Everything Is Bullshit: The Greatest Scams on Earth Revealed (16 page)

Although
its ubiquitous ads make it stand out, the ecosystem surrounding the donated car
tax write-off — from legitimate, if not terribly efficient, fundraising
efforts to outright fraud — represents just one part of the private
sector’s questionable role in fundraising for nonprofits.

The reason private companies (or shady nonprofits) can give
charities such a small cut of the funds they raise is that the charities often
have no incentive to hold the commercial fundraisers accountable. While big
name charities have leverage over commercial partners and closely monitor their
reputations, the majority of nonprofits are small organizations with limited capacity
and a desperate need of funds. When a company or nonprofit offers to provide
them with more funding in exchange for signing a contract, they have no reason
to refuse. As one of countless nonprofits, they have little leverage to
negotiate a larger cut of the proceeds
.,
and given
that the fundraising company has no legal requirement to disclose its profits
or inner workings, charities may have no idea how many cars the fundraiser
sells in their name and no reason to question the modest size of the checks
they receive.

These same incentives are at work for companies that offer to
solicit donations over the phone and on street corners on behalf of charities.
Just like with car donation services, private telemarketers and canvassers cut
deals with nonprofits to fundraise in their name. When they solicit donations
from people, they act like part of the charity and make no mention of their
quotas and commissions.

A report from the state of Washington found that charities
received 46% of funds raised by commercial fundraisers. A 2009 Charity
Navigator analysis of states that require disclosures wrote that the companies
in each state contributed an average of 32 to 59 percent of the proceeds to
charity, and that the costs of running telemarketing and canvassing campaigns
ate up much of the charitable contributions made by donors. Most years New York
releases a “Pennies for Charity” report on commercial fundraising. It regularly
finds that charities receive less than 50% of the proceeds of the fundraising
performed by private telemarketers and canvassers. In 2011, it reported that
“63%, or $157 million of the funds raised by 81 telemarketers was paid to
fundraisers for fees and/or used to cover the costs of conducting the
campaigns.”

With well over half of the money raised going to the private
fundraising companies, donors’ money and tax write-offs seem to be furthering
the goal of keeping telemarketers and canvassers employed more than the goals
of supporting veterans and advancing cancer research. No national level data
exists on commercial fundraising, but with New York State alone bringing in
hundreds of millions of dollars every year, the market is easily worth
billions.

Charity for Whom?

An
IRS loophole has created a quirky situation where charities are in the business
of acquiring and selling used cars. Charities can make some money from car
donations and often outsource selling donated cars and other aspects of
fundraising. By doing so, they can focus on their programming: running after
school programs, sending care packages to soldiers overseas, or running
awareness and outreach events for terminal illnesses.

But car donation drives, along with other forms of commercial
fundraising like telemarketing and canvassing, seem to be an inefficient means
of supporting charitable work. Less than half of the proceeds accrue to
charities, with private companies retaining the rest, and fees eat up over half
of the value of the donations. This not only means that people support
charities less than they intend
,
it also deprives the
U.S. government of revenue.

Since the IRS neither audits nor compiles any data on these tax
deductions and commercial fundraisers, we also don’t know how many fundraising
organizations, whether for-profit or nonprofit, exaggerate their expenses or
even commit outright fraud. In many instances, it doesn’t seem that charities
make an informed decision to get into the car donation game. Instead, charities
shrug their shoulders when approached by predatory private companies and lend
them the charitable mirage they need in exchange for modest contributions to
their budget.

There is no law against profiting off fundraising for charities.
It is up to donors to do their research and donate in a way that will maximize
the support they provide for charities. But how much of people’s donations and
tax write-offs have to go toward private companies’ fees and salaries to reach
the point that it is charity for the companies, not the causes they claim to
support?

15.

THE INVENTION OF THE

CHILEAN SEA BASS

T
he Chilean
sea bass is not the type of fish you find on the menu at Red Lobster or Long
John Silver’s. Instead, you’re more likely to choose it out of a lineup that
includes filet mignon and lobster risotto — and to pay top dollar for its
buttery, melt in your mouth flavor.

Given its name, which conjures up exotic notions of South
American fisherman carefully acquiring this prized fish off the coast of Chile,
the price may seem appropriate. But only
a minority of
Chilean sea bass come
from the coast of Chile. Many fish sold under the
name hail from arctic regions. Moreover, the fish isn’t even a type of bass;
it’s a cod. Until 1977, the name Chilean sea bass didn’t exist, and few people
ate the fish before the 1990s. Prior to that, scientists knew the fish by the
less mouthwatering name of the Patagonian or Antarctic
toothfish
.

In short, the Chilean sea bass is a pure marketing invention
— and a wildly successful one. Far from unique, the story of the Chilean
sea bass represents something of a formula in today’s climate of overfishing:
choose a previously ignored fish, give it a more appealing name, and market it.
With a little luck, a fish once tossed back as
bycatch
will become part of trendy $50 dinners.

From Fish
Sticks to the Four Seasons

Despite
the oceans’ vast size, our appetite for their endowments appears even stronger.

