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.
Kander on Thursday filed a 30-page cease-and-desist order against Morgan Keegan & Co. Inc.. Kander says Missouri bond purchasers investing in the failed plant near Moberly lost $6.5 million. He seeks restitution, civil penalties, fees and costs.
“Were it not for their actions we would not be here today,” Kander told ABC 17 News.
Morgan Keegan, now a division of Raymond James Financial Inc., underwrote the Moberly, Mo., bonds for the Mamtek project.
Morgan Keegan was the middle man between Shelter Insurance and Mamtek. Shelter lost $5.6 million when the sweetener facility failed. A company official told ABC 17 News that the company saw the investment as a way to make a good return and bring approximately 400 jobs to a city they do business in.
“These events could not have happened if Morgan Keegan wouldn’t have failed to do their due diligence, and investigate fully, the feasibility of Mamtek’s business plan,” said Kander.
In documents obtained from the Secretary of State’s office, Kander alleges the investment firm never verified Mamtek’s assets in China, which included a sales contract with a Chinese pharmaceutical company that promised to buy the sucralose. If something were to go wrong, this supposed “backstop” was worth $52 million.
“It’s very evident that even a rudimentary investigation of what was going on with Mamtek would have revealed that the whole story kind of falls apart,” Kander explained.
He says it should have been obvious that Morgan Keegan should not have been selling the bonds when the company’s patents were first rejected in 2008 and then again in 2010.
Kander says two months after the final patent rejection is when they started selling the bond. Those patents were acting as collateral for investors, so in the end, nothing was ever securing the bonds for investors.
Criminal charges were filed last month against former Mamtek CEO Bruce Cole. He is accused of perpetrating fraud by persuading Moberly to issue $39 million in bonds and the state to authorize up to $17 million in incentives.