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Silver Bay aquaponics venture goes belly-up

This aquaponics operation in Silver Bay has sat vacant since the late summer of 2016, when the University of Minnesota Duluth closed down its research at the city-owned facility. Mariner Farms LLC had signed a purchase agreement to buy the facility for $400,000 and operate it as a for-profit venture, but the deal never closed, leaving Silver Bay with a lifeless building. (Jamey Malcomb / Lake County News-Chronicle)

Bruce Carman Jr. talked a good talk. But after more than a year of hype, the 59-year-old entrepreneur has little to show for his pledge to demonstrate that aquaponics will be "the way of the future," as he told the Duluth News Tribune in 2016.

Doing business as Mariner Farms LLC, he had planned to take over, scale up and operate a Silver Bay aquaponics facility previously run by the University of Minnesota Duluth. But Carman's plans to commercialize the operation never materialized, and the facility — which raised tilapia and used fish waste to help grow produce in an adjacent greenhouse — simply was forced to close.

Even as the Silver Bay project stalled, Carman peddled the idea of building additional facilities in other places. He persuaded the City of International Falls to offer him a 1.5-acre site for $1, for the purpose of constructing Mariner Farms' second operation.

That property, too, sits unused today.

Meanwhile, Carman's legal problems continue to escalate.

Missing money

A group of prominent local investors — including former Silver Bay Mayor Joanne Johnson and Wade LeBlanc, chairman of the Silver Bay Economic Development Authority — has successfully sued Carman for breach of fiduciary duty. The investors collectively provided Carman with $175,000 in funding to get the aquaponics facility up and running as a for-profit venture, but Carman never purchased the operation, leaving his backers to wonder where their money had gone.

LeBlanc recalled how Carman sold him and others on the promise, saying: "His passion for it when this first got going was unbelievable. He was a driving force and did a lot for it. Then, all of a sudden, I don't know what unraveled."

Silver Bay City Administrator Lana Fralich said Carman, who identified himself as CEO of Mariner Farms LLC, agreed to purchase the facility for $400,000 and was to close on the property by no later than Dec. 15, 2016, but the date came and went without a deal.

On Dec. 31, 2016, the Minnesota Secretary of State's office relisted Mariner Farms as an "inactive" limited liability corporation when Carman failed to renew his registration.

"Closing did not occur for reasons unknown to the City and the agreement expired under its own terms at the end of business on December 15th," Fralich wrote in an email to the News Tribune. She noted that the city did retain $1,000 in earnest money Carman had put down on the property, but Silver Bay was left with a now-lifeless building.

Carman declined to discuss the situation or the status of Mariner Farms LLC with the Duluth News Tribune, citing ongoing litigation.

Multiple claims

On Nov. 27, Judge Dale Wolf ordered Carman to repay LeBlanc and other Mariner Farms investors, but mounting legal claims make that far from a certainty.

Chief among those claims is a foreclosure. Judge Michael Cuzzo ruled Dec. 13 that North Shore Federal Credit Union could sell off Carman's Caribou Lake home, authorizing the lender to seek recovery of more than $698,000.

But according to the Lake County Assessor's Office, Carman's Lutsen residence is worth an estimated $521,800 — enough to cover just 75 percent of the judgment. Court records show Carman stopped making mortgage payments in June of 2016.

Today, Carman will return to the Cook County District Courthouse to face yet another suit.

Midland Funding LLC, a debt-collection company, will seek a court judgment of $1,553 to make good on Carman's unpaid credit card bills.

Back in October, yet another creditor, Capital One Bank, took Carman to court, as well, and received a $3,958 judgment to cover unpaid credit card bills.

LeBlanc personally is out $25,000 he invested in Mariner Farms LLC, plus another $22,500 he provided Carman in the form of a personal loan, for a total of $47,500.

"I don't know if I'll ever see any of that money again," LeBlanc said.

Yet John Bray, an attorney who represented Johnson, LeBlanc and other investors, said he remains committed to getting his clients' money back.

When asked how Carman could be expected to repay the investors, given the current state of his finances, Bray said: "I'm not going to offer you an opinion as to the collectability of the judgment against him."

However, Bray hinted that Carman may have access to more assets than meet the eye, saying: "I don't want to offer you too much information that I might be in possession of so that the entire world can read about it, when Mr. Carman may not be aware of what I know.

"I know that sounds cryptic, but it's meant to be," he said.

'Black eye'

Mike Mageau, an assistant professor and director of UMD's environment and sustainability program, blames Carman for the disruption of the project in Silver Bay.

Mageau helped set up and open the aquaponics facility in 2012. The closed-loop operation, called Victus Farms, raised tilapia, using nutrients from the fish waste to help grow lettuce, basil and arugula in an adjacent greenhouse. Algae from the fish tanks also was collected and refined into a biofuel, with the solids removed, dried and fed back to the tilapia.

The facility launched at a cost of about $1.3 million with help from the University of Minnesota, research grants, and other public sources, including $300,000 from the state Legislature, $100,000 from the City of Silver Bay and $50,000 from Lake County.

Victus Farms set up shop in an eco-industrial park that Silver Bay was developing with Carman's help as a consultant.

Mageau said Carman was quick to latch onto the work being done at Victus Farms and to promote it.

"Bruce didn't have any experience doing this. He kind of watched us from afar and tried to take credit whenever he could. He never spent a day in there working," he said.

"I think he gave the impression that he was in charge, and we were all working for him, which was kind of silly because it was a partnership between UMD and the city, and Bruce really didn't have anything to do with it, other than the fact that the city had hired him to try to find businesses for the eco-industrial park," Mageau recalled.

Mageau said Carman tended to overstate the success of Victus Farms, which despite significant progress, never broke even financially.

"This is a viable concept that's getting a lot of attention, and it's very close. It has a lot of potential. The problem with Bruce is that he was just promising too much too soon. We just weren't quite there yet," he said.

Mageau said the demise of Mariner Farms casts doubt.

"That's what I hate about it. It puts a big black eye on the whole concept now, and it shouldn't, because we were close," he said.

Yet Mageau understands why UMD and the city of Silver Bay wanted to accept Carman's offer to buy Victus Farms and operate it as a commercial venture. After all, he observed: That had been the dream of the research project from the start.

Fralich confirmed that objective in an email, noting, "The city is currently working with other private parties interested in the facility."

Mageau doubts UMD would consider a return to Silver Bay to resuscitate Victus Farms, given the time and cost of such an endeavor.

LeBlanc called the situation "unfortunate," but he remains optimistic

"I still think it's a good project. It's just a matter of finding the right people," he said.

"We'll work through it," LeBlanc said. "You mark my words, there will be something there hopefully within a year or two."