JEFFERSON CITY, Mo. (AP) — Investors in a failed north-central Missouri artificial sweetener factory that never was built will get more than $5 million back following a settlement filed earlier this week in federal court.
Investment banker Morgan Keegan and St. Louis law firm Armstrong Teasdale agreed to pay up to $8.25 million in attorney fees and compensation for some investors, according to The Columbia Daily Tribune (http://bit.ly/1Ce0QPF ).
A class-action lawsuit filed against them claims they misled investors, who bought a total of $39 million in industrial development bonds underwritten by Morgan Keegan to build a Mamtek artificial sweetener plant in Moberly.
Gov. Jay Nixon touted the project as an economic boon for the small town and promised up to $17.6 million in tax credits and other incentives. The factory was expected to bring as many as 600 new jobs.
But the plant was never built.
Mamtek defaulted on bond payments and construction stopped in August 2011. CEO Bruce Cole, who used money from the bond issue to stop his Beverly Hills home from falling into foreclosure, is serving seven years in prison for theft and securities fraud.
A trial for the case against Morgan Keegan and Armstrong Teasdale, filed by Alabama investor John Cromeans and others who bought bonds, was set to begin Jan. 14 before U.S. District Judge Nanette Laughrey in Jefferson City. The parties settled that day.
The filings were not released until Wednesday.
Morgan Keegan and Armstrong Teasdale denied wrongdoing in the settlement.
Investors in the class-action suit bought about $6 million of those bonds, said their attorney Timothy Francis of Birmingham, Alabama. With attorney fees and expense, about $5.2 million is left for their compensation.
Morgan Keegan and Armstrong Teasdale "paid more than the out-of-pocket losses of these investors, which is a really good settlement," Francis said.
Information from: Columbia Daily Tribune, http://www.columbiatribune.com