Bruce Cole's Mamtek Fraud Allegations

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF MISSOURI CENTRAL DIVISION ) ) MAMTEK US, INC. ) ) ) Debtor. ) ) BRUCE E. STRAUSS, TRUSTEE, ) ) Plaintiff, ) ) v. ) ) BRUCE COLE ) ) and ) ) NANETTE COLE ) ) and ) ) THE MAMTEK GROUP ) ) Defendants. ) ) IN RE:
Case No.
11-22092-drd7
Adv. Proc. No. 12-02009-drd
FIRST AMENDED COMPLAINT TO AVOID AND RECOVER FRAUDULENT TRANSFERS AND PREFERENTIAL TRANSFERS, AND FOR BREACH OF FIDUCIARY DUTY, AND FOR CONSTRUCTIVE TRUST COMES NOW Bruce E. Strauss, Trustee, and for his Complaint states and alleges as follows: PARTIES 1. Plaintiff, Bruce E. Strauss is the duly appointed, qualified and acting Chapter 7 trustee in the above captioned chapter 7 bankruptcy case. 2. At all times pertinent to the allegations in this Complaint, Bruce Cole was the president and CEO of Mamtek U.S., Inc. He is a recipient of transfers from Mamtek US, Inc. and resides at
F:\WP\VICTOR\MAMTEK\BRUCE COLE\COLE ADVERSARY\ADVERSARY COLE FIRST AMENDED FINAL.DOC
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630 N. Elm Dr., Beverly Hills, California. 3. Nanette Cole is Bruce Coles wife. She is a recipient of transfers from Mamtek US, Inc. She resides at 630 N. Elm Dr., Beverly Hills, California. 4. The Mamtek Group is a California Corporation which is a recipient of transfers from Mamtek US, Inc.
JURISDICTION AND VENUE 5. This Court has jurisdiction over this adversary proceeding pursuant to Sections 157(a) and 1334(a) of Title 28 of the United States Code because it relates to the Chapter 7 case of the debtors administered in this Court under case number 11-22092. This adversary proceeding is a core proceeding pursuant to Section 157(b)(2)(A), (F), and (H) of Title 28 of the United States Code. 6. Venue of this adversary proceeding is proper in this district pursuant to Section 1409(a) of Title 28 of the United States Code. 7. This adversary proceeding is commenced pursuant to Rule 7001 of the Federal Rules of Bankruptcy Procedure. GENERAL ALLEGATIONS 8. On December 15, 2011, petitioning creditors UMB Bank, N.A., solely in its capacity as indenture trustee under certain bond documents; Frost Electric Supply Company; Shick USA; Septagon Construction Company, Incorporated - Columbia; and Faith Technologies, Inc. filed their involuntary petition for relief under Chapter 7 of the United States Bankruptcy Code against Mamtek U.S., Inc. ("Debtor") on December 15, 2011 (the "Filing Date"). 9. On December 30, 2011, the Court entered its Order appointing Bruce E. Strauss as Interim
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Trustee (the "Trustee"). 10. On January 9, 2012, the Court entered the Order for Relief under Chapter 7 in the abovecaptioned case. 11. Bruce Cole was the president and CEO of Mamtek US, Inc. at all times pertinent to the allegations in this Complaint. 12. As CEO and president of the Debtor, Bruce Cole was and is an insider of the Debtor as that term is used in Section 101 of the Bankruptcy Code. 13. At all times pertinent to the allegations in this Complaint, Bruce Cole was a fiduciary of Mamtek US, Inc. 14. At all times pertinent to the allegations in this Complaint, Bruce Cole was an officer and director of Mamtek International, Ltd., a Hong Kong corporation which was related to Mamtek US, Inc. 15. Mamtek US, Inc. is a Delaware corporation which was incorporated on May 17, 2010. 16. At all times pertinent to the allegations in this Complaint, Mamtek US, Incs. principal place of business was in Moberly, Randolph County, Missouri. 17. Shortly after Mamtek US, Inc. was formed, the Industrial Development Authority of the City of Moberly, Missouri issued $39,000,000 worth of bonds which were to be used to construct a 90,000 square foot factory to produce sucralose, an artificial sweetener, in Moberly, Missouri (the Manufacturing Facility). 18. This Manufacturing Facility was to be constructed by Mamtek US, Inc. 19. The Manufacturing Facility was to be the property of the City of Moberly, Missouri. So long as Mamtek US, Inc. was not in default of its obligations under its agreements with the City of Moberly, Missouri and UMB Bank, N.A. relating to the bonds, Mamtek US, Inc. was to have to the right to use the Manufacturing Facility. Once Mamtek US, Inc. repaid the
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bonds, it was entitled to purchase the Manufacturing Facility from the city for a small payment of a few thousand dollars. 20. Under the agreements governing the issuance of the bonds, Mamtek US, Inc. was to submit requests for draws from the bond proceeds to the City of Moberly, Missouri, to which were to be attached invoices from creditors of Mamtek US, Inc. reflecting Mamtek US, Incs. intended disposition of the bond funds requested. If approved by the city, the request was forwarded to UMB Bank, which would distribute the proceeds in the manner requested by Mamtek US, Inc. 21. The City of Moberly, Missouri agreed to issue the bonds for the construction of the Manufacturing Facility because Mamtek US, Inc. represented that it was able to construct the Manufacturing Facility and that it intended to complete construction by November of 2010. 22. In July of 2010, Mamtek US, Inc. did have plans for the construction of a sucralose manufacturing facility, which had been created by Mamtek US, Incs then parent company, Mamtek International, which had initially drafted the plans to construct a sucralose plant in China. 23. Upon information and belief, constructing and equipping a fully functioning Manufacturing Facility using those plans would have cost approximately $32,250,000. 24. However, when Mamtek US, Inc. retained experts and engineers to modify the existing Mamtek International plans for the Moberly, Missouri site, the engineers quickly determined that the Mamtek International plans were worthless and would have been a fire and safety hazard. 25. Accordingly, Mamtek US, Inc. abandoned the Mamtek International plans and began creating an entirely new manufacturing process and design for the Manufacturing Facility.
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26. While site-work and grading at the Manufacturing Facility site commenced as early as July of 2010, further work was delayed while Mamtek US, Incs. construction contractors waited for a new design from Mamtek US, Inc. 27. Construction of the Manufacturing Facility began in October of 2010, but proceeded slowly because the plans the contractors were working from were incomplete and because Mamtek US, Inc. constantly altered and redesigned already completed plans. 28. The delay in construction and the re-design of the Manufacturing Facility cost millions of dollars. 29. The redesign took a considerable amount of time and was not finished until August of 2011, by which time Mamtek US, Inc. had spent almost all of the bond proceeds. Mamtek US, Incs. engineers opined that the new design would cost approximately $30,000,000 more than the already fully spent proceeds of the bonds to construct. 30. In August of 2011, after the bond funds were exhausted, an approximately $3.2 million repayment of the bond proceeds from Mamtek US, Inc. to the City of Moberly, Missouri came due. Mamtek US, Inc. had no funds to make this payment, continue construction, or pay its employees. Accordingly, Mamtek US, Inc. ceased operating in September of 2011. 31. Upon the cessation of Mamtek US, Incs. operations, the City of Moberly, Missouri took control of the Manufacturing Facility, which consisted of an uncompleted factory building and stacks of unassembled equipment. 32. Upon Mamtek US, Incs. failure to make the $3.2 million bond payment, it lost the right to use or control the Manufacturing Facility. Consequently, Mamtek US, Inc. was left a hollow shell owning virtually no property, but owing millions of dollars to the contractors and vendors who contributed to the Manufacturing Facility, and approximately $39,000,000 to the City of Moberly, Missouri and UMB Bank, N.A. on account of the bonds.
