Bedfellows CLIA & NTSB Team Up for Cozy Meeting on Cruise Ship Safety

The National Transportation Safety Board (NTSB) is beginning a two-day meeting today in Washington D.C. regarding the topic of passenger safety aboard cruise ships. The meeting was requested and largely organized by the Cruise Line International Association (CLIA), the trade group for the cruise lines, to showcase the cruise industry.

Participating in the meeting will be NTSB members, CLIA representatives, cruise line employees, Coast Guard officials, and delegates from the International Maritime Organization (IMO). The IMO is an United Nations entity which makes safety recommendations for cruise ships but is powerless to enforce the recommendations or discipline or punish cruise lines which ignore the recommendations.

The NTSB refused to invite the International Cruise Victims (ICV) organization to Washington D.C. and NTSB Meeting Cruise Ship Safetyrefuses to permit the ICV to participate in the meeting.  The ICV is a grass-roots, non-profit organization consisting of thousands of members who are dedicated to making cruising safer. Our firm has many former clients who are members of the ICV, including Lynnette Hudson, the daughter of Princess Cruises passenger Richard Liffridge from Georgia who perished in a fire aboard the Star Princess cruise ship.

The NTSB hearing is opening now with remarks from the Coast Guard about cruise ship accident investigations and fire protection. It is a shame that the NTSB and CLIA refuse to permit the ICV's involvement in the meeting given the first hand experience of the ICV members in dealing with dangers aboard cruise ships.  Ms. Hudson previously inspected the cruise ship which killed her father to make certain that it finally had a fire detection and suppression system installed. She testified before the United States House of Representatives regarding the cruise ship fire which killed her father. You can read about that fire and Ms. Hudson's recommendations to prevent similar fatalities here: Ten Years of Cruise Ship Fires - Has the Cruise Industry Learned Anything?

Other ICV members were aboard the Costa Concordia when it crashed into the rocks and killed 32 souls. 

When I realized that the NTSB was excluding the ICV, I send emails to the NTSB spokesperson, Eric Weiss, requesting an explanation why only CLIA members and cruise line employees were welcome. Mr. Weiss ignored my emails. But he recently spoke to a Miami Herald reporter stating that: “Security and crime is not in our jurisdiction. This is about cruise ship safety, not security.” 

The ICV has many members personally affected by the absence of safety systems and protocols on cruise ships. The ICV has participated in five Congressional hearings addressing safety issues such as engine failures and fires. It appears that CLIA and the NTSB are systematically excluding any organization with victims who have personal experiences regarding cruise ship dangers while inviting only employees and friends of the cruise lines who wish to shield the industry from criticism. 

I realize that the cruise lines are desperate for favorable press after the debacle of the Carnival Splendor and the Carnival Triumph, with both cruise ships igniting shortly after Coast Guard inspections, as well as the deadly disaster involving the Carnival-owned Costa Concordia. But excluding cruise victims and orchestrating a rigged meeting with dog and pony shows by CLIA and cruise line representatives is shameful. 

NTSB's relationship with the cruise industry has always been a mixed bag.

Years ago, the NTSB's chairman was Jim Hall, a man of personal integrity who never wavered from who his commitment to the safety of the traveling public.

Mr. Hall earned a reputation for objectivity and credibility when he was the NTBS's top dog from 1994 - 2001. He was involved in investigating serious accidents in both the aviation and cruise industries. He NTSB Cruise Safety Meetingvoiced his concerns that there would be continued problems in the maritime industry because there was no real oversight over the cruise lines. Consider the comments which Mr. Hall made to Newsweek last year:

"Jim Hall, head of the National Transportation Safety Board during the Clinton administration, says the industry is watched over by “paper tigers” like the International Maritime Organization and suffers from “bad actors” much like in the poorly regulated motor-coach industry, which saw its latest fatal bus crash in Southern California earlier this month. “The maritime industry is the oldest transportation industry around. We’re talking centuries. It’s a culture that has never been broken as the aviation industry was, and you see evidence of that culture in the [Costa Concordia] accident,” says Hall."

After Mr. Hall retired as chairman, the NTSB went in a different direction. From 2006 - 2008, Mark Rosenker served as the NTSB chairmen but he catered to the cruise industry. In 2007, CLIA's Board of Directors wined and dined Rosenker during the annual Sea Trade cruise convention (now called Cruise shipping Miami) here in Miami. He gave a nice speech to CLIA (you can read here) which he began by stating " I am very pleased that your safety record is excellent." This was a rather amazing and outrageous thing to say given the fact that just a year earlier, the Star Princess ignited off the coast of Jamaica and burned through 100 cabins and killed our client's father, Richard Liffridge, mentioned above. 

