They would meet in Las Vegas, they would meet, you know, all around the country.
[00:00:21] Robert Livermore: Mantria marketed itself as the next Microsoft, the next Apple.
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[00:00:35] Bob: Welcome back to The Perfect Scam.
I’m your host, Bob Sullivan.
And after tough years in the stock market, it’s only natural that savers might consider alternative investments.
She took the entirety of the mortgage, invested it in this and lost it all.
[00:02:10] Bob: Oh my God.
[00:02:11] Yeah.
[00:02:13] Bob: And you heard story after story like this, right?
[00:02:16] Yes, They were all like that.
[00:02:19] Bob: They were all like that.
They said Mantria could change the world through a product called Biochar, so-called garbage to gold technology.
Investors gobbled up the sales pitch, so did famous world leaders.
Here is Bill Clinton talking about Mantria at the 2009 Clinton Global Initiative Meeting.
[00:03:02] (CLIP) Let me announce the first commitment now.
The commitment is to work together to address the Global Hunger Crisis through innovative partnerships with agriculture.
[00:03:49] Yeah, I mean the story of Mantria, it’s a fascinating story.
So it began here in Philadelphia in 2005.
[00:03:58] Bob: That’s Assistant US Attorney, Robert Livermore.
[00:04:02] Robert Livermore: Troy Wragg was a student here at Temple University.
And while he was still in school, he wrote a paper on the real estate market in Tennessee.
So the land was very, very inexpensive.
That’s a pretty good business to be in.
[00:05:23] Bob: A pretty good business, but Troy’s timing is terrible.
And so what Troy did then was Troy created his own bank called Mantria Financial in Tennessee.
And it looked to be a very successful growing company.
But the truth was they were still losing money hand over fist.
[00:06:46] Bob: Troy’s losses keep mounting, and he needs a way out fast.
Enter Wayde McKelvy and his Speed of Wealth Investment Club.
[00:06:56] Robert Livermore: Troy needed investors.
He needed people to invest in this business, this Mantria Financial business.
And he couldn’t get any legitimate loans from any banks.
And Wayde ran these investment pools called Speed of Wealth.
And it also solved Troys capital problem because Wayde had the investors to, to invest in this.
And so that’s how everything really got started.
[00:08:41] Bob: It’s one of the oldest stories in investing.
That’s a classic Ponzi scheme.
Mantria is selling a green energy dream.
And then he saw that this land in Tennessee was heavily forested.
And then they took it another step farther in terms of doing system sales.
So they were going to sell the actual systems to make biochar.
And that’s then when things started really getting crazy because they started talking about turning trash into cash.
[00:10:58] Bob: Okay, but, but yeah, wait a minute.
So what was biochar?
[00:11:02] Robert Livermore: So biochar is a product.
you’re free to buy it in any hardware store.
And it’s basically wood that through tremendous heat and pressure, they turn into charcoal.
And that’s, that’s what it is.
And it has other commercial uses.
The problem with Troy and Mantria was that they had not perfected their techniques to develop biochar.
He didn’t sell it as, hey, listen, we have this great idea.
The fraud was selling this as a done deal when it was just an idea.
Investors put their heart into the biochar idea, and then put their money into it.
Many even put in money they don’t have.
[00:12:57] You know, McKelvy really targeted people on an emotional level.
[00:13:01] Bob: That’s another federal prosecutor, Sarah Wolfe.
[00:13:05] Sarah Wolfe: He was just a powerhouse of a salesman.
Just really a smooth talker.
Here’s consumer attorney, Patrick Howard.
it’s possible for you to pay that 1% interest and and make money every day.”
And I mean he was that guy.
[00:13:55] Bob: And he likes to brag about being that guy.
And that money, well it’s going out just as fast as it’s coming in.
The company has a knack for calling attention to itself.
On a rap song by Ice Block released at the time, Mantria executives star in the video.
Four thousand, five thousand more.
We counting paper galore, we toss it all on the floor.
Like there’s no substance to it.
The Ponzi is about to collapse, and investors are on the verge of losing all their money.
And it works for a while.
They would meet in Las Vegas, they would meet, you know, all around the country.
And in this particular instance here, that’s simply not the case.
It was a Ponzi scheme.
The company claimed to be producing 25 tons of biochar per day.
It really wasn’t making any and hadn’t closed a single sale.
Company bank accounts are basically empty.
[00:18:25] Bob: That’s how Patrick Howard gets involved in the case.
And I did just that.
We were heading into Labor Day.
They need a lawyer, badly.
But finding one isn’t easy.
No one would take the case.
And I was the first person to say, I’ll do it.
Patrick’s partner needs a lot of coaxing to take the case.
[00:19:52] Patrick Howard: Yes, no.
