St. Charles, Mo. • The man who persuaded a rural Missouri town and the state to invest millions in bonds and incentives for an artificial sweetener plant that never materialized pleaded guilty Tuesday to three felony charges.
Bruce Cole is set to be sentenced Nov. 3 after pleading guilty to two counts of securities fraud and one count of theft. Prosecutors dropped two of the four fraud counts originally filed in 2012. Cole’s trial had been scheduled to start in December in St. Charles County on a change-of-venue request. Under the plea agreement, Cole faces 5-7 years in prison.
Cole, 67, was the chief executive of Mamtek U.S. Inc., a company Cole formed to produce artificial sweetener. He convinced the city of Moberly in 2010 to issue $39 million in bonds for a sweetener plant that Cole said would employ 600. The state authorized up to $17 million in incentives.
The plant never materialized, as the plan collapsed financially before construction finished. Mamtek defaulted on the debt in August 2011 and Moberly defaulted on its bonds. The state never paid any of its incentives because the project failed before the company met the aid criteria.
Attorney General Chris Koster filed charges in September 2012, accusing Cole of theft for diverting at least $700,000 from a bond fund to forestall foreclosure of his Beverly Hills, California, home. The fraud counts were for making false statements to induce investors.
When Gov. Jay Nixon announced in July 2010 that Mamtek had chosen the Missouri site for the plant after competition from 12 states, the mood was celebratory in Moberly, a town of 14,000 residents in rural north-central Missouri. Mamtek said at the time it had developed proprietary technology and began manufacturing sucralose, an artificial sweetener, in China.
But as concerns were raised, an investigation eventually determined that Mamtek’s only other facility, in Fujian Province, China, was not producing artificial sweetener and, in fact, had been shut down by the Chinese government.
Koster called the case “a tragedy for this town,” in announcing the charges.
The state accused Cole of directing 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. Nanette Cole then allegedly used part of the money to make a mortgage payment and avoid an impending foreclosure on their Beverly Hills home.
Nanette Cole was not charged.
In addition to the criminal case, there are four additional cases involving Mamtek in federal bankruptcy court, along with several lawsuits filed by corporate and individual investors.
In bankruptcy case last month, a federal judge ruled that Bruce Cole committed fraud. U.S. District Judge Nanette Laughrey ordered Cole and his wife to repay $904,167 that had been transferred to their personal accounts and $360,000 sent overseas to creditors.
Meanwhile, Cole faces a civil lawsuit from the federal Securities and Exchange Commission.