Rosenker even promised CLIA that he would help the cruise lines keep "sensitive" information about maritime accidents away from the public, telling CLIA "there are provisions in the law to keep certain voluntarily provided safety information confidential."

Rosenker and CLIA were a perfect match. Both were interested in suppressing damaging information about cruise mishaps from the public.

After Rosenker retired from the NTSB, CLIA paid him as a consultant for the cruise industry. His job largely appears to tell everyone who will listen that  "the industry has an outstanding safety record and the most dangerous part of the cruise is undoubtedly the drive to the port. It is very rare that people are injured on a cruise ship,” as he told the cruise industry publication World Cruise Industry Review in 2010.  

In 2012 and 2013 Rosenker continued his gushing praise of a cruise industry which puts money in his pocket, telling a travel agent publication that “it is important for consumers to understand that cruise vacations are extremely safe. This industry is highly regulated with tremendous oversight.” Rosenker told another cruise industry publication that “every aspect of the cruise industry is heavily monitored and regulated under US, EU and international law.”

Senator Rockefeller admonished Rosenker during his testimony last year when he repeated the cruise industry's talking points before a Senate hearing on cruise ship safety issues last year, because of his obvious bias for the cruise lines.

The cruise line routinely hires from the NTSB, FBI, Coast Guard, USPH and other federal agencies. NTSB Cruise Safety MeetingMany former federal officials seem to pander to the cruise lines while in public office. Former Coast Guard officials often quickly turn into paid cruise line consultants who are pleased to appear in cruise industry publications still wearing their Coast Guard uniform and medals standing in front of an official Coast Guard logo while attesting to their wonderful experiences cruising.

Of course, no current or past federal employee should engage in such hyperbolic cheer-leading like this. It is unprofessional and unseemly. It is a conflict of interest. But some federal officials seem motivated to angle for private sector jobs in the rich cruise industry which pays no federal income taxes and is overseen, if all all, by poor, flag of convenience nations like Panama and the Bahamas and the "paper tigers," mentioned by Mr. Hall, at the IMO.

So the NTSB-CLIA love-fest begins this morning. Where is the integrity of Jim Hall? Where are the victims of cruise ship fires and sinkings? Who is speaking for the dead and injured?  Have all of the federal agencies crawled in bed with the cruise lines? 

Cruise Industry Retains Retired Coast Guard Rear Admirals to Repair Battered Image

Travel Weekly recently published an article titled "Lax Regulations of Cruise Lines is a Myth."

I'm used to reading articles from Travel Weekly which lean over backwards to be nice to the cruise lines. After all, Travel Weekly is a travel magazine which caters to people who love to cruise and travel around the world.

But I was disturbed to read that the article was written by former officials from the U.S. Coast Guard, Vice Admiral Jim Hull and Rear Admiral Tim Sullivan (both now retired from service). 

Their opinion piece claims that cruise lines are strictly regulated by the International Maritime Tim Sullivan - Coast Guard Retired Organization (IMO) and the Coast Guard.

They talk about the IMO's "rules & regulations" and the Coast Guard's allegedly "rigorous" annual inspections of cruise ships. They even go so far in their gushing praise of the cruise industry to state that they both take their families on cruises.

Although both of them are long since retired from the Coast Guard, the article includes images of them wearing Coast Guard uniforms.  A gigantic Coast Guard seal bearing the "Semper Paratus" ("Always Ready") logo is prominently displayed at the top of the article.    

Did the U.S. Coast Guard authorize these former employees to pose in uniforms and display the official seal of the Coast Guard seemingly approving an article by the for-profit travel magazine promoting the highly profitable cruise industry? Obviously not. 

So who are these former Coast Guard officials and why are they cheering for the cruise industry?

The answer, in an nutshell, is because they are consultants for the cruise lines.  

Take former Admiral Sullivan for example. He refers to himself on the professional business networking site, LinkedIn, as an "External Media Consultant for International Cruise Ship Association." His profile mentions that he is currently active in cruise vessels and shipyard external maritime public relations and consulting, among other activities. One of the consulting firms he worked for in the last few years lists BP and Transocean (remember the explosion and multiple deaths in the Gulf of Mexico) as well as numerous Fortune 200 oil & gas companies and drilling contractors like Chevron, Shell, Hess, Ensco and Diamond Offshore as clients. 

