A federal indictment charged three people with allegedly operating a Ponzi scheme through a suburban Philadelphia investment company, U.S. Attorney Zane David Memeger announced Thursday.
Troy Wragg and Amanda Knorr, the founders of the Bala Cynwyd-based Mantria Corporation, allegedly promised investors huge investment returns in supposedly profitable real estate and green-energy business ventures.
With the alleged assistance of Wayde McKelvy, 52, of Colorado, the founders allegedly raised $54.5 million through Private Placement Memorandums between 2005 and 2009.
Wragg, 34, formerly of Philadelphia; Knorr, 32, of Hellertown, Bucks County; and McKelvy are charged with conspiracy to commit wire fraud, conspiracy to commit securities fraud, securities fraud and seven counts of wire fraud.
Most of the defrauded investors lived in Colorado, according to the indictment.
“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,” Memeger said in a statement. “Unfortunately for the investors, it was all a hoax and they lost precious savings. These defendants preyed on the emotions of their victims and sold them a scam."
To induce investors, Wragg and Knorr allegedly made false representations and material omissions regarding the economic state of Mantria, according to the indictment. With the help of McKelvy, they allegedly intended to raise more than $100 million.
McKelvy allegedly encouraged investors to liquidate assets, including mutual funds and 401(k) plans, take out as many loans as possible, including home mortgages and credit card debt, and invest those funds in Mantria. The trio allegedly lied to prospective investors during seminars, promising investment returns as high as 484 percent.
The defendants allegedly also spent a sizable portion of investor money on projects, an attempt to provide the impression that Mantria was highly profitable. They allegedly used the remainder of the funding for their own benefit.
The Securities and Exchange Commission initiated civil securities fraud proceedings against Mantria in Colorado in 2009, shutting down the company. The SEC obtained an injunction preventing Mantria from raising any new funds and a court-appointed receiver liquidated the company's remaining assets.
If convicted, the defendants face possible prison sentences, fines and up to five years of supervised release.
The criminal case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Robert J. Livermore.