14

TIMELINE PART 14

6/12/18 :

Green Bay Packaging Inc. [GBPI] is planning to spend more than $500 million to build a new recycled paper mill in Green Bay and expand its shipping container division in a project that’s expected to create 200 jobs throughout the state.

The Wisconsin Economic Development Corp. [WEDC] is working with the Green Bay-based company on a state tax credit award of about $60 million to support the investment, Wisconsin Gov. Scott Walker and company officials said Tuesday. …

In addition to building the new mill, the company will invest $25 million in the expansion of its Green Bay Shipping Container Division. In May, Green Bay Packaging announced the acquisition of Wisconsin Packaging Corp., a Fort Atkinson manufacturer of corrugated packaging and displays. Green Bay Packaging plans to continue to operate and grow the Fort Atkinson facility in the future.

Green Bay Packaging [Inc. / GBPI] has announced plans to build a new $500 million facility, the largest business development project in Brown County’s history. …

Groundbreaking is scheduled for September 2018 at the site on North Quincy Street. The goal is to finish the mill within two years.

The plan must first pass the Green Bay City Council. …

It’s also the first new paper mill in Wisconsin in over 30 years.

“Huge project for us, by far the biggest thing we’ve ever done in the history of our company,” said William Kress, Green Bay Packaging [Inc.]President/CEO. “It’s kind of a leap of faith. I will tell you that it makes me a little nervous, it’s a lot of money, but we are fortunate to have a lot of good bankers on our side to help us through this, and we will carry on.” …

The company is also touting the new facility’s environmental upgrades. The coal boiler will be replaced with two natural gas boilers to reduce fuel emissions. The plant will also use a reclaimed water system that will not put wastewater into the Fox River or the Bay, according to Green Bay Packaging [Inc. / GBPI].

[GBPI President/CEO William] Kress announced the expansion Tuesday morning. He was joined by Gov. Scott Walker, Brown County Executive Troy Streckenbach and Green Bay Mayor Jim Schmitt, who announced government incentives totaling almost $90 million for the project.

“This is a big risk for them and we’re going to share some of it with them,” Schmitt said. …

Wisconsin Economic Development [Corp. / WEDC] CEO Mark Hogan said the state will provide $60 million in enterprise zone tax credits tied to job retention and creation. Streckenbach said the county will spend $5.3 million on infrastructure to create a Fox River papermaking corridor in the area.

Green Bay Economic Development Director Kevin Vonck said the city will create a new tax incremental financing district for the project that’s projected to rebate up to $23 million in property taxes to the company once the new mill is built. Schmitt said the city also would deed its evidence storage building, located near Green Bay Packaging’s Quincy Street mill, to the company as well.

[Green Bay Packaging Inc. Executive Vice President Bryan] Hollenbach said the 2½-year construction phase means time is of the essence. The city, county and state all expect to review funding requests by the end of June, and Hollenbach said the company hopes Miron Construction will begin construction in September.

The company says it will replace its facility-wide coal boiler with two natural gas boilers, reducing fuel emissions of sulfur dioxide and particulate matter emissions by more than 90%.

Green Bay Packaging [Inc.] says it will also partner with NEW Water, Green Bay’s local metropolitan water treatment facility, to construct a reclaimed water system that utilizes treated wastewater for production and does not discharge any wastewater back into the Fox River or Bay of Green Bay.

06/14/18 :

In the joint committee meeting, Brown County supervisors agreed a $5.3 million investment is worth it to keep Green Bay Packaging [Inc.] and its 1,100 jobs in the area. The full county board is expected to vote on the deal next week. …

One concern a couple supervisors expressed was the timing of the project. They say it would have helped to have more notice to have some of their questions answered and to hear from constituents.

“I was disappointed and really would have preferred that they at least allowed a month’s time to pass,” said [Brown County Supervisor James] Kneiszel. …

Bryan Hollenbach, Executive Vice President of Green Bay Packaging [Inc.], says negotiations between the company and the county started in March.

In addition to Brown County’s contribution, the city of Green Bay plans to kick in $23 million in TIF assistance. The state plans to provide $60 million in tax credits.

Green Bay Packaging [Inc.] says it is vital for all three groups to pass the incentive deals before June 30th.

“We have to look at it from a business point of view,” said Hollenbach. “We have to move very fast. If we don’t get this paper machine on order, this project is going to be delayed significantly.”

Company leaders say the paper machine order is nearly half of the $500 million investment it is making, and the order won’t happen until the incentive deals are secured. …

The goal is to break ground in September and start operations in the new facility in 2021.

 

A group of Brown County supervisors on Thursday recommended approval of $5.3 million in in-kind contributions to a $580 million expansion proposed by Green Bay Packaging Inc.

[S]everal supervisors complained that they were voting on a project for which they had been given only two days’ notice, and one they must give final approval next week.

…De Pere Supervisor Jim Kneiszel [said] “I don’t understand why we couldn’t have at least a month.”

“We just have to trust in the administration,” said Wrightstown Supervisor John Van Dyck. …

Aid package

•  COUNTY:  Brown County would spend $5.3 million on infrastructure to create a Fox River papermaking corridor.
• CITY:  Green Bay would create a tax-incremental-financing district that would return up to $23 million in property taxes to the company once the new mill opens. The city also will deed its evidence-storage building, near the company’s Quincy Street mill, to the company.
•  STATE:  Wisconsin would provide $60 million in enterprise zone tax credits.

Approvals needed

•  Green Bay Packaging [Inc.] has asked local and state government to fast-track the project so it can order machinery, and break ground in September. That means there will be several meetings in the coming days to seek approvals.
•  Green Bay’s Redevelopment Authority will meet at 1:30 p.m. Friday to review the development agreement. City Council will vote on the agreement Tuesday night.
•  The 26-member Brown County Board will be asked to approve the county’s $5.3 million in-kind contribution on Wednesday night.
•  The Wisconsin Economic Development Corp. [WEDC] board of directors will be asked to act on the state’s $60 million in incentives at its board meeting on June 29.

06/19/18 :

  • June 19, 2018 Opinion and Decision, Wisconsin Court of Appeals District III Appeal No. 2018-AP-2527-FT,  Tissue Technology LLC, Plaintiff-Respondent  v.  ST Paper LLC, Defendant-Third Party Plaintiff-Appellant

06/20/18 :

A former plastics-to-oil CEO has been convicted of tax evasion for failing to pay taxes on $14 million he obtained by defrauding investors, according to prosecutors.

A federal jury found Michael Sang Han guilty of two counts of tax evasion in U.S. District Court for the District of Columbia last month. Han served as president and CEO of Envion, a plastics-to-oil (PTO) company launched in 2004.

“Han convinced two individuals to invest nearly $40 million in his company, then used more than $14 million of that money to fund a lavish personal lifestyle,” according to a release from the U.S. Department of Justice.

Envion, which was active in Washington, D.C., Virginia and Florida over the years, claimed to have a patent for a machine dubbed the “EZ Oil Generator,” capable of converting plastics to oil. The company was profiled by several media outlets when Envion unveiled its pilot equipment in 2009. …

In subsequent years, investors grew dubious of the company’s claims, according to a grand jury indictment originally filed in 2015 and updated in 2017. The investors had put money into the company based on its claims that it owned the PTO patent and technology, according to the indictment. But they later learned Envion did not have such a patent, and it did not have the capacity to produce its technology during the period they were investing.

Envion is no longer operating (an unrelated company now operates using that name).

Prosecutors said Han used the money from investors to purchase a house in Palm Beach, Fla. complete “extravagant renovations and internal decorations,” take flights on private jets and acquire luxury cars. …

High-profile investor
One of the investors was former U.S. Secretary of Defense Frank Carlucci, who served in the Reagan Administration. Carlucci began investing in Envion in 2004, and over the years invested $32 million into the company, according to a lawsuit he later filed against Han and the company.

According to the suit, Han told Carlucci that high-profile investors including former presidents Bill Clinton and George W. Bush, Warren Buffett and Bill Gates were interested in the company. …

Carlucci was awarded $37 million in a 2013 judgment. Some of Han’s assets were sold in response to the judgment, including the home in Palm Beach that sold for $5.35 million. Carlucci died earlier this month at 87.

06/26/18 :

06/28/18 :

07/02/18 :

07/03/18 :

 

 

UNITED STATES’ MOTION FOR REVOCATION OR MODIFICATION OF RELEASE ORDER

The United States of America, by and through its attorney, Matthew D. Krueger, United States Attorney for the Eastern District of Wisconsin, respectfully moves the Court to revoke its order releasing defendant Ronald Van Den Heuvel and to order detention pending appeal in Case No. 16-CR-64 and trial in Case No. 17-CR-160. In the alternative, the United States respectfully moves the Court to modify its release order to impose additional conditions of release.

BACKGROUND

Van Den Heuvel has been under court supervision since April 2016 when he was indicted for bank fraud in Case No. 16-CR-64. In that case, Van Den Heuvel was convicted of conspiracy to commit bank fraud in violation of 18 U.S.C. § 371. In advance of the sentencing, Van Den Heuvel moved to withdraw his guilty plea. 16-CR-64, Doc. 171. The Court denied that motion and sentenced Van Den Heuvel to three years of imprisonment on January 5, 2018. 16-CR-64, Doc. 184. The Court ordered Van Den Heuvel to pay restitution of $316,445.47 to Horicon Bank, which to date he has not paid. Id.

In September 2017, Van Den Heuvel was indicted on wire fraud and money laundering charges in Case No. 17-CR-160. These charges allege that Van Den Heuvel pursued a scheme to defraud lenders and investors by making false representations about his “Green Box” business plan, and then used much of the lenders’ and investors’ funds for other purposes. 17-CR-160, Doc. 1. Trial is scheduled for November 13, 2018. 17-CR-160, Doc. 41.

Van Den Heuvel appealed his conviction in Case No. 16-CR-64. For the appeal, Van Den Heuvel obtained new, appointed counsel who has submitted three motions to extend the deadline to file the opening brief. See Case No. 18-1147, Doc. 12, 14, 16. The opening brief is currently due on August 9, 2018.

At sentencing in Case No. 16-CR-64, the Court ordered Van Den Heuvel to report to Bureau of Prisons (“BOP”) custody. But BOP subsequently declined to designate a report date until Van Den Heuvel’s pending charges are resolved. See 16-CR-64, Doc. 207. At a February 20, 2018 hearing, the Court decided to “take no action and allow the sentence to be essentially stayed pending the appeal and pending the resolution of the remaining criminal case so long as it does not appear there is unreasonable delay.” Id. Consistent with the plea agreement in Case No. 16-CR-64, the government did not object to Van Den Heuvel remaining out of custody to face the charges in Case No. 17-CR-160 for six months from sentencing. 16-CR-64, Doc. 151 ¶ 34. That the six-month period elapses on July 5, 2018.

In April 2018, the government presented information to the Court showing that Van Den Heuvel engaged in, and attempted to engage in, financial transactions that carried indicia of fraud. See 17-CR-160, Doc. 40. The Court conducted a bond hearing and imposed three additional conditions of release:

• “Defendant shall seek approval by U.S. Probation for any transactions involving $500.00 or more, either personally or on behalf of his business entities.”

• “Defendant must provide full disclosure to any party he is attempting or soliciting to conduct business with that he” (a) was convicted of bank fraud and faces a 3-year sentence; (b) faces 14 additional counts of wire fraud and money laundering; and (c) has court-appointed counsel because he is indigent.

• “Defendant must submit monthly financial reports to Pretrial Services to include (a) any amount and source of monthly income received; (b) current assets and disposal of assets which are in his name, or over which he has control or is able to convey; (c) provide copies of account statements from any bank or financial institution held in his name or over which he has control.”

17-CR-160, Doc. 42.

On June 18, 2018, the United States provided information to Pretrial Services regarding Van Den Heuvel’s activities that appear to violate his release conditions. This information is summarized below and in Docket No. 46’s Release Status Report. In recent days, the United States has obtained further information, which is being presented here directly to the Court so that it can be considered at the upcoming July 6, 2018 hearing. The underlying records and reports of interview related to this additional information are being submitted to defense counsel by email today.

A. Payments to Oneida Country Club

On May 11, 2018, Van Den Heuvel paid $3,500 in cash to Oneida Golf and Country Club (“Oneida Country Club”) without Pretrial Services’ approval. See Doc. 46. According to the Oneida employee who received the payment, Van Den Heuvel remarked that the Court had lifted restrictions on his bank accounts, and that his wife Kelly was the signer on the accounts and could use funds without repercussions, making it easier for Van Den Heuvel to obtain cash. Van Den Heuvel also paid an additional $14,781 to Oneida Country Club between September 20, 2017 and February 23, 2018, and incurred charges of $2,3228.59 during May 2018. Id.

When questioned by Pretrial Services, Van Den Heuvel claimed the $3,500 cash payment came from Tissue Technology because the Oneida Country Club membership was used for business purposes. 17-CR-160, Doc. 46. But the release condition requires Pretrial Services’ approval not only for personal transactions but also transactions done for Van Den Heuvel’s businesses. Moreover, his claim of business purposes is doubtful. 17-CR-160, Doc. 42. Records from Oneida Country Club show numerous charges for pro shop purchases, lessons, and meals for Van Den Heuvel’s wife and family. These include a charge of $915.60 on September 14, 2017, for new golf clubs and a charge of $834.51 that Kelly Van Den Heuvel incurred on June 5, 2018, for new clubs for herself. See Ex. A (Oneida Country Club records for Sept. 2017); Ex. B (Email with Oneida Country Club and receipt for clubs in June 2018).

B. Transfer of Conversion Van Without Pretrial Services’ Approval

According to knowledgeable witnesses, Van Den Heuvel had control of a 2005 Chevrolet conversion van that was titled in Kelly Van Den Heuvel’s name. Until recently, Van Den Heuvel permitted employees of Patriot Tissue in De Pere, Wisconsin, to use the van. Van Den Heuvel recently transferred the title and keys to the van to an individual named [Tony Hayes] who had come to own equipment known as after-dryers that Van Den Heuvel was seeking to purchase. T.H.’s understanding was that the van was worth $2,500. A records search corroborated that, on June 8, 2018, registration of the van was changed from Kelly Van Den Heuvel to the girlfriend of T.H. U.S. Probation Officer Brian Koehler states that Van Den Heuvel did not seek approval from Pretrial Services before transferring the van.

C. Failure to Provide Complete Monthly Financial Reports

U.S. Probation Officer Brian Koehler reports that in late June 2018, Van Den Heuvel submitted documentation as his required monthly financial report. According to Mr. Koehler, Van Den Heuvel did not submit any account statements from any bank or financial institution.

This omission is concerning because Van Den Heuvel appears to keep bank accounts and assets out of his name to avoid detection. First, the government’s investigation has found numerous bank accounts that Van Den Heuvel controlled but titled in the names of entities or other individuals, often with his wife Kelly Van Den Heuvel having signatory authority. Second, as noted, Van Den Heuvel told the Oneida Country Club employee said that because Kelly was the signer on his bank accounts, she could use funds without repercussions, and he could obtain cash. Third, according to another Oneida Country Club employee, Kelly Van Den Heuvel recently asked to set up an automatic payment of the family’s account from their son’s trust account. (Oneida Country Club denied the request; the government does not have information about the son’s trust account.) Fourth, as noted, the 2005 Chevrolet conversion van was titled in Kelly Van Den Heuvel’s name, even though Van Den Heuvel allowed it to be used primarily for Patriot Tissue employees.

This pattern suggests that Van Den Heuvel is likely using bank accounts in others’ names without disclosing the accounts to Pretrial Services. It seems highly implausible that the Van Den Heuvels could maintain their high-end lifestyle without using any bank accounts.

D. Additional Attempts to Sell Kool Machine

The government recently learned that Van Den Heuvel attempted to persuade a company located in Boise, Idaho – [Dynamis Energy] referred to herein as Company A—to purchase a pyrolysis machine manufactured by Kool Manufacturing. Van Den Heuvel had purchased the Kool machine with funds from victim Cliffton Equities and EB-5 investors, as well as other entities. 17-CR-160, Doc. 40, at 3-4. The Kool machine remains in a warehouse in De Pere, Wisconsin, today. Those victims and other creditors have claims against the Kool machine, which became subject to the Green Box NA Green Bay bankruptcy case. Id. Despite those claims, from early 2016 through as recently as June 26, 2018, Van Den Heuvel periodically contacted Company A in attempts to persuade Company A to purchase the Kool machine.

E. Inappropriate Contacts with Witnesses

In recent weeks, Van Den Heuvel has contacted individuals after learning that they made statements to investigating agents. In several cases, Van Den Heuvel apparently had no legitimate reason to contact the witnesses but rather made the contact for the purpose of conveying his awareness of their cooperation with law enforcement.

First, on June 18, 2018, the United States submitted to Pretrial Services the report of interview of Oneida Country Club employee M.J. The United States also provided Van Den Heuvel’s counsel with a copy of the report. That same day, Van Den Heuvel called M.J. to “thank” her and express apologies for her having to speak with the investigative agent, whom he described as an “asshole.”

Second, that same day, June 18, 2018, Van Den Heuvel sent a text message to a witness [Mason Kashat] whose statement had been disclosed to Van Den Heuvel in discovery. They spoke by phone the next day and Van Den Heuvel claimed he had nearly closed a deal and would be able to repay Ma.K. soon. Van Den Heuvel also added that he had read Ma.K.’s “testimony” and was “not mad” at Ma.K. or his partner, who had also made a statement to investigators.

Third, also on June 18, 2018, Van Den Heuvel called [Brian Glimes], who previously worked for Van Den Heuvel at a sorting and pulping facility. Van Den Heuvel claimed he called to relay that he planned to purchase the facility. But then Van Den Heuvel went on to say he got a “cute note” from the FBI, which reflected that B.G. had used his own money to pay for business expenses at Van Den Heuvel’s request. This apparently referred to a statement that Van Den Heuvel read in a report of interview that B.G. had given.

Fourth, in April 2018, very shortly after receiving information in discovery about A.K.’s cooperation with the government, Van Den Heuvel called A.K. According to A.K., Van Den Heuvel screamed and cursed at him because A.K. had forwarded an email from Van Den Heuvel to the government.

DISCUSSION

I. Van Den Heuvel Should Be Detained for Violating Conditions of Release Pursuant to 18 U.S.C. § 3148(b)

The consequences for violating a condition of release are governed by 18 U.S.C. § 3148(b), which provides that the Court “shall enter an order of revocation and detention if, after a hearing,” the Court:

(1)  finds that there is —
(A)  probable cause to believe that the person has committed a Federal, State, or local crime while on release; or
(B)  clear and convincing evidence that the person has violated any other condition of release; and

(2)  finds that —
(A)  based on the factors set forth in section 3142(g) of [Title 18], there is no condition or combination of conditions of release that will assure that the person will not flee or pose a danger to the safety of any other person or the community; or
(B)  the person is unlikely to abide by any condition or combination of conditions of release.

Thus, detention is required upon findings that (1) Van Den Heuvel either committed a crime or violated a condition of release, and (2) Van Den Heuvel poses a risk of flight or dangerousness, or is unlikely to comply with conditions of release. 18 U.S.C. § 3148(b). The government bears the burden of proof under § 3148(b).

A. Clear and Convincing Evidence Shows That Van Den Heuvel Violated Conditions of Release

The government has carried its burden under § 3148(b)(1)(B) because there is clear and convincing evidence that in at least two recent instances, Van Den Heuvel has violated the condition that he seek Pretrial Services’ approval for financial transactions exceeding $500. First, Van Den Heuvel admitted that he paid $3,500 to Oneida Country Club on May 11, 2018, and the payment is corroborated by the associated business records. Van Den Heuvel’s representation that the payment was a business expense is no defense because the release condition requires approval for business expenditures. 17-CR-160, Doc. 46. More importantly, his representation is false, as evidenced by the inherently personal nature of many of the expenses that led to the Oneida Country Club bills, such as new golf clubs.

Second, Van Den Heuvel did not obtain Pretrial Services’ approval before transferring title of the 2005 Chevrolet van, which T.H. believed to be worth $2,500. He may claim the transfer was not subject to Pretrial Services’ approval because it was titled in Kelly Van Den Heuvel’s name or because it was used for business purposes. But, again, the condition applies to business transactions and to any asset over which he has control, if not title. 17-CR-160, Doc. 46. Precisely because Van Den Heuvel routinely plays games with how he titles assets and comingles personal and business expenses, these violations are serious.

Third, as detailed above, Van Den Heuvel has not provided meaningful disclosure of his finances to Pretrial Services. He and his family must be using some bank accounts, but he has not disclosed any account records. It appears that the only financial records Van Den Heuvel has produced are records he generated himself. Given his bank fraud conviction and the pending charges in this case, the Court should be highly skeptical of records he produces. That is why obtaining records from third-party financial instiutions is so important. The government’s investigation has identified dozens of bank accounts opened by the Van Den Heuvels at numerous banks over the years. Because they switch accounts so frequently, however, Pretrial Services has no effective way to monitor Van Den Heuvel if he does not disclose his financial records. The three foregoing violations are supported by clear and convincing evidence.

B. There Is Probable Cause to Find that Van Den Heuvel Has Committed Additional Crimes While on Release

The government has also carried its burden under § 3148(b)(1)(A) because there is probable cause to find that Van Den Heuvel committed additional crimes while on release. The government incorporates here its April 3, 2018 Motion to Amend Conditions of Release (17-CR- 160, Doc. 40) and summarizes below facts that constitute probable cause that Van Den Heuvel committed, or attempted to commit, wire fraud in violation of 18 U.S.C. § 1343, similar to conduct at issue in Case No. 17-CR-160.

1. Transactions with J.L.

From summer 2016 through early 2018, Van Den Heuvel negotiated with J.L., seeking funding for various projects and equipment. 17-CR-160, Doc. 40, at 2-4. Van Den Heuvel sent J.L. information that was false. Id. For example, Van Den Heuvel sent an “Executive Summary” of the “Great Lakes Tissue” project in Cheboygan, Michigan, claiming that $7.7 million in “EB5 Funds were paid” for equipment in the project. Doc. 40-1, Ex. A. In truth, Van Den Heuvel received substantially less than $7.7 million in EB-5 funds; moreover, most of the funds were not used for equipment for the Cheboygan, Michigan project. Doc. 40, at 3. Van Den Heuvel also sent a resume claiming that “Green Box has partnered with Cargill, Inc.,” Doc. 40-2, Ex. B, when in truth, Cargill never had an agreement with Green Box and had terminated its agreement with a different Van Den Heuvel-controlled entity back in 2013.

2. Attempts to Sell Kool Machine

In November 2017, Van Den Heuvel worked with J.L. in an attempt to sell the Kool machine that is in De Pere, Wisconsin. Doc. 40, at 3-4. As noted, the Kool machine is subject to claims by multiple victims and creditors. Van Den Heuvel nonetheless attempted to sell unit through J.L. and even attempted to charge $5,000 for giving a demonstration of the Kool machine. Id. (As detailed above, Van Den Heuvel also attempted to sell the Kool machine to Company A without disclosing that his ownership of the Kool machine was, at best, clouded by numerous creditors’ claims.) Although the government is not aware of evidence showing that Van Den Heuvel ultimately received any funds from or through J.L., these facts amount to probable cause to find at least attempted wire fraud. That is, Van Den Heuvel made false and misleading representations regarding his business plans and the Kool machines in an attempt to induce payment of funds.

3. Transactions with A.K., Ma.K., and Mi.K.

Van Den Heuvel persuaded [Alex Knapp] and Ma.K. of New York to make three loans, totaling $87,500, sent through interstate wires, to Van Den Heuvel-controlled entities Cotton, Tissue Techonology, Inc., and PCDI MI, from June 2017 through December 2017. Doc. 40, at 5. Among the collateral pledged by Van Den Heuvel for the loans were equipment known as after-dryers. Id. Yet, according to a knowledgeable witness, Van Den Heuvel no longer owned or controlled the after-dryers. Id. These facts constitute probable cause that Van Den Heuvel committed wire fraud. He made fraudulent representations about the nature of the collateral supporting the loans in order to induce payments, which were sent by interstate wire transfer.

In addition, Van Den Heuvel sent Ma.K. and a broker named [Mike Kalet] information in mid- 2017 in an attempt to obtain further funding. Id. at 5. The information contained false information, including that Kelly Van Den Heuvel was the President of Tissue Technology, LLC and PCDI Michigan and had a net worth of $29 million. Id. Van Den Heuvel also told Mi.K. that he had prevailed in a lawsuit against Sharad Tak when, in fact, Tak had prevailed in a federal suit against Van Den Heuvel. Id. The government has no information that indicates Van Den Heuvel successfully obtained funds through Mi.K., but Mi.K. relied on Van Den Heuvel to send misleading information to potential investors. Id. Although this scheme appears to have been less developed, it arguably still constitutes attempted wire fraud.

C. Van Den Heuvel Is Unlikely to Abide by Conditions of Release

Given the evidence that Van Den Heuvel violated release conditions and committed additional crimes, detention is warranted on the ground that Van Den Heuvel is “unlikely to abide by any condition or combination of conditions of release.” 18 U.S.C. § 3148(b)(2)(B). Van Den Heuvel has demonstrated his inability to comply with even simple conditions of release, such as seeking Pretrial Services’ approval for financial transactions. The evidence suggest this inability flows from intractable dishonesty. Van Den Heuvel admitted to the Oneida Country Club employee that he has moved bank accounts out of his name to avoid detection. And when confronted with his Oneida Country Club payment, Van Den Heuvel obfuscated and lied to Pretrial Services. These patterns are longstanding with Van Den Heuvel, who was convicted of defrauding Horicon Bank and now faces charges for another convoluted fraud scheme in Case No. 17-CR-160.

Van Den Heuvel has displayed no sign of stopping his fraudulent conduct. In addition to the post-indictment conduct described above, it bears mentioning that Van Den Heuvel presented information to Pretrial Services on March 23, 2018, regarding multiple additional financial transactions that he claimed to be pursuing. See Doc. 40, at 6-8. First, Van Den Heuvel proposed selling 5% of stock in Tissue Technology for $5 million, even though he represented in his presentence report in Case No. 16-CR-64 that Tissue Technology shares were held in a trust controlled by other individuals, and that the stock had no ascertainable value. Id. at 7. Second, Van Den Heuvel proposed selling stock in Purely Cotton to Great Lakes Tissue in exchange for $2 million in patent royalties, even though the owner of Great Lakes Tissue informed government agents that he had no intention of buying Purely Cotton stock, nor did he have reason to think Purely Cotton had any assets. Id. Third, Van Den Heuvel proposed selling stock in PCDI to a man in Ghana for $6 million, even though Van Den Heuvel represented in his presentence report that PCDI shares were held in a trust controlled by others and had no ascertainable value. Id. at 8. Fourth, Van Den Heuvel proposed entering into a consulting agreement with Great Lakes Tissue and a royalty agreement with PC Fibre Box for intellectual property, even though, again, the ownership structure and value of any intellectual property is highly doubtful. See id. at 8-9.

The government does not yet have sufficient evidence to contend that these transactions amounted to wire fraud, but the proposed transactions remain highly questionable. What may be most striking about these are their sheer number. This reinforces the conclusion that [Ron] Van Den Heuvel is a persistent, unrepentant fraudster, even after being convicted of bank fraud and sentenced to three years of imprisonment.

In sum, the Court cannot find that Van Den Heuvel would comply with new release conditions. The defense will likely propose home confinement or restrictions on Van Den Heuvel’s ability to communicate with witnesses or engage in financial transactions. His track-record, however, provides no basis to believe he would comply with those conditions. In addition, the burden on Pretrial Services to try to monitor his compliance would be unreasonable.

D. No Conditions Can Assure that Van Den Heuvel Will Not Flee or Pose a Danger to Others’ Safety

In addition, the Court can find that detention is required because, based upon the factors set forth in § 3142(g), no condition or combination of conditions will assure that Van Den Heuvel will not flee or pose a danger to the safety of another person or the community. See 18 U.S.C. § 3148(b)(2).

The nature and circumstance of the offense charged, although not a violent crime, is very serious, with fraud loss amounts exceeding $9 million. If convicted of the whole scheme, Van Den Heuvel would be exposed to the potential of lengthy incarceration. This creates an increased likelihood of flight and of Van Den Heuvel engaging in extreme actions, as he has already shown a willingness to contact witnesses inappropriately.

The second § 3142(g) factor is the weight of the evidence. The United States proffers that the evidence is very strong. Numerous witnesses, both victims and individuals who worked with Van Den Heuvel, will testify that Van Den Heuvel made false representations about the Green Box process and how lenders and investors’ funds would be used. Representations about how the funds would be used were also reduced to writing in agreements. Financial records and receipts of expenditures show, in concrete and undisputable fashion, how Van Den Heuvel quickly diverted huge sums of investors’ and lenders’ funds to unauthorized purposes to fuel his lavish lifestyle. This overwhelming evidence increases the risk that Van Den Heuvel will flee or act dangerously towards others.

Next, the history and characteristics of Van Den Heuvel are mixed. Without question, Van Den Heuvel has deep family ties and a long history in the community, and he has appeared consistently at court hearings in these two cases. At the same time, Van Den Heuvel has demonstrated increasingly erratic behavior, as shown by his inappropriate contacts with witnesses. Further, Van Den Heuvel is relatively sophisticated and well-traveled with an uncanny ability to persuade people to lend him large sums of money. His wife and children recently visited the Cayman Islands. Doc. 46. As the trial in this case approaches and Van Den Heuvel runs out of ways to delay incarceration, there is a significant risk that he may seek to flee.

Finally, the Court must assess the nature and seriousness of the danger to any person or the community if Van Den Heuvel remained released. 18 U.S.C. § 3142(g)(4). Van Den Heuvel’s persistent track record of fraudulent conduct creates a real risk that he will continue to seek to defraud others around him, pressuring people to loan funds and invest in his fraudulent business plans. In addition, although Van Den Heuvel does not have a criminal history of violence, witnesses have stated that Van Den Heuvel can become verbally aggressive and that he physically assaulted one witness. Specifically in August 2011, former business partner [Howard Bedford] confronted Van Den Heuvel regarding his fraudulent misuse of funds, and Van Den Heuvel responded by punching [Howard Bedford] in the head. H.B. states that he took himself to a hospital afterwards and was diagnosed with a concussion. More recently, Van Den Heuvel was verbally abusive towards A.K., and he has engaged in subtle intimidation of witnesses in recent contacts.

Taken together, the Court could also base detention on the finding that no condition or combination of conditions will assure that Van Den Heuvel will not flee or pose a danger to the safety of another person or the community. 18 U.S.C. § 3148(b)(2).

II. Van Den Heuvel Should Be Detained Pending Appeal in Case No. 16-CR-64 Pursuant to 18 U.S.C. § 3143

The Court should also detain Van Den Heuvel pending appeal in Case No. 16-CR-64. Release or detention pending appeal is governed by 18 U.S.C. § 3143(b), which creates a presumption of detention unless the Court makes findings that support release. The Court has not expressly make such findings in deciding whether to permit Van Den Heuvel to remain released. Section 3143(b)(1) provides that the Court “shall order that a person who has been found guilty of an offense and sentenced to a term of imprisonment, and who has filed an appeal . . . , be detained,” unless the Court finds:

(A)  by clear and convincing evidence that the person is not likely to flee or pose a danger to the safety of any other person or the community if released under section 3142(b) or (c) of this title; and

(B)  that the appeal is not for the purpose of delay and raises a substantial question of law or fact likely to result in —

(i)  reversal,
(ii)  an order for a new trial,
(iii)  a sentence that does not include a term of imprisonment, or
(iv)  a reduced sentence to a term of imprisonment less than the total of the time already served plus the expected duration of the appeal process.

18 U.S.C. § 3143(b)(1). The burden to show, by clear and convincing evidence, that the requirements for release have been met lies with Van Den Heuvel. See United States v. Bilanzich, 771 F.2d 292, 298 (7th Cir. 1985) (holding that § 3143 “requires the defendant, not the government, to shoulder ‘the burden of showing the merit of the appeal’”); see also, e.g., United States v. Hanhardt, 173 F. Supp. 2d 801, 805 (N.D. Ill. 2001) (holding that the defendant bears the burden of proof on each element of § 3143, citing United States v. Holzer, 848 F.2d 822, 824 (7th Cir. 1988)).

Thus, to avoid detention pending appeal, Van Den Heuvel must show both that he is unlikely to flee or cause danger to others, and also that his appeal raises a substantial question of law or fact. The above discussion of the § 3142(g) factors shows why Van Den Heuvel cannot show that he is unlikely to flee, given the significant incarceration he faces, his ability to access funds, and his familiarity with international travel. Nor can he show he is unlikely to be dangerous to others, given his persistent fraud schemes and aggressive behavior to individuals who have been confronted him and cooperated with the government.

Van Den Heuvel also cannot carry his burden regarding the merits of his appeal. Although his opening brief has not yet been filed, it is anticipated that Van Den Heuvel will challenge the denial of his motion to withdraw his plea. The Court issued a detailed, thorough written order on that issue, and there is no apparent question of law or fact, let alone a substantial one by which Van Den Heuvel could carry his burden under § 3143(b). 16-CR-64, Doc. 183. Accordingly, detention under § 3143(b) is required.

Detention under this provision makes sense for the additional reason that the Court had ordered at sentencing that Van Den Heuvel should report to BOP custody. Given Van Den Heuvel’s disregard for his conditions of release, it is appropriate for the Court to follow through with its initial plan of having him begin to serve his sentence in Case No. 16-CR-64.

Defense counsel may contend that detention will prevent Van Den Heuvel from being able to prepare for trial in Case No. 17-CR-160, given the complexity of the case and volume of discovery. Without meaning to minimize the difficulty of preparing for trial while detained, numerous defendants must do so. Working with the U.S. Marshals Service, the Court is likely able to ensure that the Brown County officials provide Van Den Heuvel with reasonable access to counsel and discovery. To date, he has had well over six months to review discovery and confer with counsel, which is far more than many defendants receive.

III. In the Alternative, the Court Should Modify the Conditions of Release

In the alternative that the Court decides not to detain Van Den Heuvel, the Court should modify the release conditions to require Van Den Heuvel to provide meaningful financial information and to limit Van Den Heuvel’s ability to contact witnesses or pursue business plans. Specifically, the government would recommend these additional conditions:

(a)  home confinement with GPS monitoring;

(b)  a prohibition on communicating in any manner with potential witnesses in this case; and

(c)  a prohibition on soliciting, proposing, or considering any transactions that involved any business investments or loans or transfer or leases of equipment, including but not limited to any transactions related to any pyrolysis units (a/k/a Kool Units) or after-dryers.

Additionally, if the Court does not order Van Den Heuvel detained or subject to home confinement, the United States respectfully requests that Van Den Heuvel be required to seek full-time employment with an employer that would pay him wages, subject to approval of Pretrial Services. Theoretically, working full-time for wages would limit the amount of time that Van Den Heuvel could spend trying to pursue new fraud schemes and would help Van Den Heuvel earn legitimate wages for the payment of restitution and the reimbursement of appointed counsel fees.

CONCLUSION

For the reasons stated above, the United States respectfully requests that Van Den Heuvel be detained pending trial in Case No. 17-CR-160 and appeal in Case No. 16-CR-64. In the alternative, the United States respectfully requests that the conditions of Van Den Heuvel’s release be modified as described above.

Dated this 3rd day of July, 2018 at Milwaukee, Wisconsin.

Respectfully submitted,
/s/ Matthew D. Krueger
United States Attorney
Eastern District of Wisconsin

07/05/18 : 

  • July 5, 2018 Brief and Required Short Appendix of Plaintiffs-Appellants Tissue Technology LLC, Partners Concepts Development Inc., Oconto Falls Tissue Inc., & Tissue Products Technology Corp., U.S. 7th Circuit Court of Appeals, Appellate Case No. 18-1835,  Tissue Technology LLC, Partners Concepts Development Inc., Oconto Falls Tissue Inc., and Tissue Products Technology Corp., Plaintiffs-Appellants  v.  TAK Investments LLC and Sharad Tak, Defendants-Appellees

07/06/18 :

  • July 6, 2018 Bond Review Hearing Minutes re: Government’s Motion for Revocation or Modification of Release Order of Ron Van Den Heuvel, U.S. District Court, Eastern District of Wisconsin, Case Nos. 17-CR-160 and 16-CR-64,  United States of America  v.  Ronald H. Van Den Heuvel

Orange is the New

Green Box

CLICK for VIDEO of

RONALD

VANNED to

HOOSEGOW !

 

[original version]

[Ron] Van Den Heuvel has been convicted of conspiracy to commit bank fraud for using straw borrowers to obtain loans under false pretenses for personal use and to keep his business, Green Box NA, and associated businesses afloat. He was sentenced in January to three years in prison, but he was allowed to remain free under certain conditions while additional federal charges — wire fraud and money laundering — remain pending.

U.S. District Court Judge William Griesbach had required Van Den Heuvel to notify the government of any financial transactions larger than $500, file monthly reports disclosing income and bank statements and disclose his legal and financial troubles to potential investors.

Prosecutors alleged that Van Den Heuvel in May paid $3,500 in cash to Oneida Golf and Country Club without the government’s approval and had previously paid nearly $15,000 to the club between September 2017 and February 2018.

The government also alleged that Van Den Heuvel failed to submit bank account statements as required, even though prosecutors believe that Van Den Heuvel has numerous accounts under his control but not in his name. …

Van Den Heuvel also was accused of engaging in “subtle intimidation of witnesses in recent contacts,” selling a van without authorization and attempting to sell a pyrolysis machine that is the subject of claims from multiple creditors.

Van Den Heuvel is charged in federal court with 14 counts of wire fraud and money laundering related to $9 million collected from investors in his now-bankrupt Green Box recycling business. The case is scheduled to go to trial on November 13.

[updated version]

Ron Van Den Heuvel, the De Pere businessman accused of bilking millions from investors, was jailed Friday after authorities alleged he committed more fraud and intimidated witnesses while free on bond.

“Fraud has continued,” U.S. District Court Judge William Griesbach said. “He’s continued to commit crimes.”

Van Den Heuvel was sentenced to three years in prison in January for conspiracy to commit bank fraud and, in a second case, also faces 14 counts of wire fraud and money laundering for allegedly deceiving investors out of $9 million in his now-bankrupt Green Box recycling business. …

Court records show Van Den Heuvel and his family spent more than $18,000 in total at the club between September and May — all while he claimed to be indigent and in need of a public defender.

Van Den Heuvel, who took the witness stand to testify, said he told the lender the $20,000 loan would be used for business expenses.

Receipts show most if not all of the money was used to buy equipment, golf lessons and food such as shrimp cocktails and tacos for Van Den Heuvel’s wife and children.

Van Den Heuvel’s wife also transferred the title of a van worth $2,500 to help pay down a debt.

Krueger said Van Den Heuvel also failed to submit bank account statements as required. Investigators believe that Van Den Heuvel has numerous accounts under his control even though not all are in his name.

 

#LockedHimUp

07/09/18 :

On July 6, the court ordered a bond hearing. There was testimony that Van Den Heuvel had received a $20,000 loan and spent thousands of dollars at Oneida Golf and Country Club.

“The Court is satisfied that fraud has continued and the defendant has shown disregard for the orders of this Court,” reads the federal court records. “The Court finds the temptation to flee or take steps to avoid responsibility of facing trial is strong.”

Van Den Heuvel still faces prosecution for a federal indictment on 14 counts of wire fraud and money laundering.

Prosecutors say he fraudulently obtained more than $9 million in loans and investments for his eco-friendly “Green Box” business plan.

The indictment alleges that Van Den Heuvel claimed that Green Box could turn post consumer waste into usable consumer products and energy. …

Van Den Heuvel allegedly defrauded a range of victims, including individual acquaintances, the Wisconsin Economic Development Corporation (WEDC), a Canadian private investment firm, and Chinese investors in the EB-5 immigrant investor program.

In October of 2011, WEDC provided Green Box NA Green Bay, LLC with a loan of $1,116,000 to purchase equipment to create 116 jobs in the “Green Box” operation.

Instead, the indictment says he submitted false certifications claiming to have spent the funds properly.

In January of 2012, WEDC also awarded Green Box with a $95,000 grant to reimburse the company for costs to train new workers. Van Den Heuvel is accused of submitting fraudulent time records for training that never happened.

Counts 1-10 of the indictment charge Van Den Heuvel with executing the scheme to defraud by use of interstate wire communications. Maximum penalty on each count includes not more than 20 years in prison, a fine of $250,000 or both, plus a mandatory $100 special assessment and a period of supervised release.

Counts 11-14 charge Van Den Heuvel with unlawful financial transactions involving the ill-gotten gains. The maximum penalty for each individual count includes not more than 5 years in prison a fine of $250,000 or both. Plus a mandatory $100 special assessment and a term of supervised release not to exceed three years.

07/11/18 :

See also:

•  July 11, 2018 WI State Senator Dave Hansen Press Release,
WEDC’s Continued Failure, Green Box Edition

•  July 11, 2018 WI State Senator Jennifer Shilling Press Release,
Can’t pay back $1 million loan? WEDC says ‘No worries’; Walker’s troubled job agency leaves taxpayers with the bill, again

•  July 11, 2018 Democratic Party of Wisconsin Press Release,
Walker’s WEDC foots taxpayers with $1 million loan given to conman in exchange for zero jobs; WEDC’s mismanagement casts more doubt on Foxconn deal

07/12/18 :

07/13/18 :

07/16/18 : 

 

  • July 16, 2018 Order, U.S. Tax Court Docket No. 21583-15,  VHC Inc. and Subsidiaries  v.  Commissioner of Internal Revenue Service [IRS]

07/18/18 :

07/19/18 :

  • July 19, 2018 Order to Show Cause, U.S. District Court / Nevada Case No. 15-cv-694,  CH2E Nevada LLC  v.  [Abdul] Latif Mahjoob and American Combustion Technologies of California Inc. [ACTI]

On July 19, 2018, Defendant ACTI’s corporate representative failed to appear, despite the Court’s clear orders, at the hearing on its counsels’ motions. …

In light of the above, Defendant ACTI is hereby ORDERED to show cause in writing, by August 20, 2018, why the Court should not issue sanctions against it for violating Court orders, up to and including a Court fine of up to $500 and/or case-dispositive sanctions. …

Failure to respond to this order will result in a recommendation that judgment be entered against Defendant ACTI.

 

07/20/18 :

Defendant’s counsel and the late attorney, Mike Fitzgerald had on multiple occasions requested the return of over 290,000 pages of documents and the defendant’s server which were both taken 2077A and 2077B offices in the raid. To date, the server has not been returned. Through due diligence, the defendant located the PCDI server. Failure by the defendant’s counsel to report the email hacking incident allowed for the breach to continue unchecked. The 1,700 pages presented by the DOJ is clear proof that this theft of emails and delivery of them to the DOJ and the Oneida Eye did occur.

The Department of Justice and prosecution know for certain that millions of illegally gained private documents from the general search have been given to the Oneida Eye. This allows Google to pick them up for the social media.

07/23/18 : 

  • July 23, 2018 Letter from Oneida Indian Nation of NY re the July 18, 2018 decision of the U.S. Trademark Trial and Appeals Board, U. S. District Court for the Northern District of New York, Case No. 5:17-CV-913,  Oneida Indian Nation of New York  v.  United States Department of the Interior

 

  • July 23, 2018 Plaintiffs-Appellants Brief on appeal of March 2, 2018 Order by Judge Thomas J. Walsh in Brown County WI Circuit Court Case No. 2014-CV-1664, Wisconsin Court of Appeals District III – IV Appeal No. 2018-AP-761,  Scott J. Brauer, Adam Kilgas, Duane A. McVane, Matt J. Vandehey & Paul Weyers, Plaintiffs-Appellants  v.  Veripure LLC, Badger Sheet Metal Works of Green Bay Inc., Gregory A. DeCaster, Greg A. DeCaster & Judith A. DeCaster Revocable Trust, GADJAD Properties LLC, Richard Chernick, Badger Capital Investments LLC & David Conard,  Defendents-Respondents

07/24/18 :

  • July 24, 2018 Docket Entry Notification of July 26, 2018 Status Hearing reset to September 26, 2018, U.S. District Court, Northern District of Illinois, Eastern Division, Docket No. 17-CV-108,   RNS Servicing LLC  v.  Spirit Construction Services Inc., Steven Van Den Heuvel, ST Paper LLC & Sharad Tak

07/25/18 :

07/27/18 :

The witness at issue here, Steven Granoff, was Mantria’s in-house accountant. Granoff prepared Mantria’s internal financial reports, such as Mantria’s internal profit and loss statements. Granoff is expected to testify that Mantria was a start-up company and did not earn any profits and had little revenue, contrary to the defendants’ assertions to investors. Granoff will testify that almost all new funds coming into Mantria came from new investors. Granoff will also testify that any “earnings” used to pay earlier investors came from the new investor funds – corroborating the government’s allegation that Mantria was a Ponzi scheme. As such, Granoff is a critical witness for the government.

07/31/18 : 

U.S. Exhibit A

Transcript of a Jail Telephone Call of the Defendant

Calling Party:  Ron Van Den Heuvel (“RVDH”), BCSO Inmate # 930000020204

Called Party:  M.G. [Oneida Eye believes this is Michael Garsow]

Call #:  8127338

Date:  Tuesday, July 17, 2018

Time:  2:35 p.m.

Transcript By:  FBI SA T. Ryan Austin

[Automated Recording]

RVDH [Ron Van Den Heuvel]:  Hey, [First name redacted].

M.G. [Michael Garsow]:  Hey.

RVDH:  Did you get out of court?

M.G.:  Yeah, I did. I sat there for about four and a half hours. [feedback]

RVDH:  You what?

M.G.:  I sat there for about four and a half hours this morning.

RVDH:  Unbelievable.

M.G.:  Yep…

RVDH:  How long… how long were you on the stand?

M.G.:  Actually that’s the best part. They never even called me in.

RVDH:  They never even called you in?

M.G.:  Yeah, wasted my fucking time.

RVDH:  Wow. Was it for a buddy?

M.G.:  Yeah, it was for a really good friend, I used to live with him and his ex, his daughter’s mom. So, anyway.

RVDH:  Oh. How’d he… how did he fare, okay? Hey, can I put you in charge of one thing? Ty [Willihnganz].

M.G.:  What’s up?

RVDH:  Ty [Willihnganz]. Just get him here once in the morn – even if his dad brings him – get him here once in the morning and once in the afternoon. Gotta have him here [inaudible], I gotta get him here twice a day. Did you get a chance to go through any of them lists yet or work with Kelly [Van Den Heuvel]? Not today because you were in court, ay?

M.G.:  Ah, no, actually I talked to them a little bit… ah, is there echoing on your end?

RVDH:  You what?

M.G.:  Is my… is me talking echoing on your end?

RVDH:  Go, go slower. Yes, this is being recorded. Yes.

M.G.:  No. Is it recording? My voice. Is it, or um, sorry, is it echoing?

RVDH:  No, no. No, it’s not.

M.G.:  Okay. It is on my end, so I’ll do my best.

RVDH:  Okay.

M.G.:  I’ll talk to Ty and Kelly.

RVDH:  Yeah.

M.G.:  I’m helping them with the legal document you’re doing.

RVDH:  Yeah, good.

M.G.:  We have a question on that.

RVDH:  Okay.

M.G.:  So there’s two separate documents.

RVDH:  Yep.

M.G.:  One is the memorandum.

RVDH:  Yep.

M.G.:  And one is the motion.

RVDH:  Yep.

M.G.:  Now we’re looking at this, is the memorandum just that one page?

RVDH:  It’s just that one page. Make it be two. You’ll have the case number in on it, you’ll have all the things you gotta do. It’ll end up, maybe, being three. But that’s it. And then the memorandum follows right behind it with case number and everything there also. Okay?

M.G.:  Yeah, they were a little confused, ah, but that makes total sense. That clears it up.

RVDH:  The memorandum will be about 19 paragraphs. Okay?

M.G.:  Okay.

RVDH:  And the page 1 is just the reason for what we’re doing and now remember we’re not… we’re dismissing [court appointed attorney Robert] LeBell from being a court-appointed attorney. Okay? We’re not dismissing him from, from the case but he will not be lead counsel. Okay?

M.G.:  Okay. Uh, the other thing is, I talked to Don…

RVDH:  Yeah.

M.G.:  And he said at three o’clock he’s calling you to try to do a conference call.

RVDH:  Oh, good. Good, good, good. Good, good. Thank you. That’s what I needed to know. Okay?

M.G.:  Okay. Ty’s been visiting you, right? I thought he’s been coming there two or three times a day.

RVDH:  He, he has. He has. It’s just I want him to, I want him to be predictable and have it now. He says he’s not coming up; he can come up til eight o’clock at night. So, he says he’s not coming up until Kelly and you get done with that back (?). That would be good though. Okay?

M.G.:  Yeah. Because I figure you’d… they said you needed that by tomorrow.

RVDH:  I need, I need that, I need that thing so bad that I got a couple, a couple people think that it’ll get me 12-14 weeks out of here. So…

M.G.:  Oh, wow.

RVDH:  Yep.

M.G.:  Yeah, their delay was just the confusion between the two but that clears it up.

RVDH:  Okay. Go ahead and get her done. Thank you, pal.

M.G.:  Yeah; talk to you later.

RVDH:  Bye.

08/06/18 :

Van Den Heuvel’s company [Green Box NA Green Bay] has “gone off the rails. We will continue to pursue whatever (recourse) we can,” [WEDC CEO Mark] Hogan said. “I don’t like to write off dollars from any loan, but at some point you have to follow accounting rules.”

 

  • August 6, 2018 Memorandum Opinion and Order, Northern District of Illinois, Eastern Division, Docket No. 17-CV-108,   RNS Servicing LLC  v.  Spirit Construction Services Inc., Steven Van Den Heuvel, ST Paper LLC & Sharad Tak

08/07/18 :

  • August 7, 2018 Docket Entry Notification of September 6, 2018 Status Hearing reset to September 4, 2018, U.S. District Court, Northern District of Illinois, Eastern Division, Docket No. 17-CV-108,   RNS Servicing LLC  v.  Spirit Construction Services Inc., Steven Van Den Heuvel, ST Paper LLC & Sharad Tak

 

[Ron] Van Den Heuvel filed a motion to dismiss attorney Robert LeBell as his counsel on July 20.

Federal prosecutors responded that Van Den Heuvel’s motion to dismiss his attorney is another attempt to delay the proceedings. The government asked [Judge William] Griesbach to keep the case on track for Nov. 13 jury trial.

LeBell was appointed to represent Van Den Heuvel when he was charged with bank fraud in 2016 and claimed he did not have money to pay for his own attorney. LeBell tried to withdraw as Van Den Heuvel’s lawyer during a January sentencing hearing after Van Den Heuvel tried to refute terms of his plea agreement. Van Den Heuvel was sentenced to three years in jail in the case.

In his request, Van Den Heuvel said LeBell did not pursue Van Den Heuvel’s claims that federal investigators illegally obtained documents, that LeBell was working with federal prosecutors without disclosing the details to Van Den Heuvel, and that LeBell took vacations and had back surgery instead of helping Van Den Heuvel prepare his defense.

“Defendant’s counsel had a duty to prepare defendant for trial, not for a plea bargain,” Van Den Heuvel wrote to the court. “Mr. LaBell (sic), during the course of defendant’s cases took a vacation to Europe, hurt his back, went to China, went to South America, had back surgery and had his office relocated. The loss of time 12 weeks or more has prevented the defendant from preparing adequately for his case. …“

1.2 Million Tax Bill

Wisconsin Department of Revenue records indicate Van Den Heuvel, his wife Kelly, and three companies registered in his name owe more than $1.2 million in delinquent taxes.

Ron Van Den Heuvel owes $533,961 in income tax, witholding tax and fees. Kelly Van Den Heuvel owes $307,469.55 in income taxes. Oconto Falls Tissue Inc. owes $246,406.79 in withholding taxes. Tissue Products Technology Corp. owes $105,324.52 in withholding, sales and business registration taxes. Eco Fibre Inc. owes $33,158.11 in withholding, corporation and business taxes.

The combined total of the five individuals and entities is roughly 26 percent of all delinquent taxes De Pere residents and businesses owe, according to the state’s list.

08/09/18 :

Excerpt:

[Atty. Jonathan Smies / Godfrey & Kahn SC for Sharad Tak]  Q:  So as you sit here today it’s your view, at least, that [Ron] Van Den Heuvel or his companies in some way owe you or more precisely [Van Den Heuvel siblings-owned] VHC [Inc.] 150 million dollars approximately?

[David Van Den Heuvel]  A:  Roughly.

[Atty. Smies]  Q:  Do your companies owe [Ron] Van Den Heuvel anything?

[David Van Den Heuvel]  A:  We do not. He does have some shares at VHC, but they’re pledged to us against his personal debt that he owes us. The personal debt is more than the value of the shares.

[Atty. Smies]  Q:  What are the value of the shares?

[David Van Den Heuvel]  A:  A million 7.

The Court:  Say that again?

[David Van Den Heuvel]  A:  I think a million 7.

The Court:  Okay.

 

Based upon his thorough and conscientious review of the entire record of the proceedings in the district court below, and from communications with the Defendant-Appellant, the undersigned attorney has concluded that there exists no non-frivolous issue that can be raised in this appeal on behalf of the Defendant-Appellant. …

Wherefore, Thomas W. Patton respectfully requests the entry of an order granting him leave to withdraw as the Defendant-Appellant’s appointed counsel on appeal in the above-entitled cause.

SUMMARY OF ARGUMENT

[Ron] Van Den Heuvel cannot raise any argument regarding the motion to suppress because it has been waived for direct appeal in this case. He waived the issue by withdrawing the motion in the district court and by entering into a unconditional guilty plea.

Any argument challenging Van Den Heuvel’s conviction would be frivolous where he entered into an unconditional, knowing, and voluntary plea of guilty, pursuant to a plea agreement, and the district court substantially complied with Federal Rule of Criminal Procedure 11 when accepting his plea. The Rule 11 colloquy in this case was thorough and adequately advised Van Den Heuvel. Furthermore, the district court did not err by denying Van Den Heuvel’s motion to withdraw the guilty plea. He was not coerced into the plea because it contained an agreement to dismiss charges against his wife and he did not provide any evidence that he was actually innocent of the conspiracy he pled guilty to.

The district court did not abuse its discretion by denying Van Den Heuvel’s motion to adjourn the sentencing hearing and did not err in denying counsel’s motion to withdraw as attorney. Both motions were made a few days prior to sentencing and were not supported by evidence or adequate reasons for granting.

Any argument challenging Van Den Heuvel’s sentence would be frivolous where his sentence was not imposed in violation of the law, was not the result of an incorrect application of the guidelines, and was not unreasonable. The district court did not err by imposing a term or the conditions of supervised release.

On August 9, 2018, your attorney filed a brief stating that your appeal is frivolous and requesting permission to withdraw from the case.

1. You have 30 days from the date at the top of this notice to present any argument that you believe shows that your conviction or sentence is invalid. …

08/10/18 :

1:59 pm – Court resumes. [Atty. Robert] LeBell states defendant wishes to hire private counsel and also retain Mr. LeBell. [Defendant Ron] Van Den Heuvel informs the Court he intends to engage the following attorneys: Mr. LeBell, Eric Hart, Ed Kraemer, Jeff Morgan, Timothy Hansen, John Petitjean and David Matias. The Court will continue to operate under the assumption the defendant does not have the funds to obtain counsel until the time that funds are produced to show otherwise.

2:03 pm – Motion to dismiss court appointed counsel is DENIED. If defendant’s intention to hire additional counsel falls through the case will not be delayed.

08/15/18 :

  • August 15, ORDER, U.S. 7th Circuit Court of Appeals, Appellate Case No. 18-1835,  Tissue Technology LLC, Partners Concepts Development Inc., Oconto Falls Tissue Inc., and Tissue Products Technology Corp., Plaintiffs-Appellants  v.  TAK Investments LLC and Sharad Tak, Defendants-Appellees

Appellants claim that the district court’s jurisdiction is based on diversity under 28 U.S.C. § 1332. Appellants, however, fail to identify the citizenship of all the parties and the amount in controversy. Appellants must provide this information.

IT IS ORDERED that appellants file a paper captioned “Amended Jurisdictional Statement” no later than August 27, 2018, that provide the omitted information noted above and otherwise complies with all the requirements of Circuit Rule 28(a).

 

 

At the April 12, 2018 hearing [TRANSCRIPT] on the Department of the Interior’s motion to dismiss claims challenging its decision to federally recognize “Oneida Nation” as the new name of the Oneida Tribe of Indians of Wisconsin, the Court addressed questions concerning the confusion and injury that the decision would cause. …

Attached is recent correspondence between the federal Indian Health Service (IHS) and the Nation, which shows that IHS confused the Oneida Nation [of WI] with the [Oneida Indian] Nation [of NY] and mistakenly demanded that the [Oneida Indian] Nation [of NY] formulate a “corrective application plan.” See Exhibit A (letters and emails). Relatedly, attached is a Purpora Engineering invoice that recently came to my attention. Purpora mistakenly emailed the invoice to the [Oneida Indian] Nation [of NY] even though the Oneida Nation [of WI] is the company’s customer. See Exhibit B (invoice and emails).

08/17/18 : 

08/20/18 :

 

It should be noted that – contrary to the caption in this and previous court filings by Atty. Robert LeBell – the Defendant’s REAL NAME is Ronald H. Van Den Heuvel / Ronald Hewry Van Den Heuvel.

When confronted by Oneida Eye on 8/10/18 in front of U.S. Atty. Matthew Krueger about using the wrong middle initial (‘D’), defense attorney Robert LeBell blamed his secretary – yet Attorney LeBell continued to submit court filings using the WRONG NAME for his client.

It respectfully suggested that the court change venue to Milwaukee. Jury management for the Eastern District of Wisconsin in Milwaukee has advised that it seeks to secure jurors from a geographical area close in proximity to the city. Milwaukee jurors would not have been infected with the same taint as prospective jurors form [sic] Green Bay.

In regards to the Green Box technology, the affidavit correctly states the Green Box technology was not fully functioning when the defendant informed investors it was fully functioning. The defendant’s Memorandum in Support and exhibits provide no evidence the technology was “fully functioning.” Regardless of whether or not the Green Box technology hypothetically could have produced the desired results in the future, probable cause was established by the defendant’s false representations about the status of Green Box’s business operations and the functionality of the technology. …

While investors and government entities may have theorized that the process could function properly, Green Box’s technology never did function as predicted by the defendant. …

The affidavit correctly states the defendant made false claims about the current status of Green Box to raise money from investors to fund his personal expenses. These facts establish probable cause. …

The affidavit details numerous fraudulent actions by the defendant, including granting Dr. [Marco] Araujo a security interest in business equipment, and then providing a security interest in the same equipment to later investors, and misstating the status of Green Box’s operations. The affidavit states the defendant’s fraudulent statements resulted in Dr. Araujo investing $600,000 in Green Box, and that the defendant used the majority of this money for personal expenses.

Amongst other facts, the affidavit also discusses foreign investor money raised through the EB5 program that the defendant misused for personal expenses including alimony payments and Green Bay Packers tickets. The affidavit establishes probable cause that the defendant operated an investment fraud scheme through Green Box as it details some of the defendant’s material false representations about Green Box, and the defendant’s use of investor money for personal expenses.

  • August 20, 2018 Reply Brief of Plaintiff-Appellants, U.S. 7th Circuit Court of Appeals, Appellate Case No. 18-1835,  Tissue Technology LLC, Partners Concepts Development Inc., Oconto Falls Tissue Inc., and Tissue Products Technology Corp., Plaintiffs-Appellants  v.  TAK Investments LLC and Sharad Tak, Defendants-Appellees
  • August 20, 2018 Supplemental Appendix of Plaintiff-Appellants, U.S. 7th Circuit Court of Appeals, Appellate Case No. 18-1835,  Tissue Technology LLC, Partners Concepts Development Inc., Oconto Falls Tissue Inc., and Tissue Products Technology Corp., Plaintiffs-Appellants  v.  TAK Investments LLC and Sharad Tak, Defendants-Appellees
  • August 20, 2018 Brief Deficiency Letter, U.S. 7th Circuit Court of Appeals, Appellate Case No. 18-1835,  Tissue Technology LLC, Partners Concepts Development Inc., Oconto Falls Tissue Inc., and Tissue Products Technology Corp., Plaintiffs-Appellants  v.  TAK Investments LLC and Sharad Tak, Defendants-Appellees

 

08/21/18 :

  • August 21, 2018 Amended Jurisdictional Statement, U.S. 7th Circuit Court of Appeals, Appellate Case No. 18-1835,  Tissue Technology LLC, Partners Concepts Development Inc., Oconto Falls Tissue Inc., and Tissue Products Technology Corp., Plaintiffs-Appellants  v.  TAK Investments LLC and Sharad Tak, Defendants-Appellees

08/22/18 :

I.  Failure to communicate
Attorney Robert LaBell [sic] has failed to adequately communicate with the defendant, severely prejudicing the defendant’s ability to prepare for trial and aid in his own defense.

II.  Failure to investigate
The defendant asserts that Attorney Robert LaBell [sic] has failed to review numerous documents, or obtain expert assistance on technical matters of which the defendant’s case relies heavily on, that would aid in the proper defense of the defendant.

The Defendant contends that the failure by the government to return Defendant’s server from where it was seized to the Defendant has allowed for the illegal sharing of documents. These emails and documents have been illegally taken, in some instances altered and given to the government and the Oneida Eye.

  • August 22, 2018 Order, U.S. District Court / Nevada Case No. 15-cv-694,  CH2E Nevada LLC  v.  [Abdul] Latif Mahjoob and American Combustion Technologies of California Inc. [ACTI]

The Court WARNS Defendant ACTI that it must strictly comply with the Court’s orders. Failure to do so in the future may result in significant sanctions, up to and including dismissal. The Court otherwise DISCHARGES the order to show cause.

  • August 22, 2018 Order to Show Cause, U.S. District Court / Nevada Case No. 15-cv-694,  CH2E Nevada LLC  v.  [Abdul] Latif Mahjoob and American Combustion Technologies of California Inc. [ACTI]

Defendant ACTI is hereby ORDERED to file its notice of appearance by new counsel, no later than September 5, 2018.

 

  • August 22, 2018 Defendants-Respondents Joint Brief, Wisconsin Court of Appeals District III – IV Appeal No. 2018-AP-761,  Scott J. Brauer, Adam Kilgas, Duane A. McVane, Matt J. Vandehey & Paul Weyers, Plaintiffs-Appellants  v.  Veripure LLC, Badger Sheet Metal Works of Green Bay Inc., Gregory A. DeCaster, Greg A. DeCaster & Judith A. DeCaster Revocable Trust, GADJAD Properties LLC, Richard Chernick, Badger Capital Investments LLC & David Conard,  Defendents-Respondents

08/24/18 :

Although the parties have not exchanged witness lists, the United States currently expects that as many as 75 witnesses may testify. Of those witnesses, approximately 55% are located in the State of Wisconsin, and 45% are located outside of Wisconsin. With respect to the Wisconsin-based witnesses, approximately 70% live in the greater Green Bay area, meaning that a significant plurality (approximately 40%) of the total witnesses live in or near Green Bay. Several of the other Wisconsin-based witnesses live in the Madison area, meaning they will have to travel either to Green Bay or Milwaukee. The non-Wisconsin witnesses live in States ranging from Illinois to Florida and California, as well as foreign countries including Canada and China.

 

  • August 24, 2018 Judgment in a Civil Case, U.S. District Court for the Northern District of New York, Case No. 5:17-CV-913,  Oneida Indian Nation of New York  v.  United States Department of the Interior

08/30/18 :

08/31/18 :

August 31, 2018 Reply to the Response to Defendant Ron Van Den Heuvel’s Second Motion to Suppress Physical Evidence / Franks, U.S. District Court, Eastern District of Wisconsin, Case No. 17-CR-160,  United States of America  v.  Ronald H. Van Den Heuvel

[V]irtually every event that has occurred in the defendant’s cases, as well as matters relating to the defendant, but not specifically part of the court filings, is described in the blog or is easily accessible through a link conveniently provided by the blog’s author. There is virtually no need for access to PACER in this case because the Oneida Eye has provided the same service to the public. PACER, at least, offers the reader the documents in a non-editorialized fashion.
The blogger from the Oneida Eye has depicted [Ron] Van Den Heuvel as the virtual
Anti-Christ. Contrary to the claim of the government, the pretrial coverage is not simply routine press offerings. They, in concert, paint a vivid picture of the defendant’s alleged criminal conduct.

09/04/18 :

  • September 4, 2018 Order granting Ron Van Den Heuvel Pro Se Motion to Extend Time to file Response to 10/10/18, U.S. 7th Circuit Court of Appeals, Appellate Case No. 18-1147, United States of America, Plaintiff-Appellee  v.  Ronald H. Van Den Heuvel, Defendant-Appellant
  • September 4, 2018 Exhibits received by Clerk of Court’s Office, U.S. District Court, Eastern District of Wisconsin, Case No. 17-CR-160,  United States of America  v.  Ronald H. Van Den Heuvel

10:16 am The Court FINDS that Mr. Van Den Huevel has knowingly and voluntarily given up his right to have an attorney represent him.

10:21 am Further inquiry as to competence, mental alertness and competence to make the decision to represent himself.
The Court notes the record is to reflect that his wife is shaking her head no in the back of the Courtroom.
The Court inquires as to any question of competence.
Mr. Krueger requests further questioning, not a formal evaluation.
Mr. LeBell responds that both criteria are satisfied.
Mr. Krueger responds, does not see need for further evaluation.
The Court inquires as to blood sugar levels and documentation.
Mr. LeBell responds.

10:24 am The Court is satisfied that defendant is not suffering from any mental incompetence or impairment.
The Court finds that Defendant has freely and voluntarily waived his right to have counsel represent him and ACCEPTS his waiver of right to counsel.
Mr. LeBell is to supplement record with any evidence of Defendant’s physical condition today. 

10:25 am Motion to remove Mr. LeBell as legal counsel is GRANTED.
The Court would like Mr. LeBell to remain on this case as stand-by counsel.
The Court will enter an order clarifying the responsibilities of stand-by counsel.

10:26 am The Court takes a recess.

10:44 am The Court resumes.
The Court DENIES Defendant’s Motion for change of venue at this time. …

4:24 pm … The Court inquires if Defendant would like to reconsider his Motion to dismiss court appointed counsel.
Defendant WITHDRAWS his Motion to dismiss court appointed counsel. GRANTED.
Mr. LeBell is re-appointed as counsel of record for Defendant.

 

  • September 4, 2018 Notice of Removal of Brown County WI Circuit Court Case No. 18-CV-867 to U.S. District Court, Eastern District of Wisconsin, Case No. 18-CV-1362,  Fortune Avenue LLC  v.  Howard Bedford

09/05/18 :

As Dr. [Emily] Greenwald explains, after completion of the Treaty of 1838, Oneida leaders almost immediately began petitioning the federal government to exchange their individual 100-acre parcels for larger 320-acre parcels west of the Mississippi. These petitions resulted in the negotiation and execution of a new treaty that would have allowed for individual Oneida to voluntarily determine whether to exchange their individual 100-acre parcels for larger parcels outside of Wisconsin. ... Although the new treaty was never ratified, this documentary evidence shows that both the United States and the Oneida understood the Treaty of 1838 as granting separate 100-acre tracts to each individual Oneida Indian. In contrast to this evidence, the Nation does not cite a single piece of evidence that would illustrate how the Oneida understood the Treaty of 1838 when it was executed.

09/06/18 :

 

09/07/18 :

09/11/18 : September 11, 2018 Howard Bedford Answer & Affirmative Defenses, U.S. District Court, Eastern District of Wisconsin, Case No. 18-CV-1362,  Fortune Avenue LLC  v.  Howard Bedford

 

 

  • September 11, 2018 Plaintiffs-Appellants Reply Brief, Wisconsin Court of Appeals District III – IV Appeal No. 2018-AP-761,  Scott J. Brauer, Adam Kilgas, Duane A. McVane, Matt J. Vandehey & Paul Weyers, Plaintiffs-Appellants  v.  Veripure LLC, Badger Sheet Metal Works of Green Bay Inc., Gregory A. DeCaster, Greg A. DeCaster & Judith A. DeCaster Revocable Trust, GADJAD Properties LLC, Richard Chernick, Badger Capital Investments LLC & David Conard,  Defendents-Respondents

09/12/18 :

The SEC shut down the Mantria Ponzi scheme in November 2009. The defendants stole more than $54 million from more than 300 victims, specifically targeting senior citizens and other vulnerable victims. Many victims lost their entire life’s savings. In addition, defendant WAYDE MCKELVY specifically coached the victims to obtain as many loans as possible from home equity, credit cards, and other sources to “invest” in Mantria – coaching which led to further financial devastation. The government indicted this case in September 2015, a delay which was caused by, inter alia, the unexpected death of the assigned Assistant United States Attorney. Since indictment, the defendant has postponed this criminal trial for three years. Many of the victims are no longer physically capable of testifying. Even some of the victims who were prepared to testify at trial two years ago have seen their health deteriorate since then, to the point that they no longer can testify. Other victims have been so traumatized by the financial devastation wreaked by the defendants’ fraud that they cannot testify for the sake of their own mental health. A further continuance of this trial would be a grave disservice to justice, as even fewer victims would be in a position to testify and fewer victims would be alive to see justice served.

 

A manure spill that DNR officials have deemed “acute” has mostly moved downstream along Duck Creek and “is gone,” a tribal environmental expert said.

By “gone,” James Snitgen, the Oneida Nation [WI / ONWI]’s water resources supervisor, means it’s diluted enough to be undetectable by eyes or nose.

But 300,000 gallons of liquid manure is no small thing, and testing will continue downstream to determine the spill’s impact, said Ben Uvaas, a Department of Natural Resources agriculture specialist. …

“[J]ust because it looks clear and doesn’t stink – that’s a low bar,” Uvaas said. Testing will be done over the next few days to measure the impact of the spill on water quality. …

Manure spills of this magnitude are uncommon but not unheard of, he said. … But in the last five years, “off the top of my head, I can think of three other ones that were in the low to mid 100,000 gallons of manure lost,” he said.

09/13/18 :

09/14/18 :

  • September 14, 2018 Order to Show Cause, U.S. District Court / Nevada Case No. 15-cv-694,  CH2E Nevada LLC  v.  [Abdul] Latif Mahjoob and American Combustion Technologies of California Inc. [ACTI]

 

I was informed yesterday that there was a ‘legal’ package addressed to Glenarbor Partners Inc delivered to a home that I own in Winnetka IL. The package was from a Green Bay law firm which proports to be representing Vos Electric. The only business that I am aware of with Vos is a loan to Glenarbor Partners Inc to provide financial assistance to Green Box & RTS. This loan was in anticipation of Vos and Spirit Construction’s participation in a successful project in either De Pere WI or Cheboygan MI. The majority of these funds were distributed (by the Green Box bankruptcy attorney through his trust account) to pay existing company obligations and to advance the cost of due diligence for those new projects. Additionally – at your specific direction – Glenarbor Partners Inc provided funds directly to your brother Ron and his wife Kelly for their personal and professional obligations. Given that you had originally specifically directed and I had agreed that “not one penny should go to Ron”, I had turned down Ron and Kelly’s multiple requests for funds until you directed that they should be given the money.

As I’m sure that you recall, since your group of companies were going to participate and profit from these projects, we asked that you loan the funds to the Green Box/RTS companies. Our clear verbal agreement was that this loan plus interest would be paid out of either these projects (with your group of companies getting all construction and electrical work) or from the proceeds of the [Sharad] Tak lawsuits. I signed the note only to formalize the structure and provide you with a “paper trail” for your companies that could be used in case of any problems. In our discussions prior to providing the loan, you were insistent on a structure through Glenarbor Partners Inc (or another non-Ron entity) to make sure that there was no direct link between your group of companies and your brother Ron and/or any of the entities associated with Ron. You specifically mentioned the ongoing issues that your companies were having with the IRS and the IRS’s continuing interest in proving that you are supporting Ron and or have an equity interest in his businesses. You believed that this structure would hopefully “avoid the scrutiny of the IRS and other federal agencies” who were investigating Ron, his companies and your group of companies”. …

As I’m sure that you know, Glenarbor Partners Inc is based in Chicago, IL…. I am the only officer of the company. …

Hopefully we can work through this issue in a cooperative and non-adversarial manner, and keep the facts of this whole situation private rather than argue about this entire story in a public courtroom.

 

  • September 14, 2018 Order for Rule 33.1 Mediation scheduled for 10/23/18, U.S. 2nd Circuit Court of Appeals, Appellate Case No. 18-2607,  Oneida Indian Nation of New York, Plaintiff-Appellant  v.  United States Department of the Interior, Defendant-Appellee

 

III.  GOVERNMENT’S EVIDENCE

A.  Overview

TROY WRAGG, AMANDA KNORR, and WAYDE MCKELVY ran an elaborate Ponzi scheme collectively known as Mantria Corporation which received more than $54 million in fraudulently obtained new investor funds. WRAGG, KNORR, and MCKELVY promised investors huge returns, as high as 484%, for securities investments in supposedly profitable business ventures in real estate and green energy. In reality, Mantria was a classic Ponzi scheme in which new investor money was used to pay “returns” to early investors and their businesses generated meager revenues and no actual profits. To induce investors to invest money in their businesses, WRAGG, KNORR, and MCKELVY repeatedly made fraudulent representations and material omissions about the economic state of their businesses. WRAGG, KNORR, and MCKELVY sold what they planned to do in the future as the current reality. When the SEC shut down Mantria in November 2009, their pyramid scheme collapsed and their Ponzi scheme was exposed.

WRAGG was the CEO of Mantria. WRAGG controlled all aspects of Mantria. All important Mantria decisions were made by WRAGG in consultation with WAYDE MCKELVY, whom WRAGG considered to be his mentor.

In 2005, AMANDA KNORR was WRAGG’s girlfriend. KNORR graduated from Temple in 2006 with a degree in biological anthropology and later began to work full time at Mantria. On paper, KNORR was the President and Chief Operating Officer. In reality, KNORR was more of an office manager tasked with implementing WRAGG’s ideas. In addition, Mantria promoted KNORR as the “science” expert given her degree in a science field. KNORR occasionally gave presentations to current or prospective Mantria investors on the science behind Mantria’s green energy technologies. The purpose of the presentations was to re-assure investors that the science behind Mantria’s business proposals was sound when, in truth, the science was quite speculative.

WRAGG and KNORR were able to raise such fantastic sums of money through the assistance of MCKELVY, an unlicensed securities salesman from Colorado. Although he had little financial acumen, MCKELVY promoted himself as a financial wizard through aggressive marketing tactics. MCKELVY ran a company called “Speed of Wealth” which promised to teach investors how to become “stinkin, filthy rich.” MCKELVY then formed an investment club of sorts to invest in real estate and other projects. When WRAGG met MCKELVY, Mantria was broke and unable to raise funds from any other source. At the same time, MCKELVY was having his own investment problems. The investments which he had touted were all losing money and his investors were growing restless.

Therefore, WRAGG came up with a proposal to save both MCKELVY and himself. MCKELVY liquidated his losing investments and invested that money into Mantria. WRAGG gave MCKELVY’s investors full credit on paper for their investments in Mantria and covered their previous losses. Thus, Mantria provided MCKELVY a way to exit these other investments, save face, and generate huge paper returns for his investors.

MCKELVY thus became WRAGG’s and Mantria’s lifeline of support. MCKELVY continued to hold seminars for prospective investors and touted the fantastic paper returns which were purportedly being generated by Mantria. During these seminars, MCKELVY lied to prospective investors about the financial state of Mantria and omitted material facts in order to dupe them into investing. MCKELVY also lied about his knowledge of and participation in Mantria’s business operations. In return for raising huge sums of money, WRAGG and KNORR paid MCKELVY a commission between 12% and 15% of all new investor funds which he generated – another material fact which they failed to disclose to investors. Of the $54 million raised, MCKELVY personally pocketed more than $6 million in proceeds from the victims.

Defendants WRAGG, KNORR, and MCKELVY frequently used wire transfers to move funds and facilitate their Ponzi scheme. Virtually all of the new investor money was sent via wire transfer to Mantria’s bank accounts. Mantria, based in Bala Cynwyd, Pennsylvania, sent MCKELVY his “commissions” via wire transfer to an entity he controlled called “Retirement TRACS, LLC”. Mantria also used wire transfers to pay for other portions of the Ponzi scheme, including payments for both the real estate and green energy projects.

B.  Early Years of Mantria

TROY WRAGG and AMANDA KNORR dated while attending Temple University. WRAGG graduated in December 2005 and founded Mantria around that time. KNORR joined Mantria after graduating in May 2006. In college, WRAGG wrote a report on an emerging real estate market in Tennessee. In 2005, WRAGG visited his sister in Tennessee and talked to her father-in-law, Dr. George R. Dixson, an experienced real estate investor, about selling real estate. Dr. Dixson introduced WRAGG to a friend who also owned a lot of land. WRAGG performed a real estate transaction for the friend and received a $70,000 commission for performing this transaction. WRAGG used those funds as seed capital for Mantria.

Emboldened by his early success in this real estate venture, WRAGG negotiated a deal with Dr. Dixson to sell some of his land in Tennessee. Dr. Dixson owned a lot of land in Van Buren County, Tennessee along the Cumberland plateau. The land was very rural, undeveloped and worth approximately $500 to $2000 per acre. Most of the land was heavily wooded and had been used for timber harvesting and some strip mining activity. The land had a shortage of potable water. Much of the water in the county was contaminated by the past strip mining activity in the area. The contamination gave the water an orange color. Water for any real estate development would have to be pumped from a neighboring county over a mountain. A pipeline and pumping stations would have to be built to accomplish this feat at considerable expense. In addition, part of the land had been used during the Second World War as a test firing range and possibly contained unexploded shells.

[Footnote 1: In 2001, a boy in neighboring White county lost his hand when he played with an old artillery shell resulting in an $8 million lawsuit.]

Dr. Dixson deeded the land to WRAGG and Mantria to sell on a seller-financed note. WRAGG did not pay Dr. Dixson any money up front. Under the terms of the deal, Dr. Dixson received about $4000 per acre when WRAGG sold each acre of land. Importantly, if WRAGG did not sell the land within a certain time period, Dr. Dixson could take the land back. By receiving the deed, Mantria also assumed responsibility for paying all the real estate taxes on this land.

WRAGG began to imagine grand plans for this venture with several different planned communities. WRAGG hired his aunt and his sister to do sales and marketing for this real estate venture. His aunt found a real estate agent in Florida who had some investors interested in buying land in Tennessee. WRAGG rode the tidal wave at the end of the real estate market’s frenzied boom years and sold a small portion of the undeveloped land to speculators for $10,000 to $30,000 an acre, promising that the land could be worth $80,000 an acre once developed. WRAGG paid an appraiser to state that the land would be worth that $80,000 an acre once the real estate development was completely built with homes, infrastructure, and willing buyers. WRAGG negotiated similar deals with other landholders in the area and started selling their land to speculators. Short on cash, Mantria performed a few cosmetic improvements to the land but no real development. While a few gravel roads were built and electric lines were strung, none of the home sites had a source of water or a means to dispose of sewage. The purpose of these “improvements” was to give the appearance of a development project to prospective investors. The land remained the uninhabitable wasteland that it had been for decades and the development of the land fell far short of justifying the $80,000 figure.

Mantria’s earliest security offerings dealt with this real estate development in Tennessee. Mantria claimed that they “owned” 6,533 acres of land in Tennessee through a partnership Mantria Communities, LP. Mantria Communities, LP, claimed to be developing this land into several master planned communities, including Indian Trails Estates and Ironbridge Village in Van Buren, County, Mantria Place and Legacy Ridge in Sequatchie County, and Iris Village in Grundy County. There were other concept communities, such as Mantria Village and Mantria Bluffs, which were planned and discussed but never sold. Importantly, the securities offerings did not mention that Mantria’s interest in the land was contingent according to the terms of the purchase agreements with Dr. Dixson and the other landowners.

For example, Indian Trails Estates purported to be a master planned community with 302 potential home sites, each home site sitting on one acre of land which Mantria touted to be worth $88,000. Of course, a “potential” home site merely means that someone, at some point in time, could potentially build a house there. A small amount of cosmetic development was done at Indian Trail Estates but not completed and no homes were actually built. Mantria obtained the land through a seller-financed contract. Mantria obtained title to the land but did not have to pay the seller until the land was resold. Most of this land was resold to investors financed with Mantria funds through Mantria Financial with little to no money down.

Mantria Place purported to contain 3,000 home sites on 5,429 acres of land. Mantria obtained this land on a seller financing agreement from the McClelland Foundation. About 150 lots were sold. After the SEC shutdown Mantria, the McClelland Foundation simply foreclosed and took back the remainder of the land – demonstrating how tenuous Mantria’s title to the land really was. The Dunlap carbon diversion plant, discussed in more detail below, was located on this property as well.

Mantria was required by securities law to include all of the contingencies and problems with the real estate backing their securities offerings. For example, in a private placement memorandum (PPM) to raise $5 million in common stock for Mantria dated May 15, 2009, the PPM claimed that Mantria “owned” approximately 6,000 acres in Tennessee in five communities “developed by Mantria, with a total appraised value of $70,000,000.” The PPM stated that Mantria had sold 235 acres of “buildable” lots. The PPM stated that the investment would be returned after three years. The PPM estimated profits at 34.50% over the three year period. The PPM further stated that “The Common Stock Buyback Program gives you a 100% ROI by us repurchasing the common Stock at the end of 2011.” After the return of the investment after three years, the PPM promised a “total estimated return on investment” as 134.50%. The PPM further promised that the investment would be guaranteed with real estate with a “2 to 1 Ratio on your original investment, which means if you invest $50,000 you will receive $100,000 worth of collateral.” The PPM did not reveal all of the contingencies and problems with the real estate nor did it provide an honest assessment of Mantria’s financial condition and prospects. If Mantria had told investors the truth about the land, no one would have invested in their securities offerings. In order to dupe speculators into investing in this real estate through the security, the PPM contained numerous false statements and material omissions.

Contrary to their representations to investors that they were earning extravagant returns on selling real estate, Mantria’s real estate development was plagued by financial problems from the start. Mantria needed a substantial amount of funds to develop the land, funds which they did not have. WRAGG planned to sell the land to raise the funds, but needed to show some development in order to market and sell the land. By the end of 2006, Mantria was on the verge of bankruptcy and had defaulted on its debts to Dr. Dixson and the other landowners. To keep Mantria from going bankrupt, Dr. Dixson loaned WRAGG $50,000 in December 2006. In an email dated December 28, 2006, Dr. Dixson suggested that WRAGG file for bankruptcy if he could not pay him back. On January 1, 2007, WRAGG emailed Dr. Dixson and explained to him that he was in the process of re-organizing Mantria’s debt so that he could pay Dr. Dixson back. WRAGG thereafter negotiated several large loans with third-parties to keep Mantria funded in the short term. Nonetheless, Mantria’s financial problems continued throughout 2007 because they could not sell very much land. Far from being the astronomical commercial success WRAGG described to investors, Mantria barely managed to survive and stave off bankruptcy.

C.  Mantria Financial

The creation of Mantria Financial was a watershed moment for Mantria. Initially, a small amount of the land in Tennessee was sold either to cash buyers or through mortgages offered by major U.S. banks which, at that time, offered “no document” loans. Mantria received a total of about $300,000 in revenue from the sale of the land. When the financial crisis hit in 2008, real estate prices crashed, the availability of loans disappeared, and sales plummeted nationwide. Undaunted, WRAGG used his entrepreneurial spirit and decided that Mantria would create a “bank” and start offering mortgages in addition to selling the land. WRAGG hired an attorney, Christopher Flannery, to help him secure the necessary licenses. In early 2008, WRAGG received approval from the State of Tennessee to form a financial institution, called Mantria Financial, and to start financing mortgages on the land.

Mantria now needed new investor funds to “finance” the loans for the sale of real estate in Tennessee. With the real estate market plunging, willing investors were hard to find. WRAGG, therefore, sold the land under contracts which allowed real estate buyers to walk away from the transaction if the land did not increase in value in order to induce investors to sign the real estate contracts. The real estate buyers were not required to put any money down or pay any closing costs. In addition, the buyers did not have to pay interest, principal, or real estate taxes for a set time period. In fact, many of the real estate investors even received a cash bonus of $3000 or 5% cash back from Mantria after closing as an added inducement to buy the land. Nonetheless, despite these unusual terms, each sale was run through a title company, a mortgage was written, and a HUD-1 form was produced just like any other real estate sale.

The economic reality of real estate sales was far different from the extraordinary success claimed by WRAGG. Mantria was in fact losing a substantial amount of money on every real estate sale. Not only did Mantria have to pay $3000 or 5% cash back to many of the buyers, they also paid substantial sums in closing costs to the title company on each transaction. In addition, Mantria paid commissions to its employees for the sale of land. Mantria also had to pay the landowners to purchase the real estate under the seller financing contracts. As a result, while WRAGG, KNORR, and MCKELVY told prospective securities investors that Mantria was wildly successful in the real estate market, the sales were only illusionary and the profits nonexistent. In reality, Mantria simply created a real estate bubble exclusively inflated by the investor funds into Mantria Financial. The bubble was not supported by any real economic development. Once this bubble inevitably burst, the Mantria securities investors would lose their money. In this manner, the securities investors in Mantria and Mantria Financial became the victims of WRAGG, KNORR, and MCKELVY’s Ponzi scheme.

D.  WAYDE MCKELVY

While WRAGG created the mechanism to inflate the real estate bubble in Tennessee, he still needed new investor funds to act as the air to inflate that bubble. Initially, investors willing to support Mantria were scarce. Mantria continued to struggle to pay its bills. Each month, WRAGG and KNORR sat down with their accountant and decided which bills could be paid and which bills had to wait. Short on cash, Mantria essentially existed month to month. WRAGG needed a master showman and marketer who could sell his ideas to the public and solve his cash flow problem.

In the fall of 2007, a Mantria salesman introduced WRAGG to WAYDE MCKELVY. MCKELVY operated what he called “Speed of Wealth” investment clubs in Colorado which promised to make investors “stinkin, filthy rich”. An insurance salesman by trade, some of the initial members of his club included his insurance clients. To skirt SEC registration rules, MCKELVY claimed that the clubs were merely educational and that he was not promoting or selling securities, which the transcripts of the presentations clearly show that he was doing. As an insurance salesman, MCKELVY taught investors to withdraw funds from their brokerage or retirement accounts, overfund insurance policies, and then take the maximum possible loans from these policies. MCKELVY also coached his investors to withdraw the maximum amount of money from financial institutions in the form of credit card loans, home equity loans, and other types of bank loans. MCKELVY instructed investors to take the proceeds from all of those sources and invest in “high return” investments such as Mantria. MCKELVY’s theory was that investors could profit from the spread between the loans and their other investments. MCKELVY called the spread “arbitrage” and claimed that this is how the “super-wealthy” invested and made millions of dollars.

Most of MCKELVY’s early investment proposals to the Speed of Wealth Club members centered on profiting from the tail end of the real estate boom. By early 2008, these investments were losing money. When MCKELVY learned about the huge paper returns that WRAGG and Mantria were making on their Tennessee land investments, MCKELVY jumped at the chance to pitch this investment to his club. On paper, Mantria was making huge profits buying land for $4,000 and selling it for $20,000 or more. WRAGG and MCKELVY claimed that in 2008, Mantria had $11 million in revenue from the land sales and $2 to $3 million in profit. In reality, almost all of this new “revenue” was simply new investor funds artificially pumping up the value of this almost worthless land in Tennessee. WRAGG and MCKELVY also did not account for the massive cash loss Mantria took on each real estate transaction and the fact that the real estate “buyers” could walk away in two years without paying any money.

In July 2008, Mantria Financial sought to raise $70 million through a Private Placement Memorandum (PPM). WRAGG, KNORR, and MCKELVY circulated this PPM to prospective investors. According to SEC regulations, all of the Mantria investors were required to be “accredited investors,” meaning that they had sufficient income, net worth, and investing experience to understand that an investment in Mantria was extremely risky and that they could afford to lose their entire investment. Unfortunately, MCKELVY and WRAGG ignored the SEC regulations and very few of the Mantria investors were in fact accredited. Rather, MCKELVY advertised on radio, television, and the internet and offered Mantria investments to the general public. On the urgings of MCKELVY and WRAGG, many investors withdrew their life’s savings from their retirement accounts or even took out loans to invest in Mantria. The Mantria Financial PPM promised that about $65 million of that money would be used to make loans to borrowers to buy the land in Tennessee. The PPM promised an estimated annual return of 9% to 12%. The PPM stated that they would put the investment money to work “immediately” and that they had “buyers in place” to use the $65 million by December 31, 2009. Using false representations and material omissions in selling this security, WRAGG, KNORR, and MCKELVY raised millions of dollars which they used to pay “earnings” to other investors.

Mantria’s lawyer, Christopher Flannery, repeatedly counseled WRAGG and KNORR that their false and overly optimistic representations to investors were improper under federal securities law. For example, in an e-mail dated April 7, 2009, after reviewing a proposed PPM, Flannery told WRAGG and KNORR: “In general, there is just too much hype. You can’t sell securities the way you sell other products. Any sales material has to be calm and conservative.” Regarding the extravagant returns WRAGG and KNORR promised to investors, Flannery wrote: “I am very uncomfortable stating returns. Is this on an annual basis?” Flannery continued, “I don’t think you want to make any representations regarding an 85% return. Profits and returns must always be stated at the low end of the possible range.” In a second example, Flannery marked up a March 17, 2009 “Executive Summary” of the Mantria Industries Biochar Receivables Factoring Program with bold print “TOO MUCH HYPE”. Other notes on the same document read, “Never use exclamation points,” “Timeline is too aggressive,” and questioned one representation with a note “Is this true?” Moreover, Flannery questioned WRAGG if Mantria was paying MCKELVY commissions to sell investments in Mantria. WRAGG lied and told Flannery no. Flannery told WRAGG that any commissions to MCKELVY would be illegal because he was not licensed to sell securities and such commissions were required to be disclosed in the PPMs. Thereafter, WRAGG hid from Flannery the millions of dollars of commissions being paid to MCKELVY. In sum, WRAGG and KNORR ignored Flannery’s legal advice and proceeded as planned with the false representations and material omissions in the securities offerings.

E.  Green Energy

Knowing that the two-year real estate contracts were ticking time bombs which would destroy Mantria, WRAGG needed a new scheme to generate investor interest and enthusiasm in Mantria and keep the cash flowing into the Ponzi scheme before it crashed. With oil prices climbing over $140 per barrel, WRAGG, KNORR, and MCKELVY jumped on the “green energy” wave that was sweeping across the country during that time period. Initially, WRAGG latched onto the green energy ideas as a way to market the real estate in Tennessee as a “green” community. WRAGG later met Michael Lurvey who ran a company called Carbon Diversion, Inc. (“CDI”). Lurvey claimed that he had a license from the University of Hawaii to use and develop their carbon diversion systems. The carbon diversion systems took certain forms of biomass and using the right combination of heat and pressure, turned the biomass into a product known as biochar, which is similar to charcoal. Depending on the quality, the biochar could be sold for a profit and used in various applications. Lurvey was exploring ways to use the carbon diversion systems in Hawaii to convert Macadamia nut shells into biochar.

WRAGG saw potential for using the same systems for Mantria. WRAGG knew that thousands of acres of forest in Tennessee would be cleared if his real estate was ever developed. Mantria began investing millions of dollars of new investor funds into CDI. Mantria and CDI began two different projects. First, Mantria and CDI planned to develop a biochar facility on the land Mantria owned in Dunlap, Tennessee. According to WRAGG, the Dunlap facility would turn the surrounding forest into profitable biochar. Second, Mantria and CDI would build a carbon diversion systems factory in Carlsbad, New Mexico to build the machines which made the biochar. Like the real estate developments, WRAGG, KNORR, and MCKELVY began soliciting investments in these “green energy” projects by making false representations to potential investors, omitting material facts, and wildly exaggerating the extent of their operations.

After listening to the sales pitches of WRAGG, MCKELVY, and KNORR, investors threw millions of dollars into these green energy projects believing that Mantria was on the cusp of a revolutionary technology. WRAGG and MCKELVY portrayed Mantria as the next Microsoft – a company which would change the world and make every investor fabulously wealthy. The defendants attempted to raise more than $100 million in securities investments. Between 2008 and 2009, WRAGG, KNORR, and MCKELVY raised a total of $54 million in 12 different securities offerings from more than 300 different investors. Some investors “rolled- over” funds from one group to the next, such as from a real estate fund to a green energy fund.

The chart below represents only new money coming into Mantria bank accounts and excludes any money “rolled-over” from one investment to the next. Moreover, there were additional securities offerings by Mantria that apparently did not raise any money.

In pitching Mantria to prospective investors, WRAGG, KNORR, and MCKELVY stated that Mantria was making huge profits in green energy sales, as high as 484% return on investment. Unfortunately for these investors, the economic and scientific reality of the situation was far different than the situation presented by WRAGG, MCKELVY, and KNORR when soliciting investments. While Mantria was pouring millions of dollars into CDI to support these projects, CDI was making very little progress. In fact, CDI was making so little progress, that in December 2008, the University of Hawaii withdrew their license. In early 2009, WRAGG accused Michael Lurvey of misappropriating Mantria funds and hired an investigator. In the summer of 2009, Mantria took over CDI in a proxy fight. This gave Mantria control over CDI’s green energy developments.

WRAGG and MCKELVY had told investors in May 2009 that the Dunlap plant was up and running. The truth of the matter was far from that. In fact, the Dunlap plant had not even been built. In July 2009, WRAGG struck a deal with Cary Widener, the owner of High-Temp Industries. High-Temp Industries manufactured and supplied CDI with many of the components for the carbon diversion system. A mechanical engineer by trade, Widener agreed to help get the Dunlap plant up and running. Widener saw the Dunlap plant as a “science experiment” for his company. Widener believed that if he could get the Dunlap plant working, then Mantria could sell the carbon diversion systems to other companies which would result in profits for High-Temp Industries which sold Mantria the parts to manufacture and maintain the machines. Widener understood that the Dunlap plant itself would never be profitable.

WRAGG, KNORR, and MCKELVY touted the Dunlap plant as a fully functioning facility generating tons of biochar per day. They paid investors to travel to the Dunlap facility to see the plant operate. In reality, the Dunlap plant was nothing more than a Potemkin village to give the appearance of production to investors. The total amount of sales from the Dunlap plant totaled a few thousand dollars for a few samples of product. In a PPM dated July 31, 2009, to raise $3.75 million for 25% of the profits on Mantria Place Eternagreen Center, WRAGG assured investors that the Dunlap facility “began operations on July 30, 2009” – which of course was not true. The PPM claimed that each investment will be “secured by real estate with an appraised value of at least 100% of an Investor’s initial investment” – the real estate of course was not worth that much and came with serious contingencies. The PPM promised that over $2 million of these investor funds would be used for development and working capital – in reality these funds were used to pay “earnings” on prior investments.

