MOBERLY, Mo. — A northeast Missouri community that issued $39 million in bonds three years ago to support an artificial sweetener plant that folded a year later has agreed to pay $95,000 to end its involvement in a lawsuit filed by investors.
Moberly and the Moberly Industrial Development Authority announced the settlement Tuesday in a lawsuit filed by Shelter Insurance Cos. and other investors in Mamtek U.S. Inc., the Columbia Daily Tribune reported.
Construction on the factory stopped in August 2011 when Mamtek failed to make a required bond payment. Since then, more than a dozen lawsuits have been filed to assign blame for bondholder losses, including a criminal case pending against former Mamtek CEO Bruce Cole.
Shelter was joined by Overland Park, Kan.-based investment firm Waddell & Reed in filing the first bondholder lawsuit in March 2012 in Cole County. That lawsuit accused Morgan Keegan, an investment banking firm based in Memphis, Tenn., of fraud.
Mamtek's failure came only a year after the company persuaded Moberly leaders to issue the bonds with the promise of more than 600 jobs to the struggling Randolph County community. Company leaders claimed to have extensive business ties in China and said the factory would open that part of the state to additional investment.
That prompted state leaders to authorize as much as $17.6 million in tax credits and other incentives.
Morgan Keegan, which was hired to underwrite and market the bonds, sought to spread the blame for Mamtek's failure and tried to get Moberly added as a defendant to the Shelter lawsuit.
The settlement ends all pending claims against Moberly in the lawsuit, attorney Thomas Azar told the court in papers filed this week.
But it doesn't end the involvement of either the city or its development group in a separate federal lawsuit filed by investors.
Still, City Manager Andy Morris said that it's "a positive sign, and the council is glad that this portion of the case is over."
Morgan Keegan's attorneys said they didn't know how the ruling affects them. Shelter's attorney declined to comment.