Posted in: FINRA | Ponzi Schemes | SEC | Risky Investments |
Everyone is going “green” these days. With public support behind green products, investments, and programs, the financial scammer is sure to take advantage.
That is why FINRA has issued an alert warning investors of green energy scams promising large gains from investments in companies developing alternative or renewable fuels.
FINRA warns investors of fraudsters using fashionable stocks to lure people with aggressive, overly-optimistic, and potentially false claims. As their example, a solar panel company stock was “set for a 200% gain,” which is an unreasonably high prediction for almost any security.
Last November the Securities and Exchange Commission charged four individuals and two companies with operating a $30 million Ponzi scheme, in which they convinced nearly 300 investors to invest in what they claimed to be environmentally-friendly opportunities.
Wayde and Donna McKelvy targeted elderly investors in the Denver area who were approaching their retirement age, the SEC said in their press release. The McKelvys, through their investment company Speed of Wealth LLC, touted “green” initiatives of Pennsylvania-based Mantria Corporation, which they claimed had developed a “carbon negative” housing community in rural Tennessee and a “biochar” charcoal substitute.
Along with Mantria executives Troy Wragg and Amanda Knorr of Philadelphia, the group allegedly recruited investors attending seminars and Internet “webinars,” promising investors unreal returns ranging from 17 percent to “hundreds of percent” every year as well as exaggerating Mantria’s “green” initiatives.
In their complaint, the SEC was clear in refuting Mantria’s sales pitch:
“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 future 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.”
By accounts, it appears as if Speed of Wealth and Mantria used 21st century green products to run an old-fashioned Ponzi scheme. As the Detroit Free Press noted, green scams are basically a twist on traditional oil and gas scams.
Seminars and webinars hosted and sponsored by Speed of Wealth, investors were urged to liquidate all their assets - including retirement and 401(k) plans - so they could invest in “consistent and safe” high-yield securities offered by Mantria. They were even encouraged to borrow against home equity and credit. Wragg and Knorr would also employ high-pressure tactics, along with using short-term incentives to get investors to immediately pledge money, according to the SEC.
In Ponzi-like fashion, Speed of Wealth and Mantria used investor money to pay returns for some investors, while the McKelvys took a generous 12.5 percent commission.
Even if financial scammers take advantage of investors and their love of the environment, those who have been victimized should treat it like any fraud. If you have lost money in a “green” scam, contact one of our attorneys so we can help you fight back.
