Nearly six years after the Securities and Exchange Commission brought civil fraud charges, federal authorities filed criminal charges against three people for operating a $54 million Ponzi scheme touting "green energy" and "carbon-negative" technologies. Troy Wragg, 34, of Georgia, Amanda Knorr, 32, of Pennsylvania, and Wayde McKelvy, of Colorado, were charged in an unsealed indictment for their former role with Mantria Corp. ("Mantria"). Each of the three defendants was charged with one count of wire fraud conspiracy, seven counts of wire fraud, conspiracy to commit securities fraud, and securities fraud. If convicted of all charges, each defendant could face dozens of years in prison.
Mantria was formed in mid-2005 by co-founders Tony Wragg and Amanda Knorr. Mantria touted itself as a vast conglomerate comprised of 11 operating divisions, at least 32 wholly-owned or affiliated companies, and other related entities that, in total, brought in lucrative profits. Wayde McKelvy operated Speed of Wealth, LLC ("SOW") and Retirement TRACS, LLC ("RT"), which heavily advertised to the public and hosted investor seminars in Colorado, Las Vegas, and other cities to solicit investors for Mantria. Neither Wragg, Knorr, or McKelvy were licensed to sell securities. Initially, Mantria began partial development of a Tennessee real estate development, building roads, a model home, and an entrance gateway to give the appearance of progress to investors. After those plans fizzled out, Mantria turned to the manufacture of "biochar," a charcoal-like product made from organic waste. In promotional materials distributed by Mantria's financial arm, potential investors were told they could expect 450% returns from Mantria's bio-char activities and eventual public offering.
At events hosted by McKelvy, which included live, internet, and radio presentations that even once included a cameo from former NFL quarterback John Elway, investors were first told that McKelvy would teach them the secrets of wealth - which started with McKelvy urging investors to first liquidate their "traditional investments" that included their retirement accounts and 401(k) plans. McKelvy then encouraged potential investors to borrow as much as possible against both their home equity and their parents' home equity, as well as to tap their business line of credit. After doing so, McKelvy recommended that those investors entrust those funds to the consistent and safe investments offered by Mantria. The following are statements made by McKelvy at a seminar in May 2009 as alleged in the complaint filed by the Securities and Exchange Commission:
''Number one, you must quit following the herd and never, ever expect to build wealth by investing in mutual funds, CDs, money market, bonds, or qualified retirement accounts, such as a 401(k) plan, which is exactly where all you guys are investing. You will not get wealthy. You'll go straight to the poor house. I'll prove that to you in a moment."
"[w]hat do we always hear, students? It's too good to be true, right? All the time, it's too good to be true. It's a Ponzi scheme. No, guys, you need to understand the truth about guarantees and collateral. We'll go over that tonight."
"So here's what I'm telling you to do, guys. Gotake your equity out, because you're an A lender, you can borrow 6 percent or less today. Go loan it out at 17 percent. Create arbitrage. That's how you get rich. That's it. Troy [Wragg] is going to be talking to you about an opportunity to make phenomenal returns collateralized by real estate, in the second half."
Through various offerings, Mantria raised at least $54 million from over 300 investors.
However, the Department of Justice now alleges that Mantria was nothing more than a massive Ponzi scheme which "grossly overstat[ed] the financial success of Mantria and promis[ed] excessive returns." Despite claims that Mantria was pulling in lucrative returns, authorities charge that Mantria had "virtually no earnings, no profits, and was merely using new investor money to repay earlier investors." Similarly, Mantria's claims that they were producing large quantities of "biochar" and had significant pre-orders are also claimed to be false. Authorities estimate that Mantria investors ultimately suffered at least $37 million in losses.
Knorr, Wragg, McKelvy, and McKelvy's wife, Donna McKelvy, were the subject of a 2009 emergency enforcement action filed by the Securities and Exchange Commission. The Commission ultimately obtained judgments against the four totaling over $130 million and consisting of disgorgement, civil penalties, and prejudgment interest. Lawyers representing Mantria victims reached a $6 million settlement last year with a lawyer and accountant who provided services to the scheme.
A Mantria promotional video is still available on Youtube:
A copy of the indictment is below: