Case 11-22092-drd7

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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 ) ) Defendants. ) ) IN RE:

Case No.

11-22092-drd7

Adv. Proc. No.

COMPLAINT TO AVOID AND RECOVER FRAUDULENT TRANSFER, BREACH OF FIDUCIARY DUTY, AND FOR CONSTRUCTIVE TRUST COMES NOW Bruce E. Strauss, Trustee, and for his Complaint to Avoid and Recover Fraudulent Transfer, Breach of Fiduciary Duty, and for Constructive Trust 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 630 N. Elm Dr., Beverly Hills, California.
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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. 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)(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. In Count I of this adversary proceeding, the Trustee seeks to avoid and recover, pursuant to Sections 105 and 548 of the Bankruptcy Code fraudulent transfers that Mamtek US, Inc. made to Bruce and Nanette Cole. In Count II, the Trustee seeks a judgment against Bruce Cole on account of his breaches of fiduciary duty related to the fraudulent transfers sought to be avoided in Count I. In Count III, the Trustee seeks the imposition of a constructive trust on the defendants Bruce and Nanette Coles residence because it appears that the fraudulent transfers were used to pay a mortgage on the residence. 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
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Date"). 9. On December 30, 2011, the Court entered its Order appointing Bruce E. Strauss as Interim Trustee (the "Trustee"). 10. On January 9, 2012, the Court entered the Order for Relief under Chapter 7 in the abovecaptioned case. 11. As CEO and president of the Debtor, Bruce Cole is an insider of the Debtor as that term is used in Section 101 of the Bankruptcy Code. 12. At all times pertinent to the allegations in this Complaint, Bruce Cole was a fiduciary of Mamtek US, Inc. 13. Mamtek US, Inc. is a Delaware corporation which was incorporated on May 17, 2010. 14. At all times pertinent to the allegations in this Complaint, Mamtek US, Incs principal place of business was in Moberly, Randolph County, Missouri. 15. 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). 16. This Facility was to be constructed by Mamtek US, Inc. 17. Under the agreements governing the issuance of the bonds, Mamtek US, Inc. submitted requests for draws from the bond proceeds to the City of Moberly, Missouri. In accordance with the trust instrument, if approved by the city, the request was forwarded to UMB Bank, would distribute the proceeds in the manner requested by Mamtek US, Inc. 18. 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., with the remainder being paid to Septagon
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Construction Corporation, the general contractor for the construction of the Manufacturing Facility. 19. 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. 20. Ramwell Industrial, Inc. is a California corporation whose charter has been suspended. Its address of record is defendant Bruce Coles home address and its registered agent is defendant Bruce Cole. 21. Ramwell Industrial, Inc. never provided any goods or services to Mamtek US, Inc. 22. Mamtek US, Inc. never paid any money to Ramwell Industrial, Inc. 23. On July 28, 2010, Mamtek US, Inc. received $4,278,648 on account of its draw request. 24. On July 29, 2010, Bruce Cole directed that Mamtek US, Inc. wire $700,000 (the Transfer) to his wife Nanette Cole. 25. This Transfer came solely from the $4,278,648 Mamtek US, Inc. received from the bond proceeds. 26. Bruce Cole represented to officers and agents of Mamtek US, Inc. that the Transfer was in compensation for services provided by Ramwell Industrial, Inc. for engineering services related to the construction of the Manufacturing Facility. 27. This representation was false when it was made and Bruce Cole knew it was false when it was made. 28. Bruce Cole caused officers and agents of Mamtek US, Inc. to make the July 23, 2010 draw
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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. 29. This representation was false when it was made and Bruce Cole knew it was false when it was made. 30. On July 29, 2010, Bruce Cole directed that Mamtek US, Inc. wire $204,167 to himself. 31. This transfer came solely from the $4,278,648 Mamtek US, Inc. received from the bond proceeds. 32. The $204,167 transfer to Bruce Cole and the $700,000 Transfer to Nanette Cole are referred to collectively herein as the Transfers. 33. The Transfers were not used for the design, acquisition, and construction of the Manufacturing Facility. 34. Upon information and belief, the funds from the 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). 35. The funds from the Transfers were paid towards a debt secured by a mortgage encumbering the Real Property. 36. As a result of the Transfers, Bruce and Nannette Cole acceded to $904,167 in equity in the Real Property. 37. Bruce and Nanette Coles possession of this equity and receipt of the Transfers is wrongful, it is fraudulent, and it wrongfully deprives the bankruptcy estate of Mamtek US, Inc. of the value of the Transfers. COUNT ONE - AVOIDANCE OF FRAUDULENT TRANSFERS
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38. The plaintiff repeats and realleges the allegations contained above in all prior paragraphs, as though fully set forth at length. 39. On July 29, 2010, at the direction of Bruce Cole, Mamtek US, Inc. transferred $700,000 to Nanette Cole. 40. On July 29, 2010, at the direction of Bruce Cole, Mamtek US, Inc. transferred $204,167.00 to Bruce Cole. 41. Both July 29, 2010 transfers are collectively referred to herein as the Transfers. 42. This Count I is brought under Section 548(a)(1)(A) of the Bankruptcy Code because the Transfers this 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. 43. This Count I is also brought under Section 548(a)(1)(B) of the Bankruptcy Code because the Transfers were made in exchange for no consideration. The 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 44. The Transfers were made for the benefit of Bruce Cole and Nanette Cole 45. Mamtek US, Inc. received less than a reasonably equivalent value in exchange for the Transfers. 46. Mamtek US, Inc. was insolvent when the Transfers were made. 47. When the Transfers were made, Mamtek US, Inc. was engaged in the business of constructing the Manufacturing Facility. 48. Mamtek US, Inc. had an unreasonably small amount of property or other capital to fund the construction of the Manufacturing Facility.
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49. When the Transfers were made, Mamtek US, Inc. intended to incur a debt in the approximate amount of $39,000,000 to construct the Manufacturing Facility. 50. It was beyond Mamtek US, Incs ability to pay this $39,000,000 debt. 51. The Transfers were made for no value. 52. The Transfers were not made in good faith. 53. 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. 54. The Real Property was not sold at a trustees sale and is still owned by Bruce and Nanette Cole. 55. Upon information and belief the funds from the 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 - BREACH OF FIDUCIARY DUTY 56. The plaintiff repeats and realleges the allegations contained above in all prior paragraphs, as though fully set forth at length. 57. Mamtek US, Inc. was insolvent during the times and events for which the claims arise herein. 58. Bruce Cole was an officer and director of Mamtek US, Inc. 59. As an officer and director of Mamtek US, Inc., Bruce Cole was placed in position of special
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trust and confidence. 60. As an officer and director, Bruce Cole owed Mamtek US, Inc. fiduciary duties, including the fiduciary duties of care, loyalty, and good faith. 61. 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 himself 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. 62. As a direct and proximate result of these breaches of Bruce Coles fiduciary duties, Mamtek US, Inc. was injured in an amount in excess of $904,167.00 63. Bruce Cole maliciously, willfully, and intentionally injured Mamtek US, Inc. by the aforementioned breaches of fiduciary duty.

WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him (i) against the defendant Bruce Cole in the amount of $904,167; (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.

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COUNT THREE - CONSTRUCTIVE TRUST 64. The Trustee repeats and realleges the allegations contained above in all prior paragraphs, as though fully set forth at length. 65. The Transfer of $700,000 from Mamtek US, Inc. to Nanette Cole was wrongful. 66. The transfer of $204,167 from Mamtek US, Inc. to Bruce Cole was wrongful. 67. The Transfers were fraudulently made and were a violation of special confidence granted Bruce Cole by Mamtek US, Inc. 68. The Transfers were made for no consideration at all. 69. Bruce Cole represented to officers and agents of Mamtek US, Inc. that the Transfer to Nanette Cole would be used to pay for the design of the Manufacturing Facility in Moberly, Missouri. 70. This representation was false. 71. 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. 72. This representation was false. 73. Bruce Cole knew these representations were false when they were made. 74. Bruce Cole made these false representations in order to induce Mamtek US, Inc. to make the Transfer to Nanette Cole. 75. Making these false representations was a violation of the special confidence and trust placed in Bruce Cole by Mamtek US, Inc. 76. Mamtek US, Inc. through its officers and agents reasonably and justifiably relied upon Bruce Coles representation. 77. But for Coles false representations, the Transfers would not have been made. 78. As president and CEO of Mamtek US, Inc., Bruce Cole was a fiduciary of the company.
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79. The Transfers were made for the personal benefit of Bruce Cole and his wife, Nanette Cole. 80. By inducing Mamtek US, Inc. to make the Transfers in exchange for no consideration at all, Bruce Cole violated his fiduciary duties to Mamtek US, Inc. 81. It was wrongful for Bruce Cole to direct the Transfers be made to himself and to Nanette Cole. 82. Upon information and belief, the Transfers were used by Bruce and Nanette Cole to pay a debt encumbering the Real Property. 83. Such payment increased the value of Bruce and Nanette Coles interest in the real property by $904,167, the amount of the Transfers. 84. But for the Transfers, Bruce and Nanette Cole would no longer own the Real Property. 85. It is wrongful for Bruce and Nanette Cole to retain the benefit of the Transfers. 86. It is inequitable and unfair for Bruce and Nanette Cole to retain the benefit of the Transfers. 87. By causing the Transfer to be made, Bruce Cole deprived Mamtek US, Inc. of the right to keep and spend the Transfers for its own benefit. 88. By receiving the Transfers Nanette Cole deprived Mamtek US, Inc. of the right to keep and spend the Transfer for its own benefit. WHEREFORE, the plaintiff respectfully prays that the Court enter a judgment for him and 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; and (iii) granting such other and further relief as the Court deems just and equitable.

Respectfully submitted, MERRICK, BAKER & STRAUSS, P.C.

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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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