In 2010, the small town of Moberly, Missouri issued $39 million in municipal bonds for a private manufacturing facility that the town hoped would add 600 jobs to its community of 14,000. Yesterday the Missouri Attorney General Chris Koster filed felony theft and securities fraud charges stemming from the collapse of that project, the Mamtek sweetener factory. The charges were made against California businessman Bruce Cole who was the CEO of Mamtek. Cole was arrested at his home in Dana Point, California and Attorney General Koster said extradition proceedings would begin immediately.
In short, Cole is alleged to have used proceeds of the municipal bond offering for personal expenses. The Moberly Monitor has the details:
The probable cause affidavit alleges that shortly before the sale of the Mamtek bonds, Cole directed a Mametk consultant to prepare an invoice purporting to come from “Ramwell Industrial, Inc.” This invoice requested payment of $4,062,500 for Ramwell’s services, including $3,562,500 for “Design, acquisition, and installation of five production lines,” $325,000 for engineering and design, and $175,000 for project supervision.
Cole directed that this invoice be submitted for payment even though Ramwell was never incorporated, never had any employees, never owned any property, and never provided any goods or services to Mamtek U.S. The day after the invoice was submitted, it is alleged, Cole instructed a bookkeeper for Mamtek U.S. to wire $700,000 to Cole’s wife, Nanette.
Within 48 hours of receiving the $700,000 wire from Mamtek, Nanette Cole wrote a $281,046.30 check to cash. The Coles immediately made a payment on their mortgage in the amount of $243,018.73. Shortly thereafter, the scheduled foreclosure auction of the Coles’ Beverly Hills home was canceled.