Former Mamtek Chief Faces Fraud Charges

Jack Humphrey, Regulatory journalist
September 18, 2012 /

The Securities and Exchange Commission has filed suit in California, charging former CEO and chairman of Mamtek U.S., Bruce Cole, with fraud related to the offer and sale of municipal bonds.

The SEC’s complaint alleges that Cole executed a scheme to defraud investors and made material misrepresentations and omissions in connection with the July 2010 offer and sale of $39 million of appropriations credit bonds backed by the City of Moberly, Missouri. The bond offering was intended to finance a sucralose processing plant in Moberly that Mamtek would construct and operate.

The SEC alleges that Cole executed his fraud by directing unsuspecting Mamtek employees to take actions that diverted over $900,000 in bond proceeds for his and his wife’s personal use and by misleading city officials and bondholders about the use of those proceeds.

According to the complaint, prior to the close of the bond offering, Cole directed Mamtek employees and consultants to create false documentation for a nonexistent company to falsely justify fictitious expenses for the sucralose project.

The complaint alleges he then instructed Mamtek employees to wire his wife, Nanette H. Cole, $900,000 in bond proceeds, which were used to pay among other things, their mortgage, credit card debt, homeowners and auto insurance, and household employees, in part, under the false pretense that she was an agent of the sham company.

The complaint further alleges that as a precondition to the issuance of the bonds, Cole signed a certificate representing certain portions of the Official Statement delivered to bondholders for the $39 million offering were not false or misleading.

However, at the time that Cole signed the document, he had already directed the creation of the false documentation and had made preliminary plans to divert and misuse the bond proceeds, rendering his representation in the closing certificate false. In doing so, he misrepresented the use of bond proceeds and the accuracy of the Official Statement.


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