Collecting data on the state of fish populations is expensive
and difficult enough to leave room for debate. That debate, however, is
generally between doom and gloom like marine biologist Daniel
Pauly’s
assertion that we face the “end of fish” and other
researchers’ cautious optimism about the recovery of some fish stocks. It is
the most popular fish that face the lowest supply:
Pauly
notes that over the past 50 years, cod, swordfish, and
bluefin
tuna populations have declined by some 90%.

As populations of popular commercial fish dwindled, the seafood
industry went further afield, although experts say operations now cover
virtually every corner of the globe. Manufacturers turned to
bycatch
and once-ignored fish like the blue grenadier to
make fish sticks and filet-o-fish sandwiches. Beyond fast food, sit-down
restaurants, fish markets, and even sushi joints have taken to passing off
ignoble fish as their more popular cousins. One study found 20% of fish in
America to be mislabeled. The rate was 50% in California.

The seafood industry also tapped new fish to offset the decline
in major commercial offerings. In 2009, a Washington Post article on the
practice noted, “As they went farther and deeper, fishermen brought back fish
that people didn't have recipes — or even words — for.” So, the
fish received new, more refined names. In the seventies, seafood dealers
renamed the
slimehead
, a fish named for its
“distinctive mucus canals,” the “orange
roughy
.”
Sales of the goosefish — long thrown back by fishermen —
skyrocketed in the 1980s and 1990s once rechristened the monkfish. Rebranding
sea urchins — once known by Maine lobstermen as “whore’s eggs” —
under its Japanese name “
uni
” helped it catch on as a
popular sushi ingredient now achieving popularity in other cuisine.

An
Exercise in Branding

So
how did the
toothfish
join the ranks of well-branded
finds?

As recounted in Hooked: A True Story of Pirates, Poaching and
the Perfect Fish, in 1977 an American fish merchant named Lee Lantz was
scouring fishing boats in a Chilean port. Lantz’s business was finding new
types of fish to bring to market, and he became excited when he spotted a
menacing looking, five-foot long
toothfish
that inspired
him to ask, “That is one amazing-looking fish. What the hell is it?”

The fishermen had not meant to catch the fish, which no one
recognized. But as the use of deep-water
longlines
became more common,
toothfish
, which
dwell
in deep waters, started appearing in markets. Taking
it for a type of bass, Lantz believed it would do well in America. But when he
tried a bite of the
toothfish
, fried up in oil, it
disappointed. It had almost no flavor. Nevertheless, as G. Bruce
Knecht
, author of
Hooked
, writes:

“[Lantz] still thought its attributes were a perfect match for
the American market. It had a texture similar to Atlantic cod's, the richness
of tuna, the innocuous mild flavor of a flounder, and its fat content made it
feel almost buttery in the mouth. Mr. Lantz believed a white-fleshed fish that
almost melted in your mouth — and a fish that did not taste ‘fishy’
— could go a very long way with his customers at home.”

But if the strength of the
toothfish
(a name Lantz didn’t even know — he learned that locals called it “cod of
the deep”) was its ability to serve as a blank canvas for chefs, it needed a
good name. Lantz stuck with calling it a bass, since that would be familiar to
Americans. He rejected two of his early ideas for names, Pacific sea bass and
South American sea bass, as too generic, according to
Knecht
.
He decided on Chilean sea bass, the specificity of which seemed more exclusive.

Despite its new, noble name, chefs in fancy Manhattan restaurants
did not immediately serve a nicely broiled Chilean Sea Bass with Moroccan salsa
over couscous. It took a few years for Lantz to land contracts for his new
find. Initially, he made only a few small sales to wholesalers and other
distributors despite offering samples far and wide. Finally, in 1980, a company
struggling with the rising cost of halibut that the company used in its fish
sticks bought Lantz’s entire stock, banking on people not tasting the
difference between halibut and
toothfish
beneath the
deep fry.

From there, Chilean sea bass quickly worked its way up the food
chain. Chinese restaurants purchased it as a cheap replacement for black cod
(Chilean sea bass is, after all, a type of cod). Celebrity chefs embraced it,
enjoying, as
Knecht
writes, it ability to “hold up to
any method of cooking, accept any spice,” and never overcook. The Four Seasons
first served it in 1990; it was Bon
Appetit’s
dish of
the year in 2001.

A
Self-Fulfilling Prophecy

Addressing
new arrivals to Plymouth Plantation in 1622, Governor William Bradford
apologized that all he “could
presente
their friends
with was a lobster… without bread or anything else but a
cupp
of fair water."

It may seem surprising that previously ignored fish like the
toothfish
and the
slimehead
(successfully
rebranded as the orange
roughy
) could so quickly
become the toast of the town. But with a long-term perspective, it becomes
clear that the line between
bycatch
and fancy seafood
is not a great wall defended by the impregnability of taste, but a porous
border susceptible to the effects of supply and demand, technology, and fickle
trends. This is true of formerly low-class seafood like oysters and, most of
all, the once humble lobster.

