’ and I said, ‘This is what I can give you.’ He said, ‘I won’t pay that price.’ I said, ‘Are you ready to give that garbage away? What are you, disguising it with onions? You don’t know how they store it; that could be poisonous.’ He said, ‘As long as the invoice says “Russian caviar. …'”

In September 1997, Russian president Boris Yeltsin, citing corruption, moved the caviar industry back under governmental control and appointed a former high-ranking K.G.B. official to oversee the effort. Now only government-licensed companies can legally export caviar.

Meanwhile, environmentalists took up the sturgeon’s case. In April 1998, the sturgeon was added to an international treaty designed to protect its dwindling numbers. Importers and exporters worldwide were required to obtain permits; violators began to be prosecuted and the caviar trade was effectively regulated for the first time in its history.

A LOT of Tins

Since then, American caviar dealers and the federal government have been tangling in court. But while the new restrictions should have driven the price sky-high-or made the delicacy scarce-top-grade caviar has been more widely available than ever.

One trick, according to the federal government, is packaging low-grade roe and labeling it as high-grade caviar-easily accomplished since few consumers know the good stuff from the poor, anyway. The U.S. government has been regularly sampling caviar shipments for DNA testing.

Then there’s outright smuggling. On Dec. 17, 1998, Eugeniusz Koczuk, owner of Gino International, and two associates, Wieslaw Rozbicki and Andrzej Lepkowska, were indicted on seven counts related to the illegal trafficking of caviar. The case, which was tried over two and a half weeks last fall in the Eastern District courthouse in Brooklyn, drew scant attention, but it became the U.S. government’s first successful criminal prosecution for caviar smuggling.

Gino International had transported about 19,000 pounds of caviar into the United States during 1998 without declaring it or providing the required importation permits, said prosecutors Cynthia M. Monaco and Nancy A. Miller. The caviar was worth as much as $10 million.

“The defendants were engaged in a massive scheme to import thousands of pounds of protected wildlife products into the United States,” Ms. Monaco said in her opening statement last October.

According to the government, Gino International was selling this caviar to some of the biggest names in the industry: Caspian Star, Caviar Plus, Connoisseur, Madison Avenue Caviarteria, Paramount Caviar, Urbani Truffles, U.S. Caviar & Caviar, Vilitar and Zabar’s, many of which in turn supply some of the best shops, restaurants and hotels in the world.

The prosecutors outlined a scheme that spanned half the globe and allegedly included a flight attendant from LOT Polish Airlines, who allegedly hired couriers to transport luggage packed with unrefrigerated caviar tins into the United States. Among her recruits, according to the government, was Andrzej Lepkowska, a high-ranking police official in Warsaw.

The operation was only discovered when a German attaché agent, acting on a tip from an informant who, according to special agent Ed Grace, might have been a disgruntled LOT Polish Airlines employee, alerted American law enforcement agents to seven passengers with 16 pieces of luggage between them that were crammed with about 1,000 pounds of caviar.

Mr. Koczuk was sentenced in June by federal Judge Frederic C. Block to 20 months, with a fine of $25,000 and forfeiture of $70,000 worth of seized caviar. His co-defendent, Wieslaw Rozbicki, will be sentenced on Aug. 8. Andrzej Lepkowska pleaded guilty and will be sentenced on Sept 22.

In Maryland this July, three people-two of them officers of U.S. Caviar & Caviar-pleaded guilty to federal fraud, smuggling and wildlife-endangerment charges. The company agreed to pay a $10.4 million fine, the largest ever in a wildlife-smuggling case, prosecutors said.

Meanwhile, pressure is on to continue the crackdown. Despite limited coverage of the Gino International proceedings, the case attracted the attention of Mr. Kennedy, senior attorney for Riverkeeper and the Natural Resource Defense Council. Mr. Kennedy was concerned that the recently plummeting numbers of Atlantic sturgeon in the Hudson River might be a result of poaching by caviar industry operatives willing to mislabel local fish eggs from the brown waters of the Hudson as beluga from the Caspian. Mr. Kennedy petitioned Judge Block to make an example of the Gino smugglers.

“A tough sentence … will send a clear message to the caviar industry that laws designed to protect these extraordinary fishes will be strongly enforced and that such practices will no longer be tolerated,” Mr. Kennedy wrote.

In a sidebar to the smuggling case, Gino International has filed a complaint in Queens Supreme Court against its former customer, Zabar’s, for $59,000 plus interest. Walter Drobenko, Gino’s attorney, said Zabar’s withheld final payment on a caviar shipment after Gino’s president was indicted.

William Wachtel, the attorney for Zabar’s, countered, “The idea that you would sue a company for product that the government says is contraband is chutzpah.”

Spoiled Again

Meanwhile, government officials said they are continuing their crackdown. According to the warrant issued last December against Caspian Star (and obtained by The Observer ), the firm over the past two years has transferred to the government sizable shipments that DNA tests carried out by the government determined were mislabeled as premium caviar.

The warrant did not result in charges. But on the day it was executed, Arkady Panchernikov, president of Caspian Star, was arrested on a misdemeanor charge for possession of an unregistered 25mm Beretta. Caspian Star’s attorney, Russell Gioiella, said: “Neither Arkady or Caspian Star have been charged with any crime.” According to Mr. Gioiella, Mr. Panchernikov pleaded guilty to disorderly conduct to satisfy the gun charge.

The importers are fighting back. Mr. Drobenko, who also represents Caviarteria, is fighting the government’s right to seize and sample, through DNA testing, shipments of caviar. The importers are concerned about the government’s storage of the seized goods, which they said has resulted in spoiled caviar costing them thousands of dollars.

“They allege that instead of having Russian sturgeon, we had Siberian sturgeon,” said Mr. Drobenko, Caviarteria’s attorney. “They just let a quarter million dollars’ worth of caviar spoil.”

Meanwhile, the government has entered the caviar business itself. Recently, it invited about 45 caviar importers out to the shiny glass office complex that houses the Department of Fish and Wildlife along the Sunrise Highway in Valley Stream, Long Island, to bid on a half-ton of caviar seized by federal agents last winter.

The government’s forensics lab had determined through DNA testing that the shipment was mislabeled as pure “osetra” caviar. In fact, it contained as much as 32 percent Siberian caviar, the government said. The auction invitation letter warned: “The United States of America makes no representation as to the quality, salability, condition, usability, accuracy, labeling and or of weight measurement … the caviar is being sold ‘AS IS’ and ‘WITH ALL FAULTS.'”

One of the bidders was Arkady Panchernikov, of Caspian Star. Mr. Panchernikov, a middle-aged man sporting a shiny beige double-breasted suit, opened a red plastic cooler sitting on a metal folding table at the auction, pulled out a 500-gram tin and twisted the top until it came off with a slight slurp. Glistening caviar pearls trapped in black goop slid down the side of the tin onto Mr. Panchernikov’s hands as he peered at the eggs, then sniffed them.

“Can I taste it?” Mr. Panchernikov asked the federal agents who were looking on. No, against the rules, he was told.

“We don’t want to see you lick your fingers, either,” joked Paul Cerniglia, a supervisory wildlife inspector.

Mr. Panchernikov looked back at Inspector Cerniglia, opened his mouth, stuck his fingers in, then languorously slid them out.

-With Gabe Oberfield Bad News Belugas: Roe v. High Grade: Call in the Sturgeon General!