$6 Million Settlement Close for “Green” Alleged Ponzi Scheme Run by Temple Grads

Since securities regulators accused Bala Cynwyd-based Mantria Corp. of perpetrating a Ponzi scheme against those who invested in their biochar facility and green housing community in rural Tennessee in 2009, the case has taken some bizarre twists and turns.

But it looks like the matter could be winding down, as lawyers from Philadelphia’s Saltz Mongeluzzi & Bendesky head to court next month in Colorado seeking final approval for a $6.05 million settlement in a class action brought against advisors of the company.

The Securities and Exchange Commission filed a civil suit in federal court in Denver in November 2009, calling Mantria a $54 million Ponzi scheme that never sold any biochar. The SEC said a Colorado investment firm called Speed of Wealth promoted Mantria and lured many of the investors. Mantria was founded by Temple University alums Troy Wragg and Amanda Knorr, who worked with Speed of Wealth’s Wayde and Donna McKelvey to attract investors.

No one has been charged criminally in the Mantria matter. But Wragg, Knorr, the McKelveys and Speed of Wealth stipulated to a civil judgment against them and U.S. District Judge Christine Arguello in Denver entered a $135 million judgment in 2012.

The only problem recovering money from the defendants is like getting blood from a stone. Wragg is working on his next venture, a web-based company called YourVibe.com, which describes itself as “the web’s ultimate music social media network.” Knorr is apparently working as a waitress and the McKelvey has surfaced in the Las Vegas in the mortgage business. But none of them have much cash.

So investors tried to sue advisors to Mantria and Speed of Wealth. Howard said 11 Philadelphia law firms turned down the case before one plaintiff convinced him to represent them on a contingency fee basis.

“It’s a risky case, because the main actors – Wragg, Knorr, the McKelveys – could not be sued,” Howard said. “And we had to prove that the advisors knew it was a Ponzi scheme. And to this day, they all steadfastly deny that they had any knowledge of or were complicit in the scheme.”

Here’s a look at the defendants sued in the case:

  • Philadelphia law firm Astor Weiss Kaplan & Mandel, who served as Mantria’s outside legal counsel.
  • Astor Weiss associate Christopher Flannery, who eventually joined Mantria as general counsel.
  • Philadelphia-based accountant Daniel Rink, who eventually became Mantria’s CFO.
  • Tatum, the national consulting business who placed Rink at Mantria. The managing partner of Tatum’s now-defunct Philadelphia office, Andrew Reckner, wrote an article for the Philadelphia Business Journal in August 2007 highlighting its relationship with Mantria and Wragg.
  • Jenkintown-based accounting firm Krassenstein Granoff & Unger, accountants for Mantria.
  • Littleton, Col.-based tax law firm Estill & Long, lawyers for Speed of Wealth.

Howard said the certified class includes more than 500 people, largely elderly individuals from Colorado who were promised between 17 percent to 22 percent at a time when the stock market was tanking in 2007 and 2008.

A lawyer for the defendants, Carolyn Fairless, managing partner of Denver’s Wheeler Trigg O’Donnell, could not be immediately reached for comment.

The settlement received preliminary approval in March. There will be a hearing July 18 to determine if the settlement should be finalized. The proposed settlement would be for $6.85 million, of which $800,000 is earmarked for the receivership and $6.05 million will be distributed to the plaintiffs. Howard and Saltz Mongeluzzi have asked for a 30 percent fee.

“We’re pleased we were able to return some of the money lost but this presents a cautionary tale,” Howard said. “If an opportunity seems too good to be true, it probably is.”

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