And so I went and met with them.
I think they were so embarrassed.
But the money is all gone.
[00:21:27] Patrick Howard: Correct.
[00:21:28] Bob: Um, a, a third of which was Peter paying Paul.
Um, but something around $35 million was lit on fire and just all gone, right?
[00:21:37] Patrick Howard: Yes.
[00:21:38] Bob: So, Patrick starts looking everywhere for money.
And so, I started digging, you know, what law firm did they hire?
Still a fraction of what investors had put in.
[00:24:14] Patrick Howard: Yes.
[00:24:16] Bob: 20 cents on the dollar.
He gives the news to his neighbors.
[00:24:20] Patrick Howard: That’s a tough pill to swallow.
It wasn’t, it wasn’t going to get them back to where they were.
But what about Wayde McKelvy and Troy Wragg?
They are still free.
McKelvy, now divorced, is still somehow finding money to spend on his nonstop party life in Colorado.
For a while, Patrick wonders why he wasn’t bumping into Department of Justice lawyers during his investigation.
It was initiated by Robert Livermore, the Assistant US Attorney, who is suddenly in a hurry.
And if you know anything about kind of federal criminal investigations, they don’t take three months.
These are generally yearlong investigations.
So, so I had to really scramble very quickly to get an indictment together.
[00:27:02] Robert Livermore: I mean his lifestyle was, was really crazy.
And so they made him go through all of his expenses.
And I mean the amount of partying, it was obscene how he spent the victims' money.
They had spent every penny they had, and this guy wasted it.
[00:28:21] Robert Livermore: Absolutely.
And not only a loan on their home, they took out credit card loans.
They took out loans of, of every fashion as he taught them to do.
Their credit history is, is terrible.
It’s really left a long lasting impact to many, many of the victims.
You know one of the problems is is that people were bringing their friends and family into this.
And so that really impacted those relationships, and people got divorced as a result of this fraud.
Troy Wragg pleads guilty in 2017.
Amanda Knorr, another executive pleads guilty too, but McKelvy, he wants a trial.
He wants to take his shot before a jury.
Prosecutor, Sarah Wolfe, kind of expects that.
[00:29:32] Sarah Wolfe: No, I was not surprised that he went to trial.
This man is a professional manipulator.
So I’m sure he thought he could do the same in the courtroom.
How could this possibly be a criminal?
I mean he definitely has an air of confidence about him.
I mean I’d go so far as to say arrogance.
That they really didn’t have any assets contrary to his representations to investors.
This is while it was still operating.
Wayde was telling them what exactly he knew about what was going on.
That wasn’t something that he could walk away from during trial.
[00:33:11] Bob: Still, there are tense moments during the trial.
That’s when the kind of the fireworks happened was during trial.
[00:34:04] Bob: And so was the closing argument.
Because it’s not enough to show the jury that investors were hurt by Mantria.
Prosecutors have to prove McKelvy’s state of mind.
[00:35:02] Bob: The jury returns a guilty verdict very quickly.
McKelvy doesn’t react at all, Sarah says.
But that’s when things finally change.
More than a decade after the Mantria Ponzi crumbled, McKelvy is sentenced to 18 years in federal prison.
I don’t think he was so surprised by the jury’s verdict.
[00:36:17] Robert Livermore: Correct.
You’ve had enough time out.
I, I was shocked because of all the leniency he had given the defendant up until that point.
Now all of a sudden it all came to an end.
[00:36:39] Bob: So he went right from the sentencing to prison.
There was no go home and settle your affairs like there often is.
[00:36:44] Sarah Wolfe: There was not.
[00:37:12] Robert Livermore: Exactly and, and a lot of people don’t fully understand it.
They don’t under, really understand what it’s about.
And those things do happen.
Well none of that happened.
That’s a good way to look at it, right?
[00:39:28] Patrick Howard: Yes.
[00:39:31] Bob: Accredit yourself.
[00:39:32] Patrick Howard: Yes.
[00:39:33] Bob: And that leads to the advice that Patrick wants listeners to know.
[00:40:06] Patrick Howard: Yes.
[00:40:12] Patrick Howard: Yep.
[00:40:54] Bob: Sarah wants listeners to still believe in the justice system.
So, have faith.
And so people didn’t know where to put their money.
Call the AARP Fraud Watch web connection Helpline at 877-908-3360.
Their trained fraud specialists can provide you with free support and guidance on what to do next.
Our email address at The Perfect Scam is theperfectscampodcast@aarp.org.
And we want to hear from you.
That address again is: theperfectscampodcast@aarp.org.
Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts.
For AARP’s The Perfect Scam, I’m Bob Sullivan.
Their garbage to gold scheme attracts scores of investors and even the attention of former President Bill Clinton.