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33. From its creation in May of 2010 to the commencement of this case in December of 2011, Mamtek US, Inc. was severely undercapitalized. The company never had a source of funds sufficient to fund its operations and pay its employees. 34. Though Mamtek US, Inc. had access to approximately the $33,500,000 of the bond proceeds (the remaining proceeds were held by the bond trustee as a reserve), these funds were contractually earmarked solely for use of construction of the Manufacturing Facility. Mamtek US, Inc. was forbidden to use these funds to pay its own administrative overhead and employee salaries not directly related to the construction of the Manufacturing Facility. 35. Mamtek US, Inc. avoided this limitation on the use of bond funds by submitting thirteen false and fraudulent invoices seeking payments of $6,652,673 for a non-existent company called Ramwell Industrial, Inc. to the City of Moberly, Missouri and UMB Bank, N.A. in support of its requests for draws from the bond proceeds. 36. The draw requests from Ramwell all indicated that the funds requested would be used to pay for engineering, design work, equipment for the Manufacturing Facility. 37. Some of the funds Mamtek received on account of these draw requests were used for their stated purpose, but most were not. 38. Mamtek US, Inc. transferred more than $2,500,000 in these funds to its high level officers, including $1,380,483.19 received by defendants Bruce and Nanette Cole. Additionally, most of the wages paid to Mamtek US, Incs administrative employees were derived from bond funds. Bond funds were also improperly used to rent and decorate an office suite on Rodeo Drive in Beverly Hills, California. Hundreds of thousands of dollars in bond funds were used to pay lobbyists and lawyers seeking government subsidies for Mamtek. Tens of thousands more were paid to lawyers representing Mamtek US, Inc. in an investigation by the Securities and Exchange Commission. More than $1,000,000 was used to directly pay
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debts and expenses of Mamtek International, a company related to Mamtek US, Inc. Hundreds of thousands of dollars in additional funds were transferred to Mamtek International and to the Mamtek Group, another related company. 39. On or about July 23, 2010, Mamtek US, Inc. made its first request to draw upon the proceeds of the bonds. This request sought a disbursement of $4,498,648, with $4,278,648 to be paid directly to Mamtek US, Inc., and the remainder being paid to Septagon Construction Corporation, the general contractor for the construction of the Manufacturing Facility. 40. Attached to this draw request was an invoice from Ramwell Industrial, Inc. directed to Mamtek US, Inc. indicating that Mamtek US, Inc. owed a current payment to Ramwell in the amount of $4,012,500 for [d]esign, acquisition and installation of five production lines . . . .Engineering and Design . . . and Project Supervision, Project Coordination. The remainder of the $4,278,648 Mamtek sought was supported by various invoices from professionals retained by Mamtek US, Inc. 41. Ramwell Industrial, Inc. is a corporation which was never formed. 42. Ramwell Industrial, Inc. never provided any goods or services to Mamtek US, Inc. 43. Mamtek US, Inc. has never paid any money to Ramwell Industrial, Inc. 44. On July 28, 2010, Mamtek US, Inc. received $4,278,648 on account of its draw request from UMB Bank, N.A. 45. The City of Moberly, Missouri and UMB Bank N.A. reasonably and justifiably relied upon the representations contained in this draw request regarding the intended use of the funds requested. 46. On July 29, 2010, Bruce Cole directed that Mamtek US, Inc. wire $700,000 to the bank account of his wife Nanette Cole.
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47. This transfer came solely from the $4,278,648 Mamtek US, Inc. received from the bond proceeds. 48. Bruce Cole represented to officers and agents of Mamtek US, Inc. that the $700,000 transfer to Nanette Cole was in compensation for services provided by Ramwell Industrial, Inc. for engineering services related to the construction of the Manufacturing Facility. 49. The officers and agents of Mamtek US, Inc. reasonably and justifiably relied upon Bruce Coles representation regarding the nature of the $700,000 transfer to Nanette Cole. 50. This representation was false when it was made and Bruce Cole knew it was false when it was made. 51. Bruce Cole caused officers and agents of Mamtek US, Inc. to make the July 23, 2010 draw request which contained the representation to the City of Moberly, Missouri, and UMB Bank, N.A. that Mamtek US, Inc. owed a debt to Ramwell Industrial, Inc. for the design, acquisition, and construction of the Manufacturing Facility, and that funds received on account of the draw request would be paid to Ramwell Industrial, Inc. 52. This representation was false when it was made and Bruce Cole knew it was false when it was made. 53. The City of Moberly, Missouri and UMB Bank N.A. reasonably and justifiably relied upon the representations contained in this draw request regarding the intended use of the funds requested. 54. On July 29, 2010, Bruce Cole directed that Mamtek US, Inc. wire $204,167 to the bank account of his wife, Nanette Cole. 55. This transfer came solely from the $4,278,648 Mamtek US, Inc. received from the bond proceeds. 56. The $204,167 and $700,000 transfers to Nanette Coles account are referred to collectively
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herein as the Nanette Cole Transfers. 57. The Nanette Cole Transfers were not used for the design, acquisition, and construction of the Manufacturing Facility. 58. Upon information and belief, the funds from the Nanette Cole Transfers were used by Bruce and Nanette Cole to cure a default on a mortgage of their home at 630 N. Elm Dr., Beverly Hills, California (the Real Property). 59. The funds from the Nanette Cole Transfers were paid towards a debt secured by a mortgage encumbering the Real Property. 60. As a result of the Nanette Cole Transfers, Bruce and Nannette Cole acceded to equity in the Real Property. 61. But for the Nanette Cole transfers, Bruce and Nanette Cole would no longer own the Real Property. 62. Bruce and Nanette Coles possession of this equity, continued possession of the Real Property, and their receipt of the Nanette Cole Transfers are wrongful, fraudulent, and wrongfully deprive the bankruptcy estate of Mamtek US, Inc. of the value of the Nanette Cole Transfers. 63. On March 30, 2011, at the direction of Bruce Cole, Mamtek US, Inc. wired $360,000 (the Bridgeway Transfer) to HSBC Bank account in Hong Kong owned by a company called Bridgeway Capital Limited. 64. Bruce Cole represented to officers and agents of Mamtek US, Inc. that this transfer was made in consideration of assistance rendered to Mamtek US, Inc. by Bridgeway Capital Limited in obtaining funding. 65. Bruce Cole represented to officers and agents of Mamtek US, Inc. that this transfer was made on account of an obligation owed by Mamtek US, Inc. to Bridgeway Capital Limited
