CHICAGO — An investor with a stake in $39 million of defaulted bonds issued for a failed artificial sweetener plant in Missouri has filed a lawsuit accusing underwriter Morgan Keegan & Co. and counsel Armstrong Teasdale LLP of providing false and misleading information in the offering statement.

Columbia-based Shelter Life Insurance Co. and its affiliates named Morgan Keegan, underwriters’ counsel Armstrong Teasdale, and the law firm’s partner Mark Boatman as defendants in the case filed Monday in Cole County Circuit Court in Missouri, alleging negligent misrepresentations and unjust enrichment.

The complaint accuses the firms of failing their fiduciary responsibilities to engage “in proper due-diligence review of organization, operations and financial condition of Mamtek” and making false and misleading statements that were material to the company’s and project’s viability.

The firms represented Mamtek as a viable company in both the offering statement and sales solicitations with an operating plant in China while doing little research to verify the information, the lawsuit charges.

State officials were eventually unable to corroborate that the company indeed had an operating plant in China and shared the information with officials from the city of Moberly, which backed the bonds with an appropriation pledge. The lawsuit questions why the firms did not do a better job of uncovering that fact.

“These bonds are nearly worthless now,” said an attorney from Horn Aylward & Bandy LLC, which is representing Shelter. “We expect other plaintiffs to join the case soon.” Shelter Life purchased $5.6 million of the bonds when they were offered in 2010. Various tranches of debt traded at 23 cents to 31 cents on the dollar recently.

Morgan Keegan issued a statement saying: “The claims made in the lawsuit have absolutely no merit and we look forward to defending ourselves vigorously.” The firm declined additional comment.

Armstrong Teasdale general counsel Jay Summerville issued a similar comment. “We have reviewed the petition filed by the Shelter companies and believe that it is completely without merit. Armstrong Teasdale will vigorously defend itself in court,” he said.

The lawsuit marks the latest development in a case that has raised the ire of bondholders, various regulators and state lawmakers over the abandoned, half-finished plant built by Chinese-based Mamtek US Inc. in Moberly. The Moberly Industrial Development Authority issued the bonds backed by a city appropriation pledge to help finance the plant in 2010.

The company last August defaulted on a payment to Moberly needed for debt service and the city in turn last fall informed the trustee UMB Bank NA that it wouldn’t honor its pledge to repay the debt issued to help finance construction of the plant. Mamtek then abandoned the half-built factory.

Moberly lost its investment-grade rating from Standard & Poor’s after it declined to make good on its appropriation pledge. The city’s refusal to appropriate led the trustee to dip into reserves for a Sept. 1 debt payment. Facing legal costs, the trustee opted to hold on to remaining reserves and skipped the March 1 payment.

The suit accuses the firms of taking Mamtek at its word and conveying false information to potential buyers while focusing on the security of the city backing. “At no point during its underwriting process did defendants establish an accuracy check to verify that the statements included in the offering statement by Mamtek and-or its agents were accurate and complete,” the suit alleges citing email communications and legislative testimony.

The lawsuit also takes the firms to task for promoting a pledged “backstop” of other collateral from the company in the event of a default. The backstop came in the form of the company’s trade secrets and manufacturing recipe that a valuation firm had said was worth $7 million and a sales contract valued at $45 million. The dollar valuations were not included in the offering statement but the pledge of those items as collateral — which have little value now — were included.

The bonds were rated A-minus when issued in 2010, one notch below the city’s issuer credit rating at the time. S&P has since lowered the bonds’ rating to CC. It also downgraded the city’s issuer credit rating to B from A.

The project received city help from the bonds and $17.6 million in state assistance, although the state funds were never turned over. Officials believed the project would spur economic development in the struggling central Missouri community and create hundreds of jobs.

Missouri Attorney General Chris Koster is jointly investigating the project with local prosecutors and the Securities and Exchange Commission has issued subpoenas in connection with the financing. Lawmakers have submitted bills that would affect future economic development bonds following hearings on the project. They would require a public vote for future government-backed borrowing for economic development projects and require insurance in the event of a default.

A Missouri House committee issued a stinging report concluding that state economic development officials and financial firms failed to conduct adequate due diligence. “The committee believes that it was reasonable for Moberly officials to rely on third-party professionals and DED, but that neither the third-party professionals nor DED conducted adequate due diligence,” the report concluded.

UMB in November filed a lawsuit against Mamtek and its parent in federal court, alleging fraud. In December it joined with other creditors and filed a petition seeking an involuntary bankruptcy. Remaining reserves total about $3.9 million. Morgan Keegan earned $411,000 in its role as underwriter.

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