On May 28, 1996, at 1805 eastern daylight time, a Cessna 177B, N19708, was substantially damaged during a forced and ditching to water near Chatham, Massachusetts. The commercial pilot and passenger received minor injuries. Visual meteorological conditions prevailed for the personal flight that originated at Beverly, Massachusetts, about 1715. No flight plan had been filed for the flight conducted under 14 CFR Part 91. In the NTSB Form 6120.1/2, the pilot/owner stated that about 4 miles from the Chatham Municipal Airport (CQX), she attempted to adjust the propeller RPM; however, there was no change in RPM when the propeller control was moved. When the pilot reduced engine power and began a turn to enter the CQX traffic pattern, the engine began to shake. The pilot then increased power and the shaking continued. While looking for a forced landing area, white smoke appeared from the engine cowling, followed by oil and flames, and a complete loss of engine power. A forced landing was then performed to a pond. Examination of the engine by a Federal Aviation Administration (FAA) Inspector, revealed a hole in the engine case on the side of the number two and four cylinders, and the connecting rods for the same pistons were separated from the crankshaft. An FAA Airworthiness Directive, AD 81-18-04, was issued in 1981 and stated: "...To prevent failure of engine oil pumps which incorporate sintered iron impellers, accomplish the following: (a) Compliance is required within the next 25 hours in service after the effective date of this AD...Replace the existing drive and driven impellers with a steel driving impeller...and an aluminum impeller and shaft..." The FAA Inspector's statement said, "...It appears that the engine failed due to oil starvation to the connecting rod journals and bearings, as a result of engine oil pump failure. A search of the aircraft logs indicates that AD 81-18-4 was not accomplished." The airplane's maintenance records revealed that the AD had been signed off by a mechanic in 1981, prior to the pilot/owner purchasing the airplane, as not applicable until engine overhaul at 2,000 hours. The pilot/owner was a certified airframe and power plant mechanic, and had performed four of the airplane's last six annual inspections. The last two annual inspections were performed by another mechanic. The engine had accumulated over 1,500 hours since AD 81-18-04 was issued.