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or to himself. 66. These representations were false when they were made and Bruce Cole knew that these representations were false when they were made. 67. The officers and agents of Mamtek US, Inc. reasonably and justifiably relied upon Bruce Coles representation regarding Mamtek Us, Incs. purported obligation to Bridgeway Capital Limited. 68. Bridgeway Capital Limited rendered no services and gave no consideration to Mamtek, US, Inc. in exchange for the Bridgeway Transfer. 69. After the Bridgeway Transfer was made, Bruce Cole took ownership and control of the Bridgeway Transfer. 70. Between August 15, 2010 and July 11, 2011, Mamtek US, Inc. made $1,298,008.03 in transfers (the Mamtek Group Transfers) to The Mamtek Group. 71. Bruce Cole caused officers and agents of Mamtek US, Inc. to make draw requests which contained invoices from the fictional company Ramwell Industrial, Inc., which contained the fraudulent representation to the City of Moberly, Missouri, and UMB Bank, N.A. that the $1,298,008.03 which was transferred to The Mamtek Group was to be used for the design, acquisition, and construction of the Manufacturing Facility. 72. These representations were false. 73. Bruce Cole knew that these representations were false when they were made. 74. The Mamtek Group Transfers were not used for the design, acquisition, and construction of the Manufacturing Facility. Instead, they were largely used for improper purposes, including the payment of salaries of Bruce Cole and other high-level administrative officers of Mamtek US, Inc. and to decorate and lease office space for the Mamtek Group in Beverly Hills, California.
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75. The City of Moberly, Missouri and UMB Bank N.A. reasonably and justifiably relied upon the representations contained in this draw requests regarding the intended use of the funds requested. 76. Such a use of the proceeds of the bonds was not only fraudulent, but was a violation of the agreements Mamtek US, Inc. made in connection with the issuance of the bonds.
COUNT ONE - AVOIDANCE OF FRAUDULENT TRANSFERS BRUCE COLE AND NANETTE COLE 77. The plaintiff repeats and realleges the allegations contained above in all prior paragraphs, as though fully set forth at length. 78. On July 29, 2010, at the direction of Bruce Cole, Mamtek US, Inc. transferred $700,000 to Nanette Cole. 79. On July 29, 2010, at the direction of Bruce Cole, Mamtek US, Inc. transferred $204,167.00 to Nanette Cole. 80. Both July 29, 2010 transfers are collectively referred to herein as the Nanette Cole Transfers. 81. This Count I is brought under Section 548(a)(1)(A) of the Bankruptcy Code because the Nanette Cole Transfers were made with actual intent to defraud the City of Moberly, Missouri and UMB Bank, N.A., entities to which Mamtek US, Inc. was indebted when the transfers were made. 82. This Count I is also brought under Section 548(a)(1)(B) of the Bankruptcy Code because the Nanette Cole Transfers were made in exchange for no consideration. The Nanette Cole
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Transfers deepened Mamtek US, Incs already existing insolvency and were made prior to Mamtek US, Incs commencement of construction of the Manufacturing Facility, a project for which Mamtek US, Incs assets were entirely insufficient to complete 83. The Nanette Cole Transfers were made for the benefit of Bruce Cole and Nanette Cole. 84. The Nanette Cole Transfers were made solely with funds derived from a $4,278,648 draw request made by Mamtek US, Inc. to the City of Moberly, Missouri and UMB Bank, N.A., which stated that the proceeds of the draw request were to be used solely for the design and construction of the Manufacturing Facility in Moberly, Missouri. 85. The City of Moberly, Missouri and UMB Bank, N.A. reasonably and justifiably relied upon Mamtek US, Incs. representations regarding Mamtek US, Incs intended use of the $4,278,648 requested in the draw request. 86. UMB Bank, N.A. transferred $4,278,648 to Mamtek US, Inc. on account of the draw request. 87. Mamtek US, Incs. representations regarding its intended use of the funds in this draw request were false. 88. At the time the draw request was made, Mamtek US, Inc. and Bruce Cole intended that $904,167 of the funds requested would be transferred to Bruce and Nanette Cole. 89. Mamtek US, Inc. made the Nanette Cole Transfers with actual intent to defraud the City of Moberly, Missouri and UMB Bank, N.A. 90. Mamtek US, Inc. received less than a reasonably equivalent value in exchange for the Nanette Cole Transfers. 91. Mamtek US, Inc. was insolvent when the Nanette Cole Transfers were made. 92. When the Nanette Cole Transfers were made, Mamtek US, Inc. was engaged in the business of constructing the Manufacturing Facility.
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93. Mamtek US, Inc. had an unreasonably small amount of property or other capital to fund the construction of the Manufacturing Facility. 94. When the Nanette Cole Transfers were made, Mamtek US, Inc. intended to incur a debt in the approximate amount of $39,000,000 to construct the Manufacturing Facility. 95. It was beyond Mamtek US, Incs ability to pay this $39,000,000 debt. 96. The Nanette Cole Transfers were made for no value. 97. The Nanette Cole Transfers were not made in good faith. 98. In July of 2010 a mortgage foreclosure notice was published for Bruce and Nanette Coles Real Property indicating that the house would be sold at a trustees sale on August 12, 2010. 99. The Real Property was not sold at a trustees sale and is still owned by Bruce and Nanette Cole. 100. Upon information and belief the funds from the Nanette Cole Transfers were used
to pay and cure the mortgage on the Real Property.
WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and against the defendants (i) avoiding the Transfers pursuant to Section 548 of the Bankruptcy Code (ii) entering judgment against Bruce and Nanette Cole in the amount of $904,167; (iii) entering judgment granting the plaintiff equitable title in the Real Property; and (iv) granting such other and further relief as the Court deems just and equitable.
COUNT TWO - AVOIDANCE OF FRAUDULENT TRANSFER BRUCE COLE 101. The plaintiff repeats and realleges the allegations contained above in all prior
paragraphs, as though fully set forth at length.

