Mamtek CEO Charged With Defrauding Town

HUNTSVILLE, Mo. (CN) - Randolph County prosecutors charged the former CEO of Mamtek US with securities fraud and theft stemming from a massive failed development.

As chairman and CEO of Mamtek, Bruce Cole oversaw a $39 million development project in the city of Moberly crashed in August 2011. The project was funded primarily by municipal bonds issued by the Industrial Development Authority of the City of Moberly.

In a statement, Missouri Attorney General Chris Koster called the failure a "tragedy" for Moberly.

"Today, we have alleged that Mr. Cole deceived the city and the investors about the project and unlawfully profited from the investment by taking at least $700,000 from the bond money for his own personal use," Koster said in a statement.

Prosecutors say Cole told a Mamtek consultant to prepare an invoice from Ramwell Industrial requesting payment for more than $4 million in services, even though Ramwell was never incorporated and never provided goods to Mamtek. The next day, Cole allegedly told a Mamtek bookkeeper to wire $700,000 to Cole's wife, who then wrote a $281,046.30 check to cash.

Cole then immediately made a $243,018.73 mortgage payment and shortly after that, the scheduled foreclosure of the Coles' Beverly Hills home was canceled, according to the criminal complaint.

Cole is accused of stealing by deceit by appropriating at least $25,000 for his own personal use. Prosecutors also say he committed securities fraud by using Ramwell to obtain bond disbursements from Mamtek U.S. when he actually planned to use the funds for other purposes, including the payment of $700,000 to Cole's wife for personal use.

Cole also allegedly represented to the issuer of the bonds that Mamtek's manufacturing processes would neither require nor produce any hazardous substances, according to the complaint. Prosecutors note, however, that Mamtek's manufacturing processes called for the use of either triphosgene or thionyl chloride, both of which are hazardous chemicals.

The complaint also says Cole misrepresented Mamtek as a fully functional sucralose production facility in China. He allegedly claimed that it would take just four to six months to build the facility and make it fully operational, knowing that it would actually take longer to make a production facility functional in the United States.

If convicted, Cole faces up to 15 years in prison for the stealing charge and up to 10 years in prison and a $1 million fine on each of the four counts of securities fraud.

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