MO. City Gave Millions For “Economic Development,” Got Hosed
From the St. Louis Post-Dispatch comes a story of a economic development deal gone very bad. A city showers a private company with tens of millions of dollars from the taxpayers in hopes of creating jobs. The company goes bust. Money disappears and the taxpayers are screwed. It can’t happen in Chicago, right?
“There is a certain satisfaction in seeing Missouri Attorney General Chris Koster filing criminal charges against Bruce Cole. He is the California wheeler-dealer responsible for leaving the city of Moberly, investors, and potentially taxpayers, on the hook for $39 million in revenue bonds that were floated to finance the failed Mamtek ‘sucralose” plant.
Mr. Cole, who allegedly skimmed hundreds of thousands of dollars off the Mamtek deal to rescue his under-water Beverly Hills mortgage, was arrested on Tuesday after Mr. Koster charged him with theft and securities fraud…Mamtek didn’t fail merely because the plan to manufacture a sugar substitute at multiple plants in Missouri and China was just sugar plum fairies dancing in Mr. Cole’s head. It failed because it relied on an economic development strategy that has been proven over and over again to be a sham. It failed because nobody, including Moberly officials and the state Department of Economic Development, did their homework. Gov. Jay Nixon, a Democrat, and Republican leaders including Lt. Gov. Peter Kinder, were eager to back Mamtek when there was a photo opportunity to stand next to Mr. Cole and lip-sync the word “jobs.” But nobody was very eager to do the due diligence that would have shown the deal to be bogus.
Mamtek failed because Missouri’s economic development strategy is this: Listen to pitch from guys in suits. Give them money. Promise jobs. Say nothing when the jobs don’t appear.”