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102.
On March 30, 2011, at the direction of Bruce Cole, Mamtek US, Inc. transferred
$360,000 to Bridgeway Capital Limited (the Bridgeway Transfer). 103. Bridgeway Capital Limited was a mere conduit which held the Bridgeway Transfer in
trust for Bruce Cole. 104. 105. The Bridgeway Transfer was made for the benefit of Bruce Cole. This Count is brought under Section 548(a)(1)(B) of the Bankruptcy Code because
the Bridgeway Transfer was made in exchange for no consideration. The Bridgeway Transfer deepened Mamtek US, Incs already existing insolvency and was made during Mamtek US, Incs construction of the Manufacturing Facility, a project for which Mamtek US, Incs assets were entirely insufficient to complete 106. Mamtek US, Inc. received less than a reasonably equivalent value in exchange for the
Bridgeway Transfer. 107. 108. Mamtek US, Inc. was insolvent when the Bridgeway Transfer was made. When the Bridgeway Transfer was made, Mamtek US, Inc. was engaged in the
business of constructing the Manufacturing Facility. 109. Mamtek US, Inc. had an unreasonably small amount of property or other capital to
fund the construction of the Manufacturing Facility. 110. When the Bridgeway Transfer was made, Mamtek US, Inc. intended to incur a debt
in the approximate amount of $39,000,000 to construct the Manufacturing Facility. 111. 112. 113. It was beyond Mamtek US, Incs ability to pay this $39,000,000 debt. The Bridgeway Transfer was made for no value. The Bridgeway Transfer was not made in good faith.
WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and
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against the defendant Bruce Cole (i) avoiding the Bridgeway Transfer pursuant to Section 548 of the Bankruptcy Code (ii) entering judgment against Bruce Cole in the amount of $360,000; and (iii) granting such other and further relief as the Court deems just and equitable.
COUNT THREE - AVOIDANCE OF PREFERENTIAL TRANSFERS BRUCE COLE 114. The plaintiff repeats and realleges the allegations contained above in all prior
paragraphs, as though fully set forth at length. 115. On March 30, 2011, at the direction of Bruce Cole, Mamtek US, Inc. transferred
$360,000 to Bridgeway Capital Limited (the Bridgeway Transfer). 116. Bridgeway Capital Limited was a mere conduit which held the Bridgeway Transfer in
trust for Bruce Cole. 117. At all times pertinent to the allegations of this Count, Bruce Cole was an insider of
Mamtek US, Inc. 118. 119. The Bridgeway Transfer was made for the benefit of Bruce Cole. Upon information and belief, at the time the Bridgeway Transfer was made, Bruce
Cole was a creditor of Mamtek US, Inc. pursuant to an agreement whereby Mamtek US, Inc. agreed to pay Bruce Cole a percentage of any funding it received. 120. This obligation was incurred in July of 2010, when Mamtek US, Inc. became eligible
to draw on the proceeds of the approximately $39,000,000 of bonds issued by the City of Moberly, Missouri. 121. 122. The Bridgeway Transfer was made on account of this obligation. Mamtek US, Inc. was insolvent when the Bridgeway Transfer was made.
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123.
The Bridgeway Transfer enabled Bruce Cole to recover more than he would receive
if this case were a case under chapter 7 of Title 11 of the United States Code, the Bridgeway Transfer had not been made, and Bruce Cole received payment of such debt to the extent provided by the provisions of Title 11 of the United States Code.
WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and against the defendant Bruce Cole (i) avoiding the Bridgeway Transfer pursuant to Section 547 of the Bankruptcy Code (ii) entering judgment against Bruce Cole in the amount of $360,000; and (iii) granting such other and further relief as the Court deems just and equitable.
COUNT FOUR AVOIDANCE OF FRAUDULENT TRANSFERS MAMTEK GROUP 124. The plaintiff repeats and realleges the allegations contained above in all prior
paragraphs, as though fully set forth at length. 125. Between August 15, 2010 and July 11, 2011, Mamtek US, Inc. made the following
$1,298,008.03 in transfers (the Mamtek Group Transfers) to The Mamtek Group.
Date 8/15/2010 8/30/2010 9/14/2010 9/24/2010 9/27/2010 9/29/2010 10/6/2010 10/31/2010 11/11/2010
Amount $ 35,000.00 $ 32,000.00 $ 35,000.00 $ 708.03 $ 35,000.00 $ 35,000.00 $ 35,000.00 $ 35,000.00 $ 50,000.00
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12/2/2010 12/2/2010 12/10/2010 12/15/2010 12/31/2010 1/31/2011 2/25/2011 3/14/2011 3/31/2011 4/21/2011 4/29/2011 5/4/2011 5/16/2011 5/17/2011 5/20/2011 6/22/2011 6/29/2011 7/1/2011 7/11/2011 7/29/2011 8/10/2011 8/15/2011 8/15/2011 8/29/2011 9/1/2011 9/15/2011 9/15/2011
$ 45,000.00 $ 5,000.00 $ 125,000.00 $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 60,000.00 $ 50,000.00 $ 50,000.00 $ 15,000.00 $ 10,000.00 $ 26,000.00 $ 25,000.00 $ 50,000.00 $ 20,000.00 $ 34,000.00 $ 50,000.00 $ 100,000.00 $ 50,000.00 $ 25,000.00 $ 45,000.00 $ 5,000.00 $ 10,000.00 $ 1,000.00 $ 1,300.00 $ 3,000.00
126. 127.
The Mamtek Group is a California Corporation which is related to Mamtek US, Inc. Bruce Cole was an officer of both The Mamtek Group and Mamtek US, Inc. at all
times pertinent to the allegations in this Complaint. 128. This Count is brought under Section 548(a)(1)(A) of the Bankruptcy Code because
The Mamtek Group Transfers were made with actual intent to defraud the City of Moberly, Missouri and UMB Bank, N.A., entities to which Mamtek US, Inc. was indebted when the Mamtek Group Transfers were made. 129. This Count is brought under Section 548(a)(1)(B) of the Bankruptcy Code because
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The Mamtek Group Transfers were made in exchange for less than adequate consideration. The Mamtek Group Transfers deepened Mamtek US, Incs already existing insolvency and they were made during Mamtek US, Incs construction of the Manufacturing Facility, a project for which Mamtek US, Incs assets were entirely insufficient to complete. 130. The Mamtek Group Transfers were made entirely with funds drawn from the
approximately $39,000,000 in proceeds of the bonds issued by the City of Moberly Missouri to fund the construction of the Manufacturing Facility by Mamtek US, Inc. 131. The contracts and agreements executed by Mamtek US, Inc. relating to the bonds
and their proceeds required Mamtek US, Inc. to use the bond proceeds only for construction of the Manufacturing Facility. 132. The bond requisition requests submitted by Mamtek US, Inc. to the City of Moberly,
Missouri and UMB Bank, N.A. as indenture trustee for the bonds indicated that all the proceeds of the bonds received by Mamtek US, Inc. would be used for construction of the Manufacturing Facility. 133. The Mamtek Group Transfers were not used for the construction of the
Manufacturing Facility. The Mamtek Group used the funds for other purposes, primarily to decorate and pay rent on an office it rented in Beverly Hills and to pay the wages and insurance for high level officers of Mamtek US, Inc. 134. Mamtek US, Incs statements in its bond requisition requests that the funds
requested would be used for the construction of the Manufacturing Facility were false and Mamtek US knew that these statements were false when they were made. These statements were made with the intent that the City of Moberly, Missouri would approve and UMB Bank, N.A. would approve the payment of the draw requests to Mamtek US, Inc. 135. UMB Bank, N.A. and the City of Moberly, Missouri were creditors of Mamtek US,
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Inc. when the draw requests were made and they remain creditors of Mamtek US, Inc. 136. Mamtek US, Inc. made The Mamtek Group Transfers with the intent to defraud
UMB Bank, N.A. and the City of Moberly, Missouri. 137. Mamtek US, Inc. received less than a reasonably equivalent value in exchange for
The Mamtek Group Transfers. 138. 139. Mamtek US, Inc. was insolvent when The Mamtek Group Transfers were made. When The Mamtek Group Transfers were made, Mamtek US, Inc. was engaged in
the business of constructing the Manufacturing Facility. 140. Mamtek US, Inc. had an unreasonably small amount of property or other capital to
fund the construction of the Manufacturing Facility. 141. When The Mamtek Group Transfers were made, Mamtek US, Inc. intended to incur
a debt in the approximate amount of $39,000,000 to construct the Manufacturing Facility. 142. 143. 144. It was beyond Mamtek US, Incs ability to pay this $39,000,000 debt. The Mamtek Group Transfers were made for less than reasonably equivalent value. The The Mamtek Group Transfers were not made in good faith.
WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and against the defendant The Mamtek Group (i) avoiding the Mamtek Group Transfers pursuant to Section 548 of the Bankruptcy Code (ii) entering judgment against The Mamtek Group in the amount of $1,298,008.03; and (iii) granting such other and further relief as the Court deems just and equitable.
COUNT FIVE RECOVERY OF AVOIDED TRANSFERS BRUCE COLE 145. The plaintiff repeats and realleges the allegations contained above in all prior
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paragraphs, as though fully set forth at length. 146. Between August 15, 2010 and July 11, 2011, Mamtek US, Inc. made $1,298,008.03 in
transfers (the Mamtek Group Transfers) to The Mamtek Group. 147. Code. 148. Bruce Cole is the immediate and mediate transferee of a portion of the Mamtek The Mamtek Group Transfers are avoidable under Section 548 of the Bankruptcy
Group Transfers from The Mamtek Group. 149. Bruce Cole was an insider of Mamtek US, Inc. at all times relevant to the claim
asserted in this Count. 150. Group;