In the early colonial days, lobster was a subsistence food. The
biggest knock against lobster seems to be how plentiful it was. Food histories
like The Encyclopedia of American Food and Drink describe lobsters “washing
ashore in two foot piles.” As wealth grew in colonial America, lobster remained
a food primarily for prisoners, indentured servants, and the poor. Commercial
markets were limited and a lobster bake would have had a status roughly
equivalent to fast food takeout today.

Lobster seems to have first found a mass market thanks to the
advent of canning in the early to mid 1800s. Once canneries managed to convince
skeptical Maine fishermen to become lobstermen, canned lobster could be found
in inland stores, although still at one fifth the price of baked beans.

But what made the lobster king were 19th century food tourists
— moneyed visitors to the New England coast from Philadelphia, New York,
and Boston. These “rusticators” came looking for the “Yankee America of Myth,”
so locals served them lobster for dinner on fine china with butter and herbs.
With the advent of refrigeration, rusticators could pay top dollar for this new
“luxury” of lobster in urban stores and restaurants as well.

Although lobsters were once cheap and plentiful, and expensive
only due to their nostalgic branding, lobster prices soon reflected real
rarity. Between canning and the demand for lobster as a luxury purchase,
lobstermen overfished. Whereas huge lobsters were once laughably easy to pull
up, finding
one pound
lobsters became the work of a
professional. The exclusive image of the lobster became a self-fulfilling
prophecy, reflecting its stocks in the real world.

Each of the rebranded fish — the
slimehead
turned orange
roughy
, the sea urchin turned
uni
, the
toothfish
turned Chilean
sea bass — experienced the same. After their successful branding helped
make them part of
high-brow
cuisine, the stocks of
each plummeted. Seafood Watch, a sustainable seafood advisory list, released
guidelines on each as scientists worried about their possible extinction. In
2002, a mere 10 years after Chilean sea bass became popular, environmental
groups teamed up with American chefs on a “Take a Pass on Chilean Sea Bass”
campaign that encouraged chefs to take the fish of their menus.

Before the campaign began, international agreements set quotas
and established other regulations on the capture and sale of
toothfish
, but advocates insisted the boycott was necessary
given the prevalence of illegal poaching. In 2002, the Commerce Department
estimated that ⅔ of Chilean sea bass sales were illegal. The incentives
to ignore regulations were simply too high.

This is well illustrated by the case of Antonio Garcia Perez, a
Spanish fisherman with serious disregard for fishing regulations. Perez used
longlines
“that stretch over more than 15 miles and carry
up to 15,000 baited hooks” to catch as many as 40 tons of Chilean sea bass in a
day. As
Knecht
recounts in Hooked, Perez instigated
“one of the longest pursuits in nautical history” in 2003 while fishing for
toothfish
near the Heard and McDonald Islands, two barren,
volcanic spits of land located roughly equidistant between South Africa,
Australia, and Antarctica. Spotted by Australian patrol boats, Perez ordered
his ship to flee south toward Antarctica.

Perez’s boat, the
Viarsa
, had 96 tons
of Chilean sea bass on board worth $1 million. With an Australian
ship giving
chase, the
Viarsa
made
directly for a storm of 75 mph winds.
Knecht
describes the ship ascending building-size waves that rocked the ship, bent the
walls, and created “the impression that the hull was being pressed together
like an accordion.” To protect a cache of a fish no one much cared about a
decade earlier, the
Viarsa
raced 4,000 miles (more
than the distance from California to New York) over 3 weeks until additional
patrol boats trapped it in the South Atlantic Ocean and took Perez and his crew
to an Australian court to face charges of violating Australia’s Fisheries
Management Act.

Nature,
Nurtured

In
the United States, the Food and Drug Administration oversees the labeling of
seafood. But the agency generally doesn’t have a problem with people in the
seafood industry marketing fish under new names, focusing instead on cases of
fraud and mislabeling that leads to safety concerns. The FDA now recognizes
Chilean sea bass as an accepted name along with Patagonian and Antarctic
toothfish
.

It would be nice if market mechanisms kicked in to protect
stocks of popular seafood. When lobster became popular and overfished, the
difficulty of trapping them would increase the price, leading people to seek
alternatives. Lobsters would have a respite until stocks increased and prices
dropped, hopefully leading to a sustainable equilibrium over time.

Unfortunately — as shown by the story of Antonio Garcia
Perez and the world’s fishing stocks — nothing of the sort happens.
People continue to pay for popular seafood, with high prices becoming a draw
for fishermen rather than a deterrent for diners. The result is hard to enforce
(and negotiate) regulations and a tragedy of the commons.

The trajectory of the Chilean sea bass — from almost
unknown, to fish sticks, to a fine cuisine risking extinction in a mere 20
years — shows just how much power seafood markets hold over the state of
our oceans. That said, regulation and campaigns like “Take A Pass On Chilean
Sea Bass”
have
had an effect. Seafood Watch notes the
success of some recovering stocks and identifies a number of responsible
sources for acquiring
toothfish
.