From the start, the Dunlap plant was plagued by scientific and logistical challenges. When Widener went to Tennessee in July 2009, he expected the Dunlap plant to be nearly completed based upon what WRAGG had told him. In reality, the building had not even been built. There were no mechanical drawings. There were no building drawings. Widener and some engineers from CDI thereafter spent about three months in Tennessee building the Dunlap plant essentially from scratch. By November 2009, the Dunlap plant had run a few test batches but was not producing a consistent and sellable product.

Contrary to WRAGG’s and MCKELVY’s representations to investors, to create biochar, the Dunlap plant needed a consistent feedstock to produce a consistent product. WRAGG’s idea to produce biochar from the Tennessee forest was not scientifically feasible because the trees came in many different varieties and densities. As Widener explained, making biochar is similar to making any other kind of baked product – if you have inconsistent ingredients you will end up with inconsistent results. To sell the biochar, they needed consistent and high quality results made from consistent and high quality feedstock. The quality of the biochar in the test batches was not high enough for sale because the technology had not been perfected, again contrary to WRAGG’s and MCKELVY’s representations to investors.

The Dunlap plant also suffered from logistical problems. The Dunlap plant was never designed to produce the large scale quantities of biochar that WRAGG promised. There were several additional problems with the Dunlap plant. First, the plant was not capable of producing the quality of biochar their potential customers required. Second, the plant could produce a little more than one ton of biochar per hour while WRAGG promised investors that the plant could produce 10 tons per hour. Per ton, biochar is relatively inexpensive, typically selling for $500 or less. Biochar is expensive to transport, costing as much as $800 per ton. The Dunlap plant would have to produce millions of tons to generate the profits promised to investors. Built on a mountain top in rural Tennessee, trucks would have to access the plant on a narrow road. It would be impractical, if not impossible, to transport the tons of feedstock and biochar in and out of the Dunlap plant to make it financially successful. Knowing the logistical problems with the Dunlap plant, WRAGG planned to build a second biochar facility in Hohenwald, Tennessee. The Hohenwald plant would be built in an industrial park with easy access for trucks and close to a railroad – a location much more suitable for this kind of production.

In a PPM to investors dated May 1, 2009, Mantria Industries LLC attempted to raise $12.2 million to build a waste-to-energy plant in Hohenwald, Tennessee. The PPM assured investors that their investment was “backed by high quality real estate at a 2 to 1 ratio” of the amount invested. The PPM estimated the return on this investment at 233.28%. The PPM further stated, “Your investment is secured with collateral, so if we fail to provide the projected ROI [Return on Investment] at the end of each year, you could then enact your collateral.”

On August 31, 2009, a similar PPM sought to raise another $20 million for the Hohenwald plant. The PPM promised that Mantria would use this money for “working capital, reserve funding, and expanding operations via construction of the Hohenwald Site.” This PPM estimated 2010 profits at 38.97% and 2011 profits at 78.56%. If the company went public, the PPM estimated returns at 550.87%. Like the other investments, the PPM promised that the investment was secured by real estate “at a 1 to 1 Ratio on your amount invested.” The PPM explained, “Your investment is secured with collateral, so if we fail to provide the projected ROI at the end of each year, you could then enact your collateral.” An accompanying powerpoint presentation written by WRAGG for potential investors explained that “our #1 focus here – expand operations organically via the sale of equity at a discount today.” On a slide titled “Revenue Streams,” WRAGG stated that they were currently working with “the following Fortune 500 companies: Kraft, Republic Waste, Smuckers, Wal-Mart” – none of which was true. WRAGG explained that if “we go bankrupt” the investors’ money is secured by a “1-1 ratio” of real estate – again without mentioning the serious contingencies on that collateral.

In a similar manner, WRAGG, KNORR, and MCKELVY circulated PPMs for securities to “build” a plant in Carlsbad, New Mexico which would construct the carbon diversion systems (which made the biochar) for resale. WRAGG, KNORR, and MCKELVY raised about $2 million to build this plant. According to the PPM submitted to investors dated March 15, 2009, the investment was to be used exclusively to build the Carlsbad plant. The PPM stated that all “cash received will be held in trust to be used solely for the purposes described” in the PPM.

While WRAGG, KNORR, and MCKELVY took in millions of dollars in investments for the Hohenwald plant, all of those funds were diverted to keeping the Ponzi scheme going and the Hohenwald plant was never built. In the same manner, while WRAGG, KNORR, and MCKELVY took in millions of dollars in investments for the carbon diversion systems plant in Carlsbad, New Mexico, those funds were diverted in the exact same manner and the Carlsbad plant was never built, even though investors were told that the plant was fully operational.

Although the economic and scientific reality of the situation was grim, WRAGG, KNORR, and MCKELVY were able to raise such fantastic sums because they presented a fantasy world to prospective investors. MCKELVY told investors that they could make money simply by spreading the biochar onto fields because it pulled “toxins” out of the atmosphere – a claim which was preposterous. WRAGG and MCKELVY told investors that the Dunlap plant would turn “trash into cash” by converting the consumer/household waste generated by the Mantria real estate developments into biochar. WRAGG and MCKELVY told investors that the State of New York was going to put one of their carbon diversion systems in every county to turn “trash into cash.” Unfortunately for the investors, as a matter of chemistry, consumer waste cannot be made into biochar because there simply is not enough carbon in consumer waste and consumer waste is an inherently variable feedstock. Mantria’s carbon diversion systems were untested, unproven, and unprofitable which WRAGG, KNORR, and MCKELVY pitched to investors as tested, proven, and profitable.

In raising these funds, WRAGG, KNORR, and MCKELVY repeatedly lied about the economic state of Mantria and omitted material facts. Some, but not all, of the key misrepresentations that they made included:

•  That Mantria was exceedingly profitable. Investors were told that Mantria was currently earning millions of dollars in real estate and green energy and investors could expect to earn as much as a 484% return on their investments in Mantria. In reality, Mantria had no profits and very little revenue.

•  All investments in Mantria were secured by the Tennessee real estate on a “2 to 1” or a “1 to 1” ratio. Investors were told that if Mantria went bankrupt, they would not lose any money because they would get the real estate in Tennessee. Of course, Mantria vastly overstated the value of the land in Tennessee and their ownership of the land came with serious contingencies. When Mantria was shut down by the SEC, most of the land had been taken back by its former owners and what little remained had little or no value.

• That Mantria’s biochar production facility in Dunlap, Tennessee was in full production and earning substantial profits from the sale of biochar. Investors were told lies such as “Mantria Industries is the world’s largest manufacturer and distributor of biochar.” In fact, the Dunlap facility was never a full production facility and only produced some samples of biochar. Moreover, Mantria’s business plan was based upon an impossibility – “trash into cash.” It is scientifically impossible to turn consumer waste into biochar because there simply is not enough carbon.

• That Mantria’s carbon diversion systems plant in Carlsbad, New Mexico had been built and that they had contracts to sell large numbers of systems to various customers. In fact, the Carlsbad plant was never built and the money they raised to build the plant was used to pay investor “earnings” on other securities.

In addition, WRAGG, KNORR, and MCKELVY made numerous material omissions from their solicitations to investors, including but not limited to:

• They failed to tell investors that they were paying “earnings” to old investors with new investor funds.

• They also failed to tell investors that MCKELVY was receiving a commission of 12% to 15% of all new investor funds. WRAGG and KNORR also received “points” or a percentage of later securities offerings which was not disclosed to investors.

• They failed to disclose to investors all the problems and contingencies with the Tennessee real estate. A key part of their investment pitches to new investors was that if Mantria went bankrupt, their investments were secured by the Tennessee real estate.

• They failed to disclose to investors that the University of Hawaii revoked the right to use the patent on the technology which they intended to use to make biochar and to produce the carbon diversion systems.

The financial truth of Mantria was far different from the fantasy world pitched by WRAGG, KNORR, and MCKELVY as reality. Mantria’s actual revenues from the sale of land in Tennessee amounted to about $300,000 and they sold $7,500 worth of biochar samples from the Dunlap plant. Neither the Hohenwald nor the Carlsbad plant were built and the money raised was used to pay “earnings” on other investments. All of the purported “earnings” were in fact new investor funds.

F . The Investigation

In 2009, the SEC in conjunction with the Colorado Division of Securities began to investigate Mantria. Through the course of the civil investigation and the subsequent FBI criminal investigation, the investigators obtained numerous recordings of WRAGG, KNORR, and MCKELVY making sales pitches to prospective Mantria investors during which they made false representations and material omissions.

1.  April 21, 2009 Radio Show

On April 21, 2009, AMANDA KNORR appeared on the Speed of Wealth internet radio show to promote Mantria securities to potential investors. During her appearance, KNORR made several false statements and material omissions to tout Mantria. First, KNORR claimed that Mantria was able to “produce about 20% more product than other competitors” – which of course was false because Mantria was not producing any product at that time. KNORR falsely alleged that Mantria was currently selling the biochar being produced at their facility in Tennessee. KNORR further falsely stated that a logistics company, Integra Core, was presently handling the packaging and shipment of the biochar being produced in Tennessee. KNORR stated, “We actually have orders going out.” KNORR alleged that Mantria had orders going out to Africa, Australia, and India – which was not true because the Dunlap plant was not even built. In April 2009, the Dunlap plant was merely an idea in the head of WRAGG, KNORR, and MCKELVY which they pitched to investors as reality.

2.  Speed of Wealth Seminar, May 7, 2009

On May 7, 2009, MCKELVY and WRAGG touted Mantria to potential investors at a Speed of Wealth seminar in Colorado. In the first half of the presentation, MCKELVY pitched his plan for investors to withdraw money from other investments, overfund insurance policies, and then take out the maximum possible loan. MCKELVY’s theory was that the investors could make money on the spread between the loan (around 6%) and their other investments. MCKELVY then began pitching Mantria. MCKELVY did not have a license to sell securities and he openly flaunted SEC rules. MCKELVY stated that Speed of Wealth investors had “averaged between 17 and 100 percent annualized returns” investing with Mantria. MCKELVY stated, “I get a hundred investments across my desk every month. And I’ve did a few of them. I’m never doing any other investment except for Mantria.” MCKELVY stated that “I’m deeply involved in Mantria. A lot of the things he’s [WRAGG] talking about, I’m a partner with. I look at the books. I know where all the money is going.”

After MCKELVY’s presentation, WRAGG made a presentation to the investors and made a number of false statements and material omissions to induce them to invest. WRAGG claimed that over the past 18 months, Mantria made $10.6 million in pre-tax profits for Speed of Wealth investors. WRAGG stated that Mantria had over $100 million in assets. WRAGG claimed that “70 percent of our assets are real estate assets based in the State of Tennessee.” WRAGG stated, “when we talk about collateral and when we talk about security, ladies and gentlemen, you do not get any better than that.” WRAGG claimed that Mantria had a “very light and passive debt load.” WRAGG stated that Mantria owned 10,000 acres of land in Tennessee and that they were currently building a real estate community called Mantria Place. WRAGG admitted that the land was purchased for only $2,600 per acre. WRAGG claimed that he was “developing” 4500 home sites on the property. He claimed that he was “creating our own city.” He claimed that Mantria Place was “Tennessee’s largest master plan community.” WRAGG described Mantria’s other investments and claimed that the average return on these investments for the past nine months had been over 248%. WRAGG claimed that they had already “built the world’s first biorefinery manufacturing plant in Carlsbad, New Mexico.” WRAGG claimed that the “estimated net profit” for Mantria in 2009 was $5.5 million. WRAGG claimed that the estimated rate of return for investors over three years was 134.50%.

Furthermore, WRAGG told the investors that they were investing in “something that’s cash-flowing, something that has assets of over $104 million supporting it.” WRAGG promised that all of the investments would be collateralized with the “2 to 1 ratio” of real estate.
WRAGG told the investors that if they did not get the promised returns, the investors “get to enact the collateral”. WRAGG promised investors a money-back guarantee that Mantria would buy-back their investments by December 31, 2011, if they were not fully satisfied. WRAGG also stated that Mantria was “setting aside money to make sure that we can buy you back at the end of that time frame.” WRAGG stated that if Mantria went bankrupt, the investors would not lose any money because they had the collateral of the real estate investments. Of course, WRAGG knew that all of these assertions were false. WRAGG also knew that he was not giving the investors a complete and accurate picture of Mantria as he omitted many material facts about Mantria. If the potential investors had known the truth about Mantria’s financial condition and economic prospects, it is unlikely that any of them would have invested.

3.  Speed of Wealth Seminar, May 21, 2009

In the first half of the presentation, WAYDE MCKELVY pitched his plan for investors to withdraw money from other investments, overfund insurance policies, and then take out the maximum possible loan. MCKELVY’s theory was that the investors could make money on the spread between the loan (around 6%) and their other investments. MCKELVY then began pitching Mantria. MCKELVY suggested that Mantria was the next Microsoft and that the investors in the room would have the chance to get “stinkin, filthy rich” if they invested with Mantria. MCKELVY stated that Mantria’s plan was to turn “trash” into “cash”. MCKELVY explained that Mantria was “on the cusp of a revolutionary technology that’s going to change the world, and you guys can benefit from it by putting money in and getting stinkin’ wealthy.” In introducing WRAGG to the audience, MCKELVY told the investors, “This is the biggest wealth-building opportunity that I believe has ever come across in your lifetime.”

WRAGG then made his presentation pitching Mantria. During the presentation, WRAGG made a number of false statements to the prospective investors. WRAGG stated that Mantria was in a “full commercial state” of production. He stated that Mantria had received “6,000 tons of preorders for our bioproducts.” WRAGG alleged that Mantria owned over 10,000 acres of land in Tennessee that they were “developing” into Tennessee’s largest master- plan community. WRAGG stated that early investors in Mantria had made “well over 100- percent return” in 2008. WRAGG stated that Mantria “returned to Speed of Wealth students over $9.5 million in pretax profits.” WRAGG stated that even though he and KNORR were young, they had been in “business together for the last ten years.” WRAGG promised the investors that their investment would be collateralized “by real estate at a 2 to 1 ratio.” He later further explained that promise by stating, “Now, every dollar that’s invested into this deal is at a 2 to 1 ratio, which means if you invest $50,000 or $25,000, – let’s say $25,000, you’re getting $50,000 of collateral, which is backed by high quality real estate.” WRAGG stated that if Mantria went bankrupt, the investment would still be secured by the real estate.

Moreover, WRAGG stated that Mantria’s biochar production had experienced “tremendous growth” which “more than doubled in just this past month.” WRAGG bragged that EternaGreen was “rapidly becoming the industry-leading brand.” WRAGG stated that the plant was producing “$6.2 million annually” with a single shift of production. However, WRAGG stated that they planned to go to three shifts to triple production. With triple shifts, WRAGG promised returns of 293% to the investors.

After WRAGG’s presentation, MCKELVY spoke for a few minutes and made more false statements about Mantria. MCKELVY claimed that the State of New York had “already ordered and signed a letter of intent” to purchase 62 waste disposal units from Mantria. MCKELVY also claimed that the investors “can get paid by just owning land and spreading this stuff [biochar] all over your field, because this stuff pulls the toxins out of the atmosphere.” MCKELVY further alleged that Mantria was the only biochar producer which would “burn all waste” and “could turn trash into biochar is 40 minutes.” MCKELVY stated that the competition’s biochar units cost $13 million to build, while Mantria’s biochar units only cost $3.5 million and were “portable”. MCKELVY claimed that the machines were small enough to be put on the back of a garbage truck. MCKELVY further claimed that they had “a backlog of machines already ordered” and that Mantria could not manufacture the biochar machines fast enough to keep up with sales. MCKELVY falsely claimed that the Carlsbad, New Mexico plant was currently under construction to build more biochar machines.

Again, all of these assertions by WRAGG and MCKELVY were patently false. Neither WRAGG nor MCKELVY painted an honest picture of Mantria for the prospective investors, for if they had, it is highly unlikely that any of them would have invested. WRAGG, KNORR, and MCKELVY had to dupe prospective investors with false representations and material omissions about Mantria’s economic condition and financial prospects to convince them to invest.