Date 8/16/2010 9/9/2010 9/16/2010 10/5/2010 10/25/2010 11/2/2010 11/18/2010 12/7/2010 12/16/2010 1/5/2011 1/20/2011 2/3/2011 2/9/2011 4/25/2011 Amount $7,785.58 $7,785.57 $7,785.58 $7,785.59 $7,785.56 $7,785.58 $7,882.00 $8,557.55 $8,850.14 $8,850.13 $8,113.97 $8,113.98 $204.91 $1,180.88
Bruce Cole received the following $98,467.02 in transfers directly from the Mamtek
151.
Bruce Cole received the following $189,579 in transfers from ADP Payroll Services,
which acted as a conduit for payment of Mamtek Group Transfers from The Mamtek Group to Bruce Cole;
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Date 2/15/2011 2/28/2011 3/15/2011 3/31/2011 4/18/2011 4/29/2011 5/13/2011 5/31/2011 7/5/2011 7/15/2011 7/29/2011 8/19/2011
Amount $14,583.00 $14,583.00 $14,583.00 $14,583.00 $14,583.00 $14,583.00 $14,583.00 $14,583.00 $29,166.00 $14,583.00 $14,583.00 $14,583.00
152.
The $288,046.02 in transfers described in the two paragraphs above are referred to
herein collectively as the BCMG Transfers. 153. Bruce Cole did not take the BCMG Transfers in good faith. At the time he received
the BCMG transfers, he knew they were the fruits of fraudulent representations made to the City of Moberly and UMB Bank. 154. Bruce Cole knew that the Mamtek Group Transfers were avoidable. At the time he
received the BCMG transfers, he knew the Mamtek Group Transfers had been obtained by fraud. He also knew that the Mamtek Group Transfers were made in exchange for less than adequate consideration, that they deepened Mamtek US, Incs. insolvency, and that they were made at a time when Mamtek US, Inc. was constructing the Manufacturing Facility a task for which Mamtek US, Incs capital was entirely inadequate.
WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and against the defendant Bruce Cole in the amount of $288,046.02 and granting such other and further relief as the Court deems just and equitable.
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COUNT SIX - BREACH OF FIDUCIARY DUTY 155. The plaintiff repeats and realleges the allegations contained above in all prior
paragraphs, as though fully set forth at length. 156. Mamtek US, Inc. was insolvent during the times and events for which the claims
arise herein. 157. At all times relevant to the allegations in this Count, Bruce Cole was an officer and
director of Mamtek US, Inc. 158. As an officer and director of Mamtek US, Inc., Bruce Cole was placed in position of
special trust and confidence. 159. As an officer and director, Bruce Cole owed Mamtek US, Inc. fiduciary duties,
including the fiduciary duties of care, candor, loyalty, and good faith. 160. Bruce Cole breached his fiduciary duties to Mamtek US, Inc. by, among other things. a. Ordering the transfer of $700,000 to Nanette Cole by Mamtek US, Inc.. b. Ordering the transfer of $204,167 to Nanette Cole by Mamtek US, Inc. c. Falsely representing to employees and agents of Mamtek US, Inc. that the payment of $700,000 to his wife Nanette Cole was actually a payment on amounts owing by Mamtek US, Inc. for the construction of the Manufacturing Facility. d. Permitting and directing Mamtek US, Inc. to falsely represent to City of Moberly, Missouri, and UMB Bank, N.A. in its capacity as bond trustee, that Mamtek US, Inc. owed a debt to Ramwell Industrial, Inc. for the design, acquisition, and construction of the sucralose manufacturing facility in Moberly, Missouri, and that funds received on account of the draw request would be paid to Ramwell Industrial, Inc. e. Ordering the transfer of $360,000 to Bridgeway Capital Limited by Mamtek US, Inc.
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f. Falsely representing to employees and agents of Mamtek US, Inc. that the payment of $360,000 was in payment of a debt owed by Mamtek US, Inc. to Bridgeway Capital Limited. g. Ordering the transfer of $100,000 on July 29, 2010 and $50,000 on August 3, 2010 to Mamtek International, Inc. by Mamtek US, Inc. Mamtek US, Inc. received no value on account of these transfers. At the time of these transfers Mamtek International, Inc. held 100% of the shares of Mamtek US, Inc. At the time these transfers were made, Bruce Cole was the chairman of the board and a vice president of Mamtek International, Inc. These transfers were made from the $4,278,648 in bond proceeds Mamtek US, Inc. received on July 29, 2010. h. Ordering the transfer of $100,000 on July 29, 2010 to the Wuyishan Wanho Beverage Company and $400,000 on August 16, 2010 to Wan Zhen Hao. Wan Zhen Hao was the beneficiary of both of these transfers. Mamtek US Inc. received nothing in exchange for these transfers. These transfers were made from the $4,278,648 in bond proceeds Mamtek US, Inc. received on July 29, 2010. i. Ordering the transfer of $60,000 on August 4, 2011 to Everzon International. Mamtek US, Inc. received nothing in exchange for this transfer which was made from bond proceeds. j. Permitting and directing Mamtek US, Inc. to falsely represent to the City of Moberly, Missouri, and UMB Bank, N.A. in its capacity as bond trustee, that Mamtek US, Inc. intended to use the $4,278,648 in bond proceeds it received on July 29, 2010 for the design, acquisition, and construction of the sucralose Manufacturing Facility in Moberly, Missouri, when Bruce Cole knew and intended that $500,000 of these proceeds would be paid to or for the benefit of Wan Zhen Hao and when Bruce