These are consultants for big business who are well paid to get large billion dollar corporations out of tight spots. They are certainly not consultants for the little guy or a family wanting a little fun on a holiday cruise. 

Now, don't get me wrong. I have great respect, as we all do, for the brave men and women in the Coast Guard who hoist ill passengers from the decks of cruise ships during dangerous medevacs far out at sea. 

But I have no respect when retired-Coast Guard officials turned cruise-ship-media consultants promote the cruise industry by wearing their Coast Guard medals & uniforms of their former-employer and mis-use the official Coast Guard seal for a travel publication.

In the Travel Weekly article, these former Coast Guard officials characterize everyone who disagrees with them as "uninformed." They also mock the "critics of the industry" who characterize the IMO as a "paper tiger."   

I have been to the past eight Congressional hearings where highly educated and informed Senators, Congressmen and Congresswomen have debated the problems associated with the unregulated cruise industry. Cruise lines incorporate in places like Panama (Carnival) or Liberia (Royal Caribbean) and register their ships in places like Bermuda and the Bahamas is to avoid U.S. taxes, U.S. labor and wages laws, and U.S. safety laws and regulations. To summarily dismiss the very real and sometimes deadly problems discussed and debated in good faith in the Senate and Congress as a "myth" is disrespectful to the American people and their elected officials.    

Let 's talk about the IMO.  The reference to it being a "paper tiger" was made by a highly distinguished Chairmen of the National Transportation Safety Board (NTSB), Jim Hall. The problem with the IMO, a United Nation's feel-good entity, is that it has no "rules" or "regulations" at all. All it can do is issue "recommendations" which it hopes the cruise lines will follow. If they don't, there is absolutely nothing the IMO can do.   NTSB Chairman Hall says the industry is watched over by “paper tigers” like the International Maritime Organization and suffers from “bad actors.” He referred to the cruise industry saying: “It is, and has been, an outlaw industry. People who book cruises should be aware of that.”

And let's talk about the Coast Guard. Unfortunately, it is underfunded and has fewer vessels than the rich, powerful, enormous and ever-growing cruise industry.  Does the Coast Guard rigorously inspect cruise ships? Hardly.  

Remember the Carnival Splendor which suffered an engine room fire three years ago? The U.S. Navy and Coast Guard spent millions of tax payer's dollars responding to the derelict cruise ship which had to be towed back to the U.S. 

What is not well known is that the Coast Guard conducted an annual examination the day before the fire and passed the vessel. This was one of the exams which retired Admiral Sullivan calls "rigorous." What an embarrassment for the Coast Guard to have inspected the cruise ship and permitted it to sail with passengers immediately before the fire broke out. Read Better Late Than Never? U.S. Coast Guard Releases Report Over 2 & 1/2 Years After Catastrophic Carnival Splendor Fire.

This is not the first public display of praise for cruise lines by Tim Sullivan. Last year, the cruise trade organization (CLIA) was under scrutiny for the widespread sexual crimes against women during cruises. CLIA wrote an article claiming that crime on cruise ships is rare: The Truth About Crime and Crime Reporting.

Who was the first person to leave a comment on the CLIA website?  No one other than former Admiral Sullivan! It's hardly a coincidence. He gushed praise for CLIA but never admitted that he is a consultant for them. He even added in his favorite phrase that he loves to cruise with his family:

"Ms. Duffy, I applaud you and CLIA for continuing to tell the cruise lines’ safety and security story. From my experience as a 36-year Coast Guard officer who has both overseen and enforced Federal regulations on our nation’s waters, I can attest that in my opinion, the cruise ships that ply US waters are in full compliance with all US regulations and still provide one of the best, safest and most secure vacation experiences available. I have taken multiple cruises in the last few years with my family and always felt relaxed, safe and secure! If I didn't, I and many others simply would not go! Cruise vessels are a "well regulated" industry. From my experience, your organization and the lines it represents, have always voluntarily and fully partnered with local, state and federal organizations on behalf of your passengers. It's the right thing to do and certainly in your best interests. I remain confident that the cruise industry, along with state and federal partners, will continue to do their best for their guests. Keep at it!"

