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Fish-Farm Operators Sue for $10M, Charge Fraud by Ex-Committee Chair

Two Cecil County families that used their homes as collateral to finance an unsuccessful commercial fish-growing operation are suing the former chairman of the Maryland Aquaculture Advisory Committee and others for $10 million on allegations of fraud and misrepresentation.

Scott McCardell stands in front of the tanks on his Cecil County farm, which now stand empty. He claims that faulty machinery sold to him as new caused disease to spread throughout the farm.

The 102-page, 108-count complaint also claims that fish were marketed out of tanks filled with “grossly” diseased fish.In all, according to one plaintiff, Scott McCardell, the 32-tank operation produced only a few hundred pounds of fish for market. The rest largely went into a hole in the ground.“What my clients are doing is trying to change what’s going on or at least bring some public attention to it,” attorney Michael D. Smigiel Sr. said yesterday.The plaintiffs claim that former Aquaculture Advisory Committee Chairman Douglas Burdette, as a principal in several aquaculture companies, sold them used equipment that he misrepresented as new. The equipment’s repeated failures caused disease to spread throughout the farm and kill thousands of the popular dinner fish tilapia, McCardell said.In early 1996, according to the complaint, McCardell asked now-Assistant Secretary of Agriculture Bradley Powers, who headed the state’s aquaculture program, for help in setting up a fish farm. Powers allegedly directed McCardell to Burdette.“The whole thing revolves around the fact that Burdette and Powers were [long-time] friends. It’s so dirty it stinks like dead fish,” McCardell said yesterday in giving his view of the Maryland aquaculture program.Burdette, described in the complaint as a principal in Aquatic Technologies Inc., Maryland Pride Farms Inc., and Global Aquatics Ltd., heads a “vertical integration” system whereby individual farmers contract to buy fish, feed, equipment and supplies from Burdette and he in turn buys the market-size fish from the farmers.Confidential minutes from the Nov. 14, 1996 meeting of the Maryland Aquaculture Advisory Committee meeting that was chaired by Burdette, and which Powers attended, show that committee members worried that the public might learn of diseases that affect farm-grown fish — including streptococcus inaei, a potentially fatal disease marked by rashes and swelling, according to the minutes.“There has been a lot of concern about the disease found in tilapia that were imported to Canada and the drastic [e]ffect it could play on the industry,” according to the minutes.Two committee members who are not involved in the McCardell lawsuit wanted to know what to do about fish disease and the committee’s advice was simple:“We cautioned them on how they approach this because there was concern that if this gets in to public press people may not eat fish and in addition it would kill the live market for tilapia,” according to the minutes. Burdette and Powers failed to return a reporter’s calls for comment, but an Agriculture Department spokesman said that seats on the advisory committee are filled for specified terms and Burdette’s term has expired.McCardell and his wife, Donna McCardell, along with Donna McCardell’s parents, Ed Wilson and Lois Wilson, all of Port Deposit, filed suit on Aug. 31 in Cecil County Circuit Court.They allege that Burdette and various of his corporations sold them defective oxygen sensors and also sold monitoring computers that were, in fact, used and badly worn.The plaintiffs also claim that that Central Maryland Farm Credit, A.C.A., loaned them $250,000 while knowing that fish operations such as this were not profitable.Burdette had outstanding loans from Central Maryland, according to the complaint, and the parties failed to disclose their relationship to the plaintiffs in this case.“The Defendant Central Maryland Farm Credit, A.C.A. had actual knowledge of the Defendant Burdette’s financial problems and the inability of the Defendant Burdette’s aquaculture system to work as proposed. The Defendant Central Maryland Farm Credit withheld this information from the Plaintiffs and continued to require the Plaintiffs to spend the funds loaned to the Plaintiffs with the Defendant Burdette and his Defendant companies thereby providing Burdette with the funds to help alleviate his debts with Defendant Central Maryland Farm Credit, A.C.A.,” according to the complaint.Dead in the waterDon Vandrey, a Department of Agriculture spokesman, provided a list of successful fish farmers and recommended contacting them.“The fish died a lot,” Pat Lee of Grasonville, who with husband David Lee, opened a small commercial fish farm. “There’s not a whole lot you can do with a dead fish.”The Lees, commercial fishermen, refused to borrow for such a venture but put $15,000 of their won money into setting up a small operation.“We didn’t do very well with the fish at all,” Pat Lee said. Smigiel said that, based on conversations with Burdette’s attorney, Joseph Lee of Bel Air, he expects Burdette to declare bankruptcy for himself and his companies in light of the lawsuit. Lee could not be reached for comment.The McCardells and Wilsons borrowed a total exceeding $500,000 to launch the venture, Scott McCardell said. The Wilsons sank $200,000 of their retirement money into the plan and all of the plaintiffs put in and countless hours of hard work.“We’ll never get out from under this,” Scott McCardell, an advertising agent, said.