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Government, Politics & Issues

Former Mamtek CEO Bruce Cole Pleads Guilty Of Security Fraud And Theft

Orange Co., Calif.

The former CEO of a company that announced it would open an artificial sweetener plant in a small north Missouri town, but never did, has pleaded guilty to three felony counts connected to the scandal.

In 2010, Mamtek CEO Bruce Cole persuaded city leaders in Moberly to issue $39 million in bonds to build the plant, which was to employ 600 people. Shortly afterward, the state's Economic Development Department kicked in $17 million in tax credits for the project -- however, those credits were never used.

But the artificial sweetener plant never opened. Construction on the facility halted after Mamtek missed its first bond payment in September 2011. Moberly's bond rating was downgraded as a result.

The failed project spurred state lawmakers into action -- a Missouri Senate committee asked the Economic Development Department to hand over all documents related to Mamtek, and a House committee grilled former department Director David Kerr over his agency's review of Mamtek before awarding tax credits. Kerr testified in November 2011 that his agency carefully reviewed the failed company's request for incentives.

Gov. Jay Nixon also defended his administration's handling of Mamtek's request for tax breaks, telling reporters in December 2011, "I think it's very, very important for me and my Department of Economic Development to use taxpayer dollars wisely, which in this situation, by paying no benefits until jobs are created, I'm confident we did." Nixon appeared with Cole and Moberly officials at the July 2010 announcement that Mamtek would build the sweetener plant.

The Mamtek scandal also prompted an audit, in which state Auditor Tom Schweich said at the time that Economic Development officials should have done a better job of screening applicants for tax credits.

In 2012, Missouri Attorney General Chris Koster filed charges against Cole, which included funneling some of the bond money intended for the plant to instead make payments on his home in Beverly Hills, Calif.

Cole was later arrested and charged with theft and securities fraud. He pleaded guilty Tuesday to two counts of securities fraud and one theft count as part of a plea deal, and a sentencing hearing is scheduled Nov. 3. Cole faces five to seven years in prison.

Follow Marshall Griffin on Twitter:  @MarshallGReport

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