What's particularly disturbing about former Admiral Sullivan's fawning praise is that the CLIA article was written in response to a story on CNN's Anderson Cooper (Predators at Seas: Are Your Kids Safe on Cruise Ships?) about a young girl who was sexually molested on a Royal Caribbean cruise ship. The CNN story clearly demonstrated that public safety required far greater oversight of the cruise industry. Rather than supporting the little girl who was raped, CLIA enlisted former Admiral Sullivan to opine that cruising is the "best, safest and most secure" vacation imaginable.  

In fact, investigating and prosecuting rapes on the high seas is not even the responsibility of the Coast Guard in the first place. If any federal agency is involved it's the Federal Bureau of Investigations.

CLIA knows that articles it plants in travel newspapers are picked up and posted on Facebook or re-tweeted on Twitter and reach a larger audience. Shortly after the retired Rear-Admirals' article was published in Travel Weekly, a well know travel blogger endorsed it lock-stock-& barrel in his article entitled Must-Read Article In Travel Weekly For All Cruise Travelers.   

Not everyone in the Coast Guard shares ex-Coast Guard Sullivan's endless praise for the cruise lines. A recent New York Times articles quotes current Coast Guard Rear Admiral Joseph Servidio, who testified at a Senate hearing in July about cruise ship dangers, saying that the recent cruise ship fires “highlight serious questions about the design, maintenance and operation of fire safety equipment on board these vessels, as well as their companies’ safety management cultures."

My view: The cruise industry has endured years of harsh media coverage. From that perspective, you can understand why cruise lines are starving for some good news for a change. But having retired Coast Guard officials on the cruise line's dole publish self-serving and misleading opinions and use Coast Guard logos without authorization and without disclosing that they are media consultants is disingenuous.  It's an affront to the working men and women of the Coast Guard.

The article reflects a desperate cruise industry which will continue to try and manipulate the public's opinion. In the process, the cruise lines will simply reinforce their image as not only being unregulated but lacking honesty.      

  

Photo Credit: Darley Consulting

Is Royal Caribbean Committing Fraud by Requiring Cruise Passengers to Sign Legally Unenforceable FlowRider Waivers?

If you want to participate in the FlowRider attraction on a Royal Caribbean cruise ship, the cruise line requires its passengers to sign an electronic waiver. The waiver purports to relieve the cruise line of any and all liability arising out of use of the FlowRider. However, the Eleventh Circuit Court of Appeal ruled last year that the waiver violates U.S. Maritime Law and is legally unenforceable.

In a  case our firm handled, the appellate court held that the Royal Caribbean waiver violated 46 U.S.C. § 30509 which prohibits contractual provisions which attempt to limit the liability of the owner of ships for "personal injury or death caused by the negligence or fault of the owner or the owner's employees or agents." The court held that the statute was clear and unambiguous, and there was no exception for recreational, inherently dangerous, or ultra hazardous activities. Although waivers of this FlowRider Wipe Out - Royal Caribbean Cruisetype may be enforceable on land under certain circumstances, such waivers are illegal and unenforceable on the high seas.

The legal decision is significant because there has been at least one death and many serious injuries to cruise passengers on the Royal Caribbean FlowRiders.

Below you can see an example how the cruise line electronic waiver works.  The participants usually are in a long line near the "Wipeout Bar!" with music blaring when they have to sign the waiver. Quite often, the passengers don't read anything and are led through the waiver by a cruise line employee very quickly. The waivers are not only legally unenforceable, but it seems like no one reads them anyway.

Ever since the Eleventh Circuit struck the waiver down, the cruise's line's requirement to force passengers to sign the waiver appears fraudulent to me.  The waiver is unenforceable. Period. Executing an unenforceable waiver is meaningless. There is a danger that a passenger may not assert their legal rights after they were seriously injured on the FlowRider because the cruise line tricked them into believing that they waived their rights. This constitutes fraud.

If you were injured on a Royal Caribbean cruise ship, and you didn't file suit timely (one year) because you believed that you waived your rights, you may still have a basis for a lawsuit against the cruise line.

If you have a question about the Royal Caribbean Flowrider waiver, please contact our office.

 

Food Stashed Under Beds & Secret Crime Statistics: The Cruise Industry Has a Lot to Hide

Today the Senate Committee on Commerce, Science, and Transportation will conduct a hearing on whether there needs to be greater Congressional oversight of the cruise industry in light of recent cruise ships mishaps. 

