Mamtek CEO charged with theft, securities fraud

Associated Press Modified: September 18, 2012 at 6:17 pm •  Published: September 18, 2012
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MOBERLY, Mo. (AP) — The CEO of a failed artificial sweetener company was charged Tuesday with theft and securities fraud in Missouri for allegedly using bond revenues to avoid foreclosure on his Beverly Hills, Calif., home and misleading financiers about the company's troubled operations.

The charges announced by Attorney General Chris Koster cap a yearlong investigation into Bruce Cole, who was chairman and CEO of Mamtek U.S. The federal Securities and Exchange Commission also sued Cole and his wife on Tuesday, seeking financial penalties for the alleged fraud.

Mamtek received $39 million of industrial development bonds from Moberly, Mo., and authorization for up to $17 million of state incentives to build an artificial sweetener factory in the city which Gov. Jay Nixon said would eventually employ more than 600 people. But construction was halted on the partially complete facility after Mamtek missed a bond payment in August 2011.

"The collapse of this $39 million investment in Moberly was a tragedy for this town," Koster said while announcing the criminal charges in front of the chain-locked front gate of the former Mamtek facility.

Beside him, the company's tattered and faded canvass banner dangled from a fence to the ground covered with weeds, with the words "Mamtek U.S." barely visible beneath a coating of dirt.

The charges filed in Randolph County Circuit Court on Tuesday allege that Cole directed a consultant to submit an invoice for more than $4 million to Mamtek for purported engineering-related services by a sham company called Ramwell Industrial Inc. Immediately after Mamtek received the bond revenues in July 2010, Cole instructed the company's bookkeeper to wire $700,000 to his wife's personal bank account, the charges allege. Nanette Cole then used part of the money to make a mortgage payment and avoid an impending foreclosure on their Beverly Hills home.

"Today, we have alleged that Mr. Cole deceived the city and its investors and stole at least $700,000 from the bond fund for his own personal use," Koster said.

The SEC lawsuit, filed in U.S. District Court in California, said the Coles also used that money to pay credit card debt, homeowners and auto insurance and household employees. It said Cole directed a second wire transfer from Mamtek to his wife's account of $204,167 to purportedly cover deferred compensation he was owed. The suit seeks an order forcing the Coles to repay their "ill-gotten gains" with interest, plus additional financial penalties.

The Orange County, Calif., sheriff's department confirmed Tuesday that Cole had been picked up from his current home in Dana Point and was in jail. Missouri court documents show authorities requested a $500,000 bond and the surrender of Cole's passport for fear that he posed a flight risk.

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