SEC v. Bruce Cole and Nanette Cole, Case No. CV 12-8024 ABC (SHx) (C.D. Cal.).  On September 18, 2012, the SEC announced fraud charges against Bruce Cole, the former CEO and chairman of Mamtek U.S.  The case concerns a fraud scheme related to a $39 million municipal bond offering backed by the City of Moberly, Missouri.  The bond offering was intended to finance a plant in Moberly that Mamtek would construct and operate.  Cole got his employees to unknowingly divert around $900,000 in bond proceeds for his personal use and by lying to city officials and bondholders about the use of those funds.  Mamtek employees and others made false documentation for a nonexistent company to justify fake expenses for the project.  Cole then told the employees to wire his wife $900,000 in bond proceeds, which were used to pay for his and his wife’s personal expenses, in part, under the guise that she was an agent of the sham company.

The SEC charged Cole with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  The SEC is seeking injunctive relief, disgorgement with prejudgment interest, and a civil monetary penalty.  The SEC also named Cole’s wife Nanette Cole as a Relief Defendant because she received some of the ill-gotten gains.