There are two recent examples of cruise line conduct which the committee should consider in determining whether Congress should take a closer eye on the cruise lines.

Example 1: A luxury cruise line, Silversea Cruises, recently flunked a surprise inspection by the Centers for Disease Control (CDC) of the cruise line's Silver Shadow cruise ship.  What makes the incident so egregious is that the CDC found that the cruise line engaged in

"an organized effort  . . . to physically remove over 15 full trolleys of dry foods, spices, canned foods, Cruise Industry Consumer Protectioncooked foods, milk, raw meats, pasteurized eggs, cheeses of all types, baking goods, raw fruits, raw vegetables, and a variety of both hand held and counter model food equipment, pans, dishware and utensils to over 10 individual cabins shared by two or three galley crew members in order to avoid inspection by VSP (Vessel Sanitation Program) staff. All the out of temperature potentially hazardous foods were discarded along with most other foods that were not canned or in original containers. The lead VSP inspector poured concentrated chlorine liquid over all the discarded foods as they were dumped into garbage bags to ensure they would not be used again." Read the CDC report here.  Look at the disgusting photographs here.

Yes, a luxury cruise line holding itself out as a 6 star cuisine experience was literally hiding meat, fish, eggs and cheese under the bunks in the crew quarters in order to cheat U.S. sanitation inspectors. Our investigation here and here leads us to the only conclusion that this deception is an industry-wide problem, 

Example 2:  After Congress passed the Cruise Vessel Safety & Security Act which was intended to require cruise lines to report crimes to the FBI and the Coast Guard in order to post crimes on an internet site for the public's consideration, the cruise industry and the FBI conspired to hide the information.  Read this disturbing story here.

The President of the International Cruise Victims (ICV) organization, Ken Carver, exposed the cover-up when he sent a Freedom of Information Act (FOIA) request to the FBI and learned that of the 400+ crimes alleged on cruise ships in 2012 alone, the FBI decided to post only 15 crimes on the Coast Guard internet site. A great injustice to the victims and the public. Watch the video below:

It's high time that Congress intervene and protect American families from the cruise industry's hide-and-seek games.      

 

 

Cruise Ship Rapist Pleads Guilty and Sentenced to Jail, But the FBI Refuses to Post Crime Data for Public Viewing

Royal Caribbean Allure of the Seas Cruise Ship RapeOne of the purposes of the new Cruise Vessel Security and Safety Law is to educate the public regarding the sexual assaults and other crimes which occur on cruise ships.

But as we reported in our article Cruise Lines, FBI & Coast Guard Caught Altering Cruise Crime Law, the FBI and Coast Guard - acting to promote the cruise lines' interests - undercut the Congressional purpose of the new cruise crime law. The cruise lines and these two federal agencies changed the language of the law to eliminate most cruise ship crimes from being reported.  

Originally all cruise ship crimes were required to be disclosed to the public.  But with the altered language, cruise crimes not reported to the FBI, or those crimes reported to the FBI and still under investigation, do not need to be disclosed to the public. 

You can read about about this issue in the Washington Post, USA TodayArizona Central and NBC Bay Area.

A good example of how the cruise lines are trying to hide crime statistics is a recent case this year involving a young girl raped on Royal Caribbean's Allure of the Seas. We reported on the crime in January.  A fifteen year old girl was lured from a teen club and raped by another teenager and a 20 year old man, Luis Scavone (photo left), on the last night of the cruise. The minor promptly reported the crime after she escaped from the rapists' cabin.

Royal Caribbean allegedly "sealed" off the crime scene and reported the crime to the FBI and the Broward County's Sheriff's Office in the cruise ship's home port. In Florida, local law enforcement also have jurisdiction over crimes on the high seas on cruise ships which return to a port in Florida.    

But rather than preserving evidence of the crime scene, Royal Caribbean unlocked the "sealed" cabin and cleaned the cabin.  It destroyed evidence in the crime scene.  Once the FBI learned of the cruise line's misconduct, it left the cruise ship and declined to prosecute.

The FBI was willing to let the two rapists (from Brazil) walk free after raping a girl. Even more disturbing is that the evidence destruction occurred on a cruise ship supervised by a former top FBI officer, Gary Bald (photo below left), who now heads Royal Caribbean's security department.

