Biochar company Mantria charged with investor fraud

By Anna Austin
A Pennsylvania-based company that has made claims of being the largest producer of biochar in the world is being charged by the U.S. Securities and Exchange Commission with fraud.

The SEC alleges that since about September 2007, Mantria Corp. principals Troy Wragg and Amanda Knorr raised approximately $30 million from more than 300 investors in approximately 12 fraudulent and unregistered securities offerings to investors, totaling at least $122 million.

According to the SEC, Mantria investment opportunities were promoted through Denver, Colo.-based Speed of Wealth LLC. Owners, Wayde McKelvy and Donna McKelvy, are also defendants in the case. Speed of Wealth "particularly targeted elderly investors or those approaching retirement age to finance such ‘green' initiatives," the SEC said in a news release. These include a "carbon negative" housing development in Tennessee, as well as the commercial production of biochar at multiple locations.

The SEC alleges that Wragg and Knorr paid a 12.5 percent commission, or "finders fee" to Speed of Wealth, while convincing investors to attend seminars or participate in Internet Webinars and liquidate their traditional investments such as retirement plans and home equity loans to instead invest in Mantria. Wragg and Knorr are also accused of falsely promising investors enormous returns on their investments, when none of the company's initiatives have generated any significant cash, and the only returns paid to investors have been funded almost exclusively from other investor contributions.

"(Mantria) overstated the scope and success of Mantria's operations in several ways to solicit investors," said the SEC. "For instance, they claimed that Mantria was the world's leading manufacturer and distributor of biochar and had multiple facilities producing it at a rate of 25 tons per day. In fact, Mantria has never sold any biochar and has just one facility engaged in testing biochar for possible commercial production. Furthermore, Mantria's only source of revenue has been from its resale of vacant lots for its purported residential communities in rural Tennessee, but those did not generate cash with which to pay investor returns because Mantria provided 100 percent financing for almost all of its vacant lot sales to buyers using other investors' funds."

A federal judge in Denver has ordered a preliminary injunction and has frozen Mantria's assets.

The company announced in beginning of August 2009 that it had opened a 32,000-ton per year biochar production facility in Dunlap, Tenn. The SEC alleges that little or no construction had ever taken place at that site or any other leased project sites, and that no facilities have ever been completed or operated and are not currently being pursued.

Biochar advocacy group, International Biochar Initiative, said it became aware of the SEC's investigation mid-November. "IBI's knowledge of Mantria's biochar activities is limited to what has appeared in press releases-IBI has not visited the site of Mantria's operations nor have we supported any of their projects," said IBI Communications Director Thayer Tomlinson. She added that the IBI has not received any funding from Mantria LLC or from EternaGreen, the title under which the company markets its biochar product.

A request for comment from a Mantria spokesperson was not immediately returned. The company's Web site is not currently functioning, and states that it is being rebuilt for informational purposes.