At a 2009 conference in Centennial, Colorado, Wayde McKelvy, a former offensive lineman at the University of Northern Colorado stood in front of a room full of potential investors for a green startup called Mantria.
Mantria was building the country’s first “carbon-negative” housing development in rural Tennessee, powered entirely by renewable energy, investors heard. What’s more, it was developing a substance that turned garbage into usable materials and produced something called biochar, a carbon-negative fertilizer made from charcoal.
The company was “on the cusp of revolutionary technology that’s going to change the world,” McKelvy promised, “and you guys can benefit from it by putting money in and getting stinkin’ wealthy.”
McKelvy was the pitchman for a green utopic offered by Mantria’s two founders, Troy Wragg and Amanda Knorr. And if Mantria’s promise sounded too good to be true, that’s because it was: a few months after the conference in Centennial, the Securities and Exchange Commission shut down the company, alleging Mantria had bilked investors out of tens of million of dollars in a widespread ponzi scheme. Now, after years of legal delays, federal prosecutors have indicted McKelvy, Wragg, and Knorr with wire and securities fraud and conspiracy.
For Westerners, white-collar crime might seem a distant threat, relegated to the East, to Bernie Madoff and wolves of Wall Street. But the details of the case reveal how the green sheen of Mantria created a vision well suited to Denver, where capitalism and environmentalism often align.
“The scheme alleged in this indictment offered investors the best of both worlds — investing in sustainable and clean energy products while also making a profit,” U.S. Attorney Zane Memeger said in a statement. “Unfortunately for the investors, it was all a hoax.”
Scams work best when they play on some form of vanity of the target, and in that regard, the denizens of Denver were perfect marks. The city has in recent years tried to reinvent itself, edging away from its oil and gas past toward an entrepreneurial haven in the Rocky Mountains. The shift meant embracing a new green identity, on display in places like Green Spaces, a shared working space in downtown Denver’s trendy RiNo Arts District that bills itself as “a place for eco and socially conscious entrepreneurs to connect and grow.”
Meanwhile, the Front Range has attracted a growing number of clean tech ventures, like the U.S. Department of Energy’s National Renewable Energy Laboratory in nearby Golden, and Vestas Wind Sytems, the largest wind turbine maker in the world Out here, green means money in more ways than one, a message that resonated with Mantria’s investors, most of whom resided in Colorado.
It’s very common for whatever is the most trendy business opportunity to be part of the story line in investment scams — whether it’s oil and gas, or hedge funds or green energy, says John Walsh, U.S. Attorney for Colorado, who specializes in white collar criminal cases. “When there’s a sense in the media that a particular industry is taking off, investment fraud guys will say 'I have the best way to get in on that.'”
McKelvy operated what he called “Speed of Wealth” clubs, which advertised on television, radio and the Internet; they also held seminars for prospective investors and promised to make them rich. Along with his former wife, Donna, McKelvy targeted elderly investors or those approaching retirement age to finance Mantria’s “green” initiatives.
According to the indictment, McKelvy convinced investors to liquidate their assets, such as mutual funds and 401k plans, to take out as many loans as possible, such as home mortgages and credit card debt, and invest all those funds in Mantria. The company, he claimed, was already producing large amounts of biochar and would turn consumer waste from the Tennessee real estate developments into biochar. Investors could get paid “by just owning land and spreading this stuff [biochar] all over your field, because this stuff pulls the toxins out of the atmosphere.” According to McKelvy, it was “the biggest wealth-building opportunity that I believe has ever come across in your lifetime.”
In fact, Mantria never produced biochar of sufficient quality to sell on the market, according to the indictment. In addition, there was no way consumer waste from the residential development would generate enough carbon to be turned into biochar. But even building the houses looked impossible: McKelvy never told investors that the land they hoped to develop had significant problems, including a lack of potable water, and the possibility of unexploded artillery shells.
During those seminars and other programs, Wragg, Knorr, and McKelvy raised over $54 million from investors, promising returns as high as 484 percent.
In the end, Mantria brought in almost no revenue from its actual operations, saddling their investors with millions of dollars in losses. It turns out, saving the world is not that easy—or profitable.
"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."
Editor's Note: Beware of slick salesmen selling "too good to be true" renewables like "FREE solar power". There is no thing as a free lunch. Check their credentials, financials and double check their engineering assumptions. The sharks are swimming waiting to take advantage of the naive. Our CSD is now considering a 25 year solar contract that many informed people consider dubious.