The search by a Philadelphia law firm has begun for victims of a $54 million Ponzi scheme dubbed last year as the largest green scam in America -- in part evolving from a City Avenue company called Mantria.
Attorney Patrick Howard, of Saltz, Mongeluzzi, Barrett & Bendesky, said yesterday that the first briefs in the class action suit are due Friday. Those will likely be motions by defendants to dismiss the lawsuit.
The suit stems from the $54 million fraud first unhatched by the Securities Exchange Commission in 2009 and headed by young 20-something Philadelphia residents Troy Wragg and Amanda Knorr as well as a notorious pitchman in Denver, Colo., in which investors were led to believe was a clean energy startup. Mantria, based in a Bala Cynwyd office space, positioned itself as a producer of a clean-burning energy called "biochar," which Wragg and Knorr said was being produced at a facility in Tennessee.
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Among the defendants in the class action suit is high-profile and politically-connected Philadelphia law firm Astor, Weiss, Kaplan & Mandel. One of the firm's attorneys, Chris Flannery, did legal work for Mantria before becoming a full-time employee of the company, Howard said. Another defendant, Dan Rink, became chief financial officer at Mantria and worked directly below Wragg and Knorr after being hired as a consultant from Tatum Partners. Tatum, which describes itself as "the largest and fastest-growing executive services and consulting firm in the United States helping companies in transition to accelerate business success and create more value," is also a defendant.
Howard said a federally-appointed receiver for any money recovered estimates 300 to 500 people were defrauded. Some victims are from the Philadelphia and Pittsburgh areas.
"We're barred from suing Troy and Amanda, so our case is all about the people who were at the top of this thing who had access to the financials," Howard said of Rink and Flannery and the firms they worked for as Mantria contractors, noting Wragg and Knorr are still being investigated by federal authorities. "Common sense leads you to the conclusion they had to know."
Behind Wragg, his 'biochar'
Mantria called itself a "diversified company" and had about 30 divisions, from real estate to banking and even a record label.
What caught the most attention and was used as a big selling point during "get rich quick" seminars with potential investors was Mantria's "biochar" development at a facility in rural Tennessee. The SEC filings in 2009 included pages of testimony debunking what Wragg and a Denver pitchman told investors of successful production of the supposed clean energy source. Investigations into biochar by Metro even brought into question the actual viability of its clean energy potential.
Wragg pointed out to Metro in 2009 that the SEC didn't allege that any of those named in the civil complaint lived lavishly off of investors' money, ala Bernie Madoff.
"I live in a 1,200-square-foot [home]," he told Metro. "I don't drive a Lamborghini."
But Wragg did drive a Mercedes SLK350 with a "MANTRIA" vanity license plate.
Clinton, Elway linked to Mantria
Just two months before the SEC charges were filed in November 2009, Wragg was on stage with former President Bill Clinton, receiving congratulations from Clinton's foundation for the fight to "mitigate global warming."
Wragg and Knorr, both 2005 Temple graduates, "went through our normal due-diligence process and we found nothing of concern," Clinton spokesman Matt McKenna told Metro. "We were surprised and disappointed to learn that their work may in fact be fraudulent."
Even Hall of Fame quarterback John Elway got involved in the alleged Ponzi Scheme. The former Bronco spoke -- for huge fees -- at investment seminars in Colorado for Speed of Wealth, the company that brought investors into the scam. Elway's agent told the Denver Post that he had "no ongoing relationship" with the companies.
How did $40 million disappear?
Howard said Wragg appears to have started modestly enough by running a real estate business out of his parents' Lehigh County home and may have even turned modest profits in 2007.
But then he decided to expand his business and eventually came in touch with a Denver-based "wealth consultant" named Wayde McKelvey, who ran an investment group called "Speed of Wealth."
"That's where things appear to have taken a turn," Howard said. "Wayde had this vehicle Speed of Wealth. For the first investors, everyone got their money back. Pretty soon tons of money's rolling in. But you can follow the internal e-mails contained in the SEC complaint. In February 2009, the e-mails become frantic because there's debt calls coming up."
By the time the SEC shut down the company in late 2009, all that was left of between $34 and $40 million in investors' money was $790,000.
According to sources and filings, Wragg, Knorr and McKelvey spent Mantria investment money lavishly, like a $150,000 getaway to Las Vegas.