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Cole knew and intended that $150,000 of these proceeds would be paid to Mamtek International, Inc. k. Ordering the transfer of $1,298,008.03 to The Mamtek Group by Mamtek US, Inc. l. Permitting and directing Mamtek US, Inc. to falsely represent to the City of Moberly, Missouri, and UMB Bank, N.A. in its capacity as bond trustee, that Mamtek US, Inc. intended to use the $1,298,008.03 in bond proceeds which were transferred to The Mamtek Group for the design, acquisition, and construction of the sucralose Manufacturing Facility in Moberly, Missouri, when Bruce Cole knew and intended that the $1,298,008.03 would be used for other purposes, primarily to decorate and pay rent on an office it rented in Beverly Hills and to pay the wages and insurance for himself and other high level officers of Mamtek US, Inc. m. Failing to investigate or ascertain the worth or efficacy of the plans to build a sucralose plant Mamtek US, Inc. received from Mamtek International. n. Permitting Mamtek US, Inc. to enter into bond contracts with the City of Moberly, Missouri and UMB Bank, N.A. without ascertaining the viability of Mamtek US, Incs. plans to construct a sucralose plant. o. Drawing from the proceeds of the City of Moberly, Missouris bond issuance without ascertaining the viability of Mamtek US, Incs. plans to construct a sucralose plant. p. After it became clear to Bruce Cole that Mamtek US, Incs plans to build a sucralose plant were worthless, continuing to draw from proceeds of the bonds and deepening Mamtek US, Incs insolvency. q. Negligently failing to adequately and sufficiently supervise the engineers and consultants engaged by Mamtek US, Inc. to create a new sucralose manufacturing
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process and design. r. Negligently failing to adequately and sufficiently supervise the operations of Mamtek US, Inc. s. Paying himself and other officers of Mamtek US, Inc. salaries well in excess of any contributions to Mamtek US, Inc. made by such officers. t. Negligently allowing, causing, and permitting Mamtek US, Inc. to continue operating after Mamtek US, Inc. was insolvent without the prospect of repaying tis creditors. u. Negligently allowing, causing, and permitting Mamtek US, Inc., its officers, and employees to submit unreasonable, non-business related and/or otherwise inappropriate expenses for reimbursement by Mamtek US, Inc. and allowing, by failing to adopt reasonable safeguards and procedures, the payment by Mamtek US, Inc. of these improper expense items. v. Negligently allowing, causing, and permitting Mamtek US, Inc., and its officers, directors, and employees to misrepresent Mamtek US, Incs. business and financial condition and solvency. w. Negligently allowing, causing, and permitting Mamtek US, Inc. to misrepresent Mamtek US, Incs business in the prospectus issued to potential bondholders of the $39,000,000 in Moblerly, Missouri bonds. x. Negligently managing Mamtek US, Inc. by, among other things, failing to obtain competent advisers and failing to use prudent business practices.
161.
As a direct and proximate result of the aforementioned breaches of Bruce Coles
fiduciary duties, Mamtek US, Inc. lost virtually all of its interests in property and incurred debts in an amount in excess of $42,000,000.
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162.
As a direct and proximate result of the aforementioned breaches of Bruce Coles
fiduciary duties, Mamtek US, Inc. was injured in an amount in excess of $42,000,000. 163. The aforementioned breaches of fiduciary duty were done maliciously, willfully, and
with reckless indifference to the rights of others.
WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him (i) against the defendant Bruce Cole in an amount sufficient to compensate the bankruptcy estate of Mamtek US, Inc. for the injuries suffered by Mamtek US, Inc. on account of Bruce Coles breaches of fiduciary duty; (ii) against defendant Cole in an amount sufficient to punish and deter the defendant and others from engaging in similar conduct; and (iii) granting such other and further relief as the Court deems just and equitable.
COUNT SEVEN - CONSTRUCTIVE TRUST 164. The Trustee repeats and realleges the allegations contained above in all prior
paragraphs, as though fully set forth at length. 165. 166. 167. The transfer of $700,000 from Mamtek US, Inc. to Nanette Cole was wrongful. The transfer of $204,167 from Mamtek US, Inc. to Bruce Cole was wrongful. The Nanette Cole Transfers were fraudulently made and were a violation of special
confidence granted Bruce Cole by Mamtek US, Inc. 168. 169. The Nanette Cole Transfers were made for no consideration at all. Bruce Cole represented to officers and agents of Mamtek US, Inc. that the transfer
of $700,000 to Nanette Cole would be used to pay for the design of the Manufacturing Facility in Moberly, Missouri. 170. This representation was false.
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171.
Bruce Cole represented to officers and agents of Mamtek US, Inc. that the Transfer
to Nanette Cole to would be paid to a corporation called Ramwell Industrial, Inc. 172. 173. 174. This representation was false. Bruce Cole knew these representations were false when they were made. Bruce Cole made these false representations in order to induce Mamtek US, Inc. to
make the Nanette Cole Transfers. 175. Making these false representations was a violation of the special confidence and trust
placed in Bruce Cole by Mamtek US, Inc. 176. Mamtek US, Inc. through its officers and agents reasonably and justifiably relied
upon Bruce Coles representations. 177. made. 178. As president and CEO of Mamtek US, Inc., Bruce Cole was a fiduciary of the But for Coles false representations, the Nanette Cole Transfers would not have been
company. 179. The Nanette Cole Transfers were made for the personal benefit of Bruce Cole and
his wife, Nanette Cole. 180. By inducing Mamtek US, Inc. to make the Nanette Cole Transfers in exchange for
no consideration at all, Bruce Cole violated his fiduciary duties to Mamtek US, Inc. 181. It was wrongful for Bruce Cole to direct the Nanette Cole Transfers be made to
himself and to Nanette Cole. 182. Upon information and belief, the Nanette Cole Transfers were used by Bruce and
Nanette Cole to pay a debt encumbering the Real Property. 183. Such payment increased the value of Bruce and Nanette Coles interest in the real
property by $904,167, the amount of the Nanette Cole Transfers.

