Sequatchie development part of a Ponzi scheme, SEC says

Sequatchie development part of a Ponzi scheme, SEC says

November 18th, 2009 by Brian Lazenby in News

PDF: SEC Complaint


Mantria is marketing a number of developments in Tennessee. Below is a list and their locations.

* Mantria Place -- Sequatchie County

* Legacy Ridge -- Sequatchie County

* Iris Village -- Grundy County

* Iron Bridge Village -- Van Buren County

* Indian Trail Estates -- Van Buren County

* Mantria View -- no information given


A Sequatchie County development is at the center of what the U.S. Securities and Exchange Commission is calling a $30 million Ponzi scheme that led to a complaint filed in federal court in Denver.

The SEC contends that Troy Wragg, 28, and Amanda Knorr, 26, of Philadelphia, Pa., as well as Wayde and Donna McKelvy of Denver, ages unknown, targeted elderly investors to invest in Mantria Place, a supposedly carbon-negative housing community near Dunlap, as well as a number of other developments in Middle Tennessee.

The complaint states that the group raised $122 million by convincing elderly investors to liquidate retirement plans and home equity to buy securities while promising returns ranging from 17 percent to "hundreds of percent" annually.

The Pennsylvania-based Mantria Corp.'s development has not generated any significant cash, and returns paid to investors have been funded almost exclusively from other investors' contributions, according to the SEC.

"These promoters fraudulently exaggerated Mantria's green initiatives and used high-pressure tactics to convince investors to chase the promise of lucrative returns," said Don Hoerl, director of the SEC's Denver regional office. "In reality, the only green these promoters seemed interested in was investors' money."

The complaint charges the four individuals, Mantria and its subsidiary, Speed of Wealth, with misrepresenting the scope and success of Mantria's operations. The SEC is seeking to freeze the companies' and the four defendants' assets.

A spokeswoman at the company who declined to give her name said the company will continue to market its biochar production and its community developments. Biochar is a fuel somewhat like charcoal and can be used in gardening and farming to return carbon to the soil.

"We deny all allegations, and we are preparing our defense," she said.

Mr. Wragg, Mantria chairman and chief executive, did not return calls Tuesday seeking comment.

Sequatchie County Executive Michael Hudson said Mantria has built a small biochar production facility on the Dunlap property but no houses.

Staff Photo by Lesley Onstott Workers at Mantria Place in Dunlap, work on a bio-refinery in Sequatchie County.

Staff Photo by Lesley Onstott Workers at Mantria Place...

"It hasn't gotten off the ground, and I doubt it will," he said.

Records show Mantria claimed to be developing a 5,000-acre gated community with a lake, marina and golf courses. The plan initially was to use timber cleared off the property to create biochar, which would be sold to help finance the project.

Paul Ulrich, a Sequatchie County resident and Mantria Place opponent, said he is not surprised about the complaint. He said he researched the company online and found a lot of negative information.

"I've always acted on the premise of 'Where there is smoke there is fire,'" Mr. Ulrich said.

Both Mr. Hudson and Mr. Ulrich said Mantria hired some local residents to work in the biochar facility, but Mr. Hudson said workers reported that the company did not pay the employees on time and owed large amounts of money to other companies.

"Early on I had my reservations about the company," Mr. Hudson said.