G.  SEC Action

In November 2009, the SEC initiated civil proceedings against Mantria in U.S. District Court in Colorado and the Ponzi scheme collapsed. Of the $54 million in investor funds, Mantria spent all but about $600,000. The district court appointed a receiver to take control of Mantria’s assets, liquidate them, and disburse whatever funds were available to the investors. Unfortunately for the investors, Mantria had very few assets. The land in Tennessee was, and always had been, essentially worthless. Most of the land was taken back by the original owners under the terms of the sales contracts – terms which had not been disclosed to the investors. The millions of dollars in profits and the $100 million in assets which WRAGG, KNORR, and MCKELVY used to dupe the victims simply did not exist.

Even after the SEC took action, WRAGG continued to solicit new investor funds and tried to keep the Ponzi scheme going. On November 20, 2009, WRAGG sent a “FAQs” form to investors which provided false information to investors and pretended that Mantria was in business. Regarding the biochar production, WRAGG stated that Mantria was “working on fulfilling the pending orders” for biochar. Regarding the sale of carbon diversion systems, WRAGG claimed that “none of the parties we are in negotiations with have stepped away.” WRAGG claimed that the Dunlap facility “is producing bio-char”. Furthermore, WRAGG claimed that “we are continuing system sales and biochar orders.” WRAGG stated that “revenue have come from the sale of land and limited sales of bio-char.” Finally, WRAGG claimed “We believe we used the investor funds for the purposes stated in the use of proceeds” and “We believe that we will be able to make all the investors whole”. WRAGG claimed that they had “significant assets in Real Estate and at the Mantria Place facility.” In sum, WRAGG blamed their financial problems on the SEC’s seizure of their financial assets rather than his own actions. WRAGG continued to lull old investors and seek new investors until the district court ordered Mantria into receivership on April 30, 2010.

The SEC and the FBI investigators queried dozens of Mantria investors. Most of the investor responses were similar. The victims invested in Mantria because they were led to believe by the defendants that Mantria was a successful business that generated substantial profits. The investors stated that they were not aware that any Mantria “earnings” were being paid with new investor funds. The investors were led to believe by WRAGG, KNORR, and MCKELVY that their investments were safe and secure. In particular, most investors noted the fact that their investments were supposedly secured by real estate in Tennessee as a particularly compelling reason to invest in Mantria. The investors were not told about the serious contingencies on or problems with the Tennessee real estate. Only when Mantria went bankrupt did the victims realize that the land in Tennessee was essentially worthless. As a result, most investors lost essentially their entire investment in Mantria.

In granting the SEC motion for summary judgment against WRAGG, KNORR, and MCKELVY, the Honorable Christine M. Arguello of the United States District Court for the District of Colorado found that Mantria amounted to nothing more than a Ponzi scheme. In her written opinion, Judge Arguello found that the defendants made material misrepresentations in connection with offers and sales of Mantria’s securities, including that: (1) Mantria generated millions of dollars in annual profits when, in fact, Mantria generated no profits; (2) Mantria was the world’s largest manufacturer and distributor of biochar and that Mantria’s biochar operations were very profitable when, in fact, Mantria never sold any biochar and never made any revenues from biochar; (3) Mantria built the world’s first biorefinery plant in New Mexico when, in fact, Mantria never built or operated such a facility; (4) Mantria’s biochar manufacturing facility in Tennessee was producing $6.2 million annually when, in fact, the facility never generated any revenue; (5) Mantria paid investors through profitable ventures when, in fact, it paid investor returns using investors’ money; and (6) Mantria was not a Ponzi scheme when, in fact, it was.

In granting the SEC’s motion for a permanent injunction barring WRAGG, KNORR, and MCKELVY from future violations of securities laws, Judge Arguello found:

[O]ver the course of approximately two years, Defendants raised more than $54 million from over 100 investors by egregiously, recklessly, knowingly, and shamelessly perpetrating a fraudulent scheme whereby they used misrepresentations, omissions, and blatant lies to induce unsuspecting and unwitting victim investors to liquidate the equity in their homes and take out bank loans to invest in Defendants’ scheme, which was nothing more than smoke and mirrors. Thus, given the seriousness and extent of the violations and the degree of scienter required to establish and further the fraudulent scheme, the Court finds that entry of a permanent injunction is warranted.

In imposing a civil penalty on the defendants, Judge Arguello held: “Defendants repeatedly engaged in these acts for at least two years, during which time they preyed on unsuspecting and unwitting investors who liquidated their retirement accounts and risked their home equity only to have their life’s savings washed away by Defendants’ sociopathic greed. Thus, without question, Defendants’ conduct is deserving of the most severe penalties available under 15 U.S.C. § 77t(d).”

H.  Mantria Business Records

Mantria’s business records unearthed during the SEC and FBI investigation showed that WRAGG, KNORR, and MCKELVY were well aware of Mantria’s financial problems and the fact that their businesses were never profitable, contrary to their wildly profitable representations to investors. Mantria’s federal tax returns showed a $25,000 loss in 2006, a $27,000 profit in 2007, and a $3.8 million loss in 2008 – not the millions of dollars in profits reported to investors. While the defendant’s told investors that Mantria held more than $100 million in assets, their own internal accounting reports reflected assets of less than $1 million as of December 31, 2008. Internal budget reports for Mantria showed that WRAGG, KNORR, and MCKELVY expected Mantria to lose over $1 million in the first half of 2009, contrary to what they told prospective investors. These budget reports showed that Mantria was actually losing money faster than WRAGG, KNORR, and MCKELVY expected and showed an actual loss of more than $6 million in the first half of 2009. If the investors had known the truth about Mantria’s financial condition, it is unlikely that anyone would have invested. WRAGG, KNORR, and MCKELVY had to lie to dupe the victims into investing in Mantria securities.

I.  Substantive Counts

The indictment charges seven substantive counts of wire fraud. The first six wire fraud counts pertain to commissions which Mantria paid MCKELVY for illegally raising funds for the fraudulent securities offerings. Count Eight pertains to a wire transfer to a title company in furtherance of the Ponzi scheme.

Count Two charges a September 18, 2009 wire in the amount of $40,625 from Mantria (WRAGG and KNORR) to Retirement TRACS, LLC, (MCKELVY) to pay MCKELVY his undisclosed commissions for raising funds for Mantria.

Count Three charges a September 10, 2009 wire in the amount of $37,458.57 from Mantria (WRAGG and KNORR) to Retirement TRACS, LLC, (MCKELVY) to pay MCKELVY his undisclosed commissions for raising funds for Mantria.

Count Four charges a September 9, 2009 wire in the amount of $34,375 from Mantria (WRAGG and KNORR) to Retirement TRACS, LLC, (MCKELVY) to pay MCKELVY his undisclosed commissions for raising funds for Mantria.

Count Five charges a July 31, 2009 wire in the amount of $200,000 from Mantria (WRAGG and KNORR) to Retirement TRACS, LLC, (MCKELVY) to pay MCKELVY his undisclosed commissions for raising funds for Mantria.

Count Six charges a July 9, 2009 wire in the amount of $68,750 from Mantria (WRAGG and KNORR) to Retirement TRACS, LLC, (MCKELVY) to pay MCKELVY his undisclosed commissions for raising funds for Mantria.

Count Seven charges a July 1, 2009 wire in the amount of $87,500 from Mantria (WRAGG and KNORR) to Retirement TRACS, LLC, (MCKELVY) to pay MCKELVY his undisclosed commissions for raising funds for Mantria.

Count Eight charges a June 11, 2009 wire transfer in the amount of $46,078.43 from Mantria to a title company in Tennessee to “purchase” real estate. As described above, Mantria used new investor funds to “buy” real estate in Tennessee to which Mantria already held title in order to create a real estate bubble for this undeveloped and worthless land.

J.  WAYDE MCKELVY’s KNOWLEDGE

The government will prove that MCKELVY knew that Mantria was a Ponzi scheme and knew that his statements to investors and prospective investors to get them to invest in Mantria were false and misleading. During the course of the SEC investigation, MCKELVY testified under oath on two occasions about his knowledge of Mantria. In so doing, MCKELVY admitted his own criminal conduct.

1.  October 22, 2009 Testimony

On October 22, 2009, MCKELVY testified before the SEC. Notably, his testimony on this occasion occurred before the SEC shut down Mantria in November 2009. During his testimony, MCKELVY admitted that he owned 51% of Retirement TRACS, LLC, and his then wife, Donna McKelvy, owned the other 49%. MCKELVY stated that he owned a percentage of Mantria Industries as well. When the SEC attorney asked him how he acquired his interest in Mantria Industries, MCKELVY replied: “Because Troy [WRAGG] and I are very, very close friends. We have become very, very close friends, sweat equity. He realized that without me he probably wouldn’t be where he is out today, and he wanted to make things right. It was a conscious decision on his part.” MCKELVY explained that WRAGG told him that WRAGG “would not be where he is today if it hadn’t been for me going out there and believing in him and believing in what they were doing and helping them raise money.”

The SEC attorney then asked MCKELVY what was the value of his ownership in Mantria Industries. Contrary to his representations to investors that Mantria was a profitable company with substantial assets backing their investments, MCKELVY replied that the value of his ownership was “squat at this point.” MCKELVY explained that Mantria’s biochar program was only in the “test stages” and opined that Mantria Industries was not worth anything “until it comes to fruition.” MCKELVY acknowledged that other Mantria investments, such as Mantria Records, also were not producing revenue. MCKELVY commented, “Until they start making real revenue, I don’t think it is worth anything.” When asked the value of the real estate in Tennessee which Mantria allegedly owned, MCKELVY responded, “in my opinion, zero.” MCKELVY stated that the land had been appraised at $100 million, “but until it sells, I think it is worth nothing.” Again contrary to his representations to putative investors that Mantria made substantial money selling real estate, when asked how much real estate Mantria had sold, MCKELVY replied, “I have no idea.”

Later in his testimony, the SEC inquired about the fees MCKELVY charged to investors. When asked if MCKELVY disclosed those fees to investors, MCKELVY replied, “No.” MCKELVY explained, “they are very much aware I make fees, they just don’t know how much.” MCKELVY further admitted that he does not explain to potential investors at every seminar the fact that he earns fees. MCKELVY stated that he only mentions fees, “just when it crosses my mind.”

One of the defenses which the defendant raised in his pretrial pleadings was that Mantria Financial was not a financial institution. In his October 2009 testimony before the SEC, MCKELVY admitted that he knew that Mantria Financial was a financial institution. When questioned about one of the investments known as Mantria 17, MCKELVY replied, “my understanding is that Mantria 17 is paid by home site owners that are financed through Mantria Financial.” MCKELVY elaborated, “Mantria 17 is a Tennessee financial institution, a commercial bank . . . . Mantria 17 was its own banking system, bank, to sell homes sites.”

In his October 2009 SEC testimony, MCKELVY also admitted that he knew that Mantria had not sold any biochar because Mantria was still testing the biochar making systems – contrary to his representations to prospective investors. Specifically, MCKELVY stated that Mantria had received “a lot of inquiries, but we are holding off on orders until we go through our tests.” Regarding who had placed an order for biochar, MCKELVY admitted, “Nobody has put an order in to my knowledge.” MCKELVY further stated that he knew that Mantria had not sold any biochar in the past because “we couldn’t produce it.” When asked about biochar products generally, MCKELVY admitted, “We haven’t sold anything. We just have inquiries, but we haven’t taken any orders.”

MCKELVY also discussed his knowledge of Mantria’s patents on the biochar technology in his October 2009 SEC testimony. The SEC attorney asked MCKELVY point blank, “have you ever told investors that in fact patents have been issued?” MCKELVY either lied or failed to remember his prior statements to prospective investors (for example, on the May 21, 2009 recording) and replied, “I’ve never said that. I’ve heard I said that, but I have never said that because it is false. Patents have never even been applied for by CDI.” The SEC attorney then pointed to the transcript of the May 21, 2009 recording where MCKELVY told the audience that the technology “is patented.” Once confronted, MCKELVY admitted that his statement “was a blatant lie.”

In his October 2009 testimony, the SEC also asked MCKELVY about his statements to prospective investors that one or more Mantria entities was preparing to “go public” through an initial public offering. MCKELVY admitted that he knew that Mantria had taken “absolutely [no steps] at this point.” MCKELVY explained, “We have to get results. We have to see the company build. You don’t go public until you have something to go public with.” Contrary to his representations to prospective investors, MCKELVY noted, “We don’t have the sales. We don’t have the bio refining sales, the system sales.”

Towards the end of his testimony, the SEC attorneys made further inquiries into MCKELVY’s assets. Again, this testimony was taken in October 2009, while Mantria was still operating and before the SEC shut it down. The SEC attorney asked him to estimate his net worth. MCKELVY stated that on “paper” his net worth was between $5 million and $10 million when accounting for his interest in various Mantria entities. However, MCKELVY admitted that his “real net worth” was “probably zero.” In so doing, MCKEVLY admitted that he knew that Mantria and Mantria’s investments were not actually worth $100 million as he and WRAGG told investors that they were worth.

Finally, the SEC attorneys asked MCKELVY about his living expenses. MCKELVY admitted that he was spending $30,000 per month from his share of the fees generated by Mantria investors. MCKELVY explained that he spent the $30,000 per month on “Living expenses. I have rent of $8,000, I have a car payment of $2,000. I have got car payments. I have groceries. I have got entertainment. Taxes to pay.” The SEC attorney then asked, “$30,000 a month is a lot of groceries, would you agree with that, Mr. McKelvy?” To which, MCKELVY replied, “Oh yes, I live good.” MCKELVY explained, “Yes, I don’t save money. . . . I spend every dime I make.”

2.  November 19, 2010

In November 19, 2010, the SEC took MCKELVY’s deposition in the civil securities fraud case in Denver. Notably, this testimony took place approximately one year after the SEC shut down Mantria in November 2009.

During this testimony, MCKELVY again addressed the issue of his knowledge that Mantria Financial was a financial institution under Tennessee law. Specifically, the SEC attorney asked MCKELVY about TROY WRAGG’s real estate development. MCKELVY stated, “I will go on the record as saying I thought it was a good idea for him [WRAGG] to start his own bank [Mantria Financial] to move the property as long as the value was the in the underlying property.”

The SEC also asked MCKELVY about the fees he made for raising money for Mantria. The SEC attorney stated that they had computed that MCKELVY made about $6.2 million in fees over three years. To which, MCKELVY responded, “In three years, yes, that’s probably pretty accurate.”

The SEC also asked MCKELVY what information he had regarding the profitability of Mantria’s operations. MCKELVY replied that he had received some “pro formas” from WRAGG. MCKELVY then stated, “I know they weren’t profitable.” MCKELVY further stated, “I don’t think there was any biochar production.”

Finally, the SEC asked MCKELVY about Mantria being a Ponzi scheme. MCKELVY explained that he did not believe that Mantria was a Ponzi scheme, even though he knew that Mantria was not profitable, he was living lavishly off the $6.2 million in commissions, and he was using new investor money to pay “returns” to earlier investors. The SEC asked MCKEVLY, “how would you define a Ponzi scheme?” MCKELVY replied, “a Ponzi scheme is something that when you’re going out and telling people you’re going to reinvest their money for them, you’re taking in money, you’re living lavishly off the money, and as new money comes in, you’re just paying the returns out and telling them what returns they’re getting” – exactly what MCKELVY was doing.

3.  June 7, 2007

The 2009 investigation was not the first time MCKELVY had been investigated by the SEC. In 2007, the SEC investigated MCKELVY regarding his investment clubs which shortly thereafter began investing in Mantria. On June 7, 2007, MCKELVY testified before the SEC and stated that he and his partner looked for investment opportunities and presented these opportunities to the clubs “every week or every other week.” MCKELVY noted that many club members were clients of his insurance business. MCKELVY stated, “We do a lot of due diligence. And once we are comfortable introducing an investment opportunity the club is called together on a teleconference. I will introduce them to the opportunity, tell them the details, the positives, the negatives of the opportunity, and my part is done.” MCKELVY explained that investment opportunities were “not hard to find.” MