Sludge Watch ==> Shreveport Louisiana loses lawsuit against sludge company

[Maureen Reilly]

City loses multimillion-dollar lawsuit against operators of sludge facility

Posted on 04/27/2007



The city of Shreveport has lost its lawsuit against Bioset, the bankrupt 
company that promised to turn the city's waste into dollars but wound up 
turning its operation over to City Hall.

Bioset opened a plant in 2002 to turn sludge from the city's wastewater 
treatment plant into fertilizer and then use the fertilizer to grow sod for 
the city. It was supposed to save the city more than $700,000 a year for the 
cost of sod, which is used in part to replace destroyed grass when water 
lines are dug up.

City Operational Services Director Mike Strong said the process turned the 
sludge into fertilizer, but never grew any sod for the city to use.

After three years the company's creditors and its new owners turned the 
bankrupt facility over to the city, saying they couldn't make money and 
didn't want it. By then, City Hall had paid Bioset a little more than $2 
million, records show.

The city, which is still operating the facility, filed suit, saying it had 
been defrauded and Bioset's developers misused money for the plant off Harts 
Island Road for personal profit. It asked Bioset's bankruptcy judge to 
eliminate any liability the city might have for the failed venture.

But U.S. Bankruptcy Judge Stephen Callaway has dismissed any claims of 
fraud.



The city's contract with Bioset guaranteed monthly payments to the company. 
With those payments, Bioset was able to get a line of credit with Hibernia 
Bank -- now CapitalOne -- and sell $10 million worth of bonds.

Now Callaway has ruled the city has to pay the money to CapitalOne so it can 
pay its bond holders.



Shreveport Chief Administrative Officer Tom Dark said that, under the 
judgment, the city will keep the plant's equipment and use the patented 
process to create the fertilizer. He said the city is looking at marketing 
the fertilizer in a form that can be used for more than growing sod so that 
something good can come out of this mess.

Dark did not say where the city will get the $10 million to settle the 
judgment.

Dark noted that this was a situation inherited from the administration of 
former Mayor Keith Hightower.

The city has tried to get about half a dozen private companies to take over 
over the plant but they haven't found any takers.

The attorney for Capital One, Jim McMichael, declined comment.



Bioset's lawyer did not return a call for comment.