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184.
But for the Transfers, Bruce and Nanette Cole would no longer own the Real
Property. 185. It is wrongful for Bruce and Nanette Cole to retain the benefit of the Nanette Cole
Transfers. 186. It is inequitable and unfair for Bruce and Nanette Cole to retain the benefit of the
Nanette Cole Transfers. 187. By causing the Nanette Cole Transfers to be made, Bruce Cole deprived Mamtek
US, Inc. of the right to keep and spend the Nanette Cole Transfers for its own benefit. 188. By receiving the Nanette Cole Transfers Nanette Cole deprived Mamtek US, Inc. of
the right to keep and spend the Transfer for its own benefit. 189. The $288,046.02 in transfers described in Count V as the BCMG Transfers are
transfers of the interest of Mamtek US, Inc. to Bruce Cole avoidable under Sections 548 and 550 of the Bankruptcy Code. 190. The BCMG Transfers are avoidable because they are the proceeds of Mamtek US,
Incs. attempt to defraud its creditors, the City of Moberly, Missouri and UMB Bank, N.A. Bruce Cole was aware of this fraud and directed that it be done. 191. Bruce Coles participation in or acceptance of this fraud is a breach of the special
trust and confidence placed in him by Mamtek US, Inc. 192. 193. It would be wrongful and unjust for Bruce Cole to retain the BCMG Transfers. Upon information and belief, at least some of the BCMG Transfers were paid
towards debts secured by liens in the Real Property. Such payments permitted Bruce and Nanette Cole to retain the Real Property and also increased their equity in it.
WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and
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against the defendants (i) imposing a constructive trust on the Real Property and any proceeds of the Real Property for the benefit of the plaintiff; (ii) ordering the defendants to convey the Real Property or the proceeds of the Real Property to the plaintiff; (iii) imposing a constructive trust on all funds or property that can be demonstrated to be proceeds of the Nanette Cole Transfers, the BCMG Transfers, or the Bridgeway Transfer; and (iv) granting such other and further relief as the Court deems just and equitable.
COUNT EIGHT UNJUST ENRICHMENT 194. The Trustee repeats and realleges the allegations contained above in all prior
paragraphs, as though fully set forth at length. 195. Mamtek US, Inc. conferred a benefit on defendant Nanette Cole by transferring to
her the Nanette Cole Transfers. 196. Mamtek US, Inc. conferred a benefit on defendant Bruce Cole by transferring to
Nanette Cole the Nanette Cole transfers, which enabled Bruce Cole to save his house from foreclosure and by enriching his wife. 197. Mamtek US, Inc. also conferred a benefit on defendant Bruce Cole by transferring to
him the Bridgeway Transfer and the BCMG Transfers. 198. 199. Both Nanette Cole and Bruce Cole appreciated the benefit of these transfers. These transfers are the fruit of false and fraudulent representations made by Mamtek
US, Inc. at Bruce Coles direction and with his consent to induce the payment of funds to Mamtek US, Inc. which were then transferred to Bruce and Nanette Cole. 200. The transfers were not earned. Nothing close to equivalent value was given to
Mamtek US, Inc. in exchange for the transfers.

