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Fri April 5, 2013
Kander announces legal action over Mamtek failure
Originally published on Fri April 5, 2013 12:04 pm
Missouri Secretary of State Jason Kander is taking action against a financial management company connected to the failed Mamtek artificial sweetener plant in mid-Missouri.
In his role as Secretary of State Jason Kander also serves as Missouri’s chief securities regulator.
He’s accusing Morgan Keegan, a Memphis-based firm of helping defraud Missourians based on a list of falsehoods, including the claim the Mamtek held several production patents.
“Morgan Keegan also told investors that it already had a factory up and running in China, producing the same product, when in fact there is no evidence that such a factor ever produced or sold sucralose at the time of the offering,” says Kander.
Kander is accusing the investment firm Morgan Keegan & Company, of not vetting Mamtek’s operation before selling its bonds to investors.
“My office has issued a cease and desist order against Morgan Keegan that prevents them from omitting material facts when selling bonds and from failing to adequately investigate bond offerings,” says Kander.
“We are also seeking full restitution for anyone who lost money on this deal, as well as civil penalties, fees and costs.”
Kander is seeking $6.6 million in restitution and fees to make Missourians who lost money whole again. He says the action will not bar Morgan Keegan from doing business in Missouri on other projects.
All told Morgan Keegan sold $39 million in bonds and netted $2.2 million in fees.
Morgan Keegan, now a division of Raymond James Financial Inc., underwrote the bonds for the Mamtek project. Messages seeking comment from the company were not immediately returned.
The criminal case against the former Mamtek CEO Bruce Cole has been moved to St. Charles County from Randolph County, where the plant was to have been built.
The Columbia Daily Tribune reports a judge granted the change of venue this week f because of publicity in central Missouri about the project's collapse.
Cole, of Beverly Hills, Calif., is charged with theft and securities fraud stemming from the 2011 financial collapse of a Mamtek U.S. project in Moberly.
The city issued $39 million in industrial development bonds toward construction of the facility, which was never built. Among other things, Cole is accused of diverting bond revenues to avoid foreclosure on a California home. He had been held on $500,000 bond until a judge reduced the amount last week.
Follow Adam Allington on Twitter: @aallington