The FBI agents should have arrested cruise line employees for the destruction of evidence, but the FBI looked the other way and simply closed its investigation. The cozy relationship between the FBI and its former FBI agents, who are now working for the cruise lines, sometimes leads to the former and present FBI agents scratching each other's backs rather than protecting the public.

The Broward County Sheriff's Department, on the other hand, was not deterred by the cruise line's misconduct and arrested the two Brazilians. The State Attorney's Office for Broward County then prosecuted the two suspects and obtained guilty pleas from both.  The 20 year old Brazilian man pled guilty last week to two counts of lewd and lascivious battery in the rape of the girl.  He is now behind bars.   

Royal Caribbean Cruise - Director of Security Gary BaldYou would think that the rape of a child on the world's largest cruise ship would be documented on the online database maintained by the FBI and Coast Guard.  That was the intent of the cruise crime law. But the FBI decided not to report it. Take a look here at the FBI statistics.  There is not a single report of a sexual assault for Royal Caribbean in 2012. In fact, there is not one report of a violent sexual crime against a cruise passenger for the entire cruise industry this year.

In prior years, the FBI reported over 400 crimes on cruises a year.  But now with the altered language in the cruise crime law, the FBI and cruise lines are concealing crimes. The FBI online database lists only 13 sexual crimes for all of last year.   

The bottom line is that even thought the cruise rapist is in jail after pleading guilty to state prosecutors, the FBI refuses to reveal the crime to the U.S. public on the online database required by the cruise crime law.

There is monkey business going on here.

The FBI and the cruise lines who routinely hire FBI agents are in cahoots. Congress needs to investigate how they derailed the law.  And the U.S. public needs to know how a law designed to protect women and children on cruises has been sabotaged to protect the image of the billion dollar cruise industry.     

Carnival Crewmember Travel Coordinator Arrested For Fraud and Grand Theft

A fifty-one year old employee of Carnival Cruise Lines has been arrested for organized fraud and theft.  

Miami resident Serafin Sanchez was arrested and booked on two criminal counts, described as organized theft of more than $50,000 and first degree fraud in excess of $100,000.

According to the arrest warrant, Mr. Sanchez is a shore-side employee of Carnival and worked as a "Crew Travel Coordinator."  His responsibilities included booking airline flights for crewmembers signing on Carnival's cruise ships around the world.

Serafin Sanchez - Carnival Cruise LineCarnival has two basic types of crew employees: (1) those who qualify for free fights to and from ports (salary employees), and (2) those who must pay for airline flights (non-salary employees).  Mr. Sanchez is accused of defrauding Carnival Cruise Lines by using his knowledge and authority to book flights for non-salary crewmembers and charging Carnival's travel account while keeping the money the crewmembers paid for the airline tickets.

The alleged scheme operated as follows:

A crewmember working on a Carnival ship would contact a head waiter on a cruise ship (identified as Rudy Saldana), who was known "to have a friend" (Mr. Sanchez)  who could arrange reduced price airline tickets. 

Mr. Sanchez would quote an arbitrary price for the ticket to Mr. Saldana who would communicate it to the crewmember.   Mr. Saldana would then collect the money from the crew member.  Mr. Saldana would deposit the money in his personal account to which Mr. Sanchez had access via a debit card.  Mr. Sanchez would then purchase the airline ticket for the crewmember but would charge the price of the ticket to the Carnival travel account.  Mr. Sanchez would allegedly pocket the money collected from the crewmember.

The arrest affidavit further alleges that Mr. Sanchez operated this "organized scheme" to defraud Carnival of approximately $132,000.00 from June to September 2011.  Mr. Sanchez  did not reimburse Carnival Cruise Lines any of cash collected from the non-salaried cruise employees.

Mr. Sanchez pled not guilty to the allegations. He is out on a $20,000 bond.  His defense counsel is Joel DiFabio whose office released the following statement:

"We are actively cooperating and working with the Miami-Dade State Attorney's Office in an attempt to resolve this matter as quickly as possible."   

 

Photo credit:  Mugshot via whosarrested.com

Bahamian Cruise Passengers Defrauded By Travel Agent & Mistreated By Carnival Cruise Line

This weekend, the Freeport News reported on  the saga of a well respected Bahamian family who purchased a cruise through a travel agent for 39 family members to sail with Carnival Cruise Lines on the Carnival Freedom cruise ship. 

Written by reporter Yasmin Popescu, the newspaper article reports on what it described as a family "torn apart" because of the fraudulent conduct of a local travel agent and the harsh conduct of the cruise line. 

Jim Walker - Cruise Law - Freeport BahamasThe story involves the Edden family of Smith's Point in Freeport which went through what is described as a "vacation from hell."

Thirty nine family members ranging from age 4 to age 71 had booked the Carnival cruise through Morris Travel which issued Carnival Fun Ship cards but actually never paid the cruise line for all of their fares. 

The large extended family flew from Freeport to Fort Lauderdale to meet the cruise ship the following day.  However once they arrived at the port, the family faced problems.  Carnival told many of the family members that they didn't have confirmed reservations.  Many of the family members were separated from their family members, including children, who were frightened by the ill treatment.   Carnival representatives treated them like they were criminals and threatened to take their mug shots and finger-print them and turn them over to the police.  

Jacy Whittaker - Freeport Bahamas LawyerTen of the family members were taken away from the check in area and forced to sit behind a cordoned off area, which subjected them to the scrutiny of and ridicule from other passengers.   

Carnival left these ten family members at the port terminal while the remaining twenty-none family members left on the cruise.  Carnival did not provide any explanation for the mistreatment, leaving them abandoned at the port without any transportation or accommodations. They were separated from the family and crying when the cruise ship sailed without them.

For the family members who Carnival permitted to board the cruise ship, many of them did not receive the type of cabins they booked.  One one young woman in a wheelchair with spina bifada was forced to leave her wheelchair outside of the non-accessible cabin and crawl into the cabin and in and out of the bathroom.

After sailing for five days, Carnival finally discovered that one of the credit card used by the travel agent was fraudulent.  Carnival then treated the family members like they were criminals.  It demanded $17,000 immediately.  Carnival belittled them and threatened arrest once they returned to South Florida. 

Carnival also told them that they would not be permitted to leave the cruise ship when it called on Nassau because the cruise line was afraid that they would flee and not return to the ship.  Carnival insisted that it confiscate their passports if they decided to go into Nassau. 

Roberto Villasante - Miami LawyerFortunately, a former Member of Parliament in the Bahamas, David Wallace, kept the family group from being arrested or being held on the ship. 

When they returned to Ft. Lauderdale, the family members felt that they would be arrested and taken to jail.

Once back home in Freeport, the family hired prominent Bahamian lawyer, Jacy Whittaker (above left), of the law firm of Parris | Whittaker to represent their interests.

Mr. Whittaker retained our firm as well as high profile Miami lawyer Roberto Villasante (photo right) to investigate legal action against Carnival for its outrageous mistreatment of the family during the cruise.

On Friday, we met with some of the aggrieved family members, from little children to grandparents.  A photograph I took of the family members is below.

Freeport reporter Yasmin Popescu took the photo at the top of me interviewing some of the family members. 

Ms. Popescu has covered this story from the beginning.  An earlier article can be read here.

Jacy Whittaker and Edden Family - Freeport Bahamas  
 

My cruise travel agent friend Chris Owens wrote an article about the debacle in July:

"Be Sure Your Cruise Travel Agent Is Not A Crook"

Another Shareholder Class Action Lawsuit Filed Against Royal Caribbean Alleging Fraud

Royal Caribbean - Stock Fraud?A third class action lawsuit has been filed against Royal Caribbean Cruises seeking class action certification for what is alleged to be fraudulent conduct by the cruise line and executives Richard  Fain, Brian Rice, and Henry Pujol.

The law suit was filed by the law firm of Kessler Topaz Meltzer & Check in Pennsylvania. 

We reported on the first two lawsuits alleging fraud in an article last month Royal Caribbean Stock Fraud Lawsuits - What Did the Cruise Line Executives Know and When Did They Know It?

The lawsuit was filed here in Miami, in Federal Court for the Southern District of Florida.

You can read the lawsuit papers here.

The law firm's press release can be read here.

Royal Caribbean Stock Fraud Lawsuits - What Did the Cruise Line Executives Know and When Did They Know It?

Two stock fraud lawsuits recently filed against Royal Caribbean Cruises have placed the cruise line's corporate ethics under the microscope.

In the case of Todd Roth v. Royal Caribbean Cruises, Ltd, Richard D. Fain, Brian J. Rice, and Henry L. Pujol, United States District Court, Southern District of Florida, Case No. 22783 - MSC, a stockholder alleges that the cruise lines withheld disclosing certain accounting errors dating back to 2009, misrepresented the company's financial status, and misled investors about the cruise line's financial future. The case was filed by the New York and Louisiana law firm of Kahn, Swick & Foti and the Florida firm of Vianale & Vianale.   

Richard D. Fain - Stock Fraud?The lawsuit alleges that on January 27, 2011, Royal Caribbean issued a press release where it made false and misleading statements that its fourth quarter results for 2010 were better than expected and it anticipated certain positive developments regarding its operations, expenses, costs, ratios and net income for 2010.  

On April 28, 2011, after the first quarter, Royal Caribbean again made misleading statements regarding its financial status.  The lawsuit alleges that CEO Richard Fain (photo left) falsely stated that "the year started off with a roar - strong bookings, low costs and solid profits - and in the first quarter every one of our brands exceeded its forecast . . . " 

However, on July 28, 2011,  Royal Caribbean suddenly and dramatically departed from its rosy projections regarding the company's financial operations.  The cruise line published a release revealing for the first time that it was performing well below expectations and that certain accounting errors (regarding treatment of interest income relating to amortization of certain financing fees) resulted in a drastic downward revision of the company's financial statements.

This news "shocked and alarmed" investors.  Royal Caribbean's stock price then fell precipitously in two days, from $35.75 to $30.50.  This development had a disastrous effect on the investments of individual shareholders.  The stockholder who filed suit, Todd Roth, had purchased 5,000 shares on July 26, 2011 at a price of $36.65 a share.  Three days later, with the stock trading at $30.50, he lost over $30,000. 

Included as defendants in the lawsuit are the CEO (Richard Fain), the Chief Financial Officer (Brian Rice) and the Corporate Financial Controller (Henry Pujol).  On January 28, 2011, the day after touting the financial strength of the cruise line, CEO Fain sold 200,000 shares at a price of $46.63 for a what the lawsuit alleges are total illicit proceeds of $9,326,000.  CFO Rice (photo right, below) quickly followed suit, selling 88,872 shares in the $46 to $47 range from February 1 - 14, 2011 for over Brian C. Rice - Stock Fraud$4,100,000 in illicit proceeds. 

Although not named personally in the lawsuit, Royal Caribbean President Adam Goldstein sold over 40,000 shares between February 1 - 16, 2011 - for a total of over $1,900,000.  Six other executives sold stock between January 28 and February 16, 2011, which combined with the stock sold by the named defendants totaled over $20,000,000.  

The lawsuit alleges that these individual defendants knew that the negative financial information had not been disclosed to the public and was being concealed, and they were participants in a "fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Royal Caribbean securities . . . "      

Earlier this year, in an article entitled Royal Caribbean Executives Get Richer While Crew Members Get Poorer, I reported that  Royal Caribbean increased its 2010 compensation paid to CEO Richard Fain almost 60% to $8,600,000.  Royal Caribbean increased the compensation paid to the company's four other named executives from 18.5% to almost 50%.  The largest compensation increase of the four executives went to President Adam Goldstein whose total compensation increased to over $4,000,000. 

These increases were primarily incentive based, meaning that the executives claimed that they met or exceeded certain financial goals for the corporation.  With this recent revelation that the company's financial performance was overstated and that the executives allegedly committed fraud or recklessly misrepresented the cruise line's financial data, the question arises whether the incentive based millions of dollars in compensation should be returned voluntarily to the corporation or disgorged in the pending lawsuits.    

The Roth lawsuit seeks class action status for what is referred to as either hundreds or thousands of other shareholders who were defrauded by the cruise line between January 27, 2011 and July 28, 2011. 

A second lawsuit seeking class action status was reportedly filed yesterday by the Pomerantz law firm with offices in New York, Chicago and Washington D.C.  It is on behalf of stockholder Stanley Wolfe and was filed in the United States District Court, Southern District of Florida, Case No. 22855.  This lawsuit seeks class certification for stockholders who purchased securities between April 23, 2009 and July 27, 2011.

Royal Caribbean Stock Chart

It will be interesting to see how these lawsuits turn out.  What did the cruise line executives know about the accounting errors?  When did they learn of the irregularities?  What did they do once they learned that the cruise line was performing substantially under expectations?  Did they dump their stock realizing that the price was artificially high?  Or did they act prudently and responsibly once the accounting mistakes were brought to their attention? 

 

Photo credits:  www.azamaraclubcruises.com

Chart credit:  Rick + Rick law firm