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201.
It would be inequitable to permit Bruce and Nanette Cole to retain the benefit of
these transfers under such circumstances. WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and against the defendants (i) entering judgment against Nanette Cole for $904,167, the sum of the Nanette Cole Transfers; (ii) entering judgment against Bruce Cole for $1,552,213.02, the sum of the Nanette Cole Transfers, the Bridgeway Transfer, and the BCMG Transfers; and (iii) granting such other and further relief as the Court deems just and equitable.
COUNT NINE TEMPORARY RESTRAINING ORDER 202. The Trustee repeats and realleges the allegations contained above in all prior
paragraphs, as though fully set forth at length. 203. The Trustee is seeking a preliminary injunction in which the net sale proceeds of the
Real Property after payment of liens, taxes, and costs are held by the Trustee pending the outcome of this adversary proceeding. 204. The Trustee seeks this relief in aid of the recovery he asks the Court to grant in this
adversary proceeding. 205. 206. The public interest is particularly strongly implicated in this case. The proceeds of the bonds discussed in this adversary complaint were the property
of the City of Moberly, a subdivision of the State of Missouri, which lent them to Mamtek US, Inc. to construct the Manufacturing Facility, which was also the property of the City of Moberly. 207. The Trustees claims against the Coles asserted in this adversary proceeding are to
recover transfers Bruce and Nanette Cole received as a result of deliberately false and fraudulent statements Bruce Cole directed and permitted Mamtek US, Inc. to make to the
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City of Moberly, Missouri in order to receive these bond proceeds. 208. These false and fraudulent statements were contained in 13 invoices purportedly
from a company called Ramwell Industrial, Inc. which were submitted from July of 2010 through August of 2011. According to Bruce Coles verified Response to the Trustees Motion for a Temporary Restraining Order Ramwell was a company which did not exist, whose services were not required by Mamtek US, Inc., and whose purported contract with Mamtek US, Inc. was terminated prior to July 29, 2010. 209. It would be profoundly unjust for this Court to permit Bruce and Nanette Cole to
enjoy the benefits of funds derived in such a manner and it is very likely that the Trustees claims against Bruce Cole to recover transfers he received which are the proceeds of these fraudulent invoices will succeed. 210. The defendants Bruce and Nanette Cole are under significant financial strain. Upon
information and belief, they are in default of at least one mortgage on their Real Property. Further, it appears that they have no current source of income. 211. The Trustee will likely suffer irreparable harm should the relief not be granted
because aside from the equity of the Coles Real Property at 630 N. Elm in Beverly Hills, California, they appear to have no other assets from which the Trustee could seek to satisfy a judgment in this proceeding. 212. The Nanette Cole Transfers were fraudulently made and were a violation of special
confidence granted Bruce Cole by Mamtek US, Inc. 213. Should this Court deny the Trustees request for a preliminary injunction, the Real
Property will likely be sold or foreclosed. 214. If the property is foreclosed, the Trustee will have no adequate legal remedy. The
Coles do not have sufficient assets to satisfy the Trustees claims legal or equitable.
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215.
If the property is sold, the Trustee believes it very likely that the net proceeds of such
sale will be dissipated or transformed to a form difficult if not impossible for the trustee to recover. 216. Bruce Cole is a sophisticated party, an attorney with decades of experience in
international business. Given Bruce Coles past conduct as set forth in this Complaint, the Trustee believes it very likely that the proceeds of the Real Property will be concealed or diverted by Mr. Cole. WHEREFORE, the plaintiff respectfully prays that the Court enter a preliminary injunction judgment compelling the payment any proceeds of the sale or other conveyance of any interest in the Real Property which are in excess of (i) the amounts payable to holders of liens in the Real Property on account of such liens; (ii) the costs incurred in connection with sale or conveyance of the Real Property; and (iii) any taxes or other amounts payable to any governmental authority in connection with any such sale or conveyance; be paid to the Trustee to be held by him pending the outcome of the present adversary proceeding and for such other and further relief as the Court deems just and equitable.
Respectfully submitted, MERRICK, BAKER & STRAUSS, P.C. By: /s/ Victor F Weber BRUCE E. STRAUSS MO#26323 VICTOR F. WEBER MO#57361 1044 Main Street Suite 400 Kansas City, MO 64105 Telephone: (816) 221-8855 Facsimile: (816) 221-7886

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Case 11-22092-drd7

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Adv. Proc. No. 12-02009-drd

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to pay and cure the mortgage on the Real Property.

paragraphs, as though fully set forth at length.

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$1,298,008.03 in transfers (the Mamtek Group Transfers) to The Mamtek Group.

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asserted in this Count. 150. Group;

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As a direct and proximate result of the aforementioned breaches of Bruce Coles

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As a direct and proximate result of the aforementioned breaches of Bruce Coles

with reckless indifference to the rights of others.

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property by $904,167, the amount of the Nanette Cole Transfers.

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Mamtek US, Inc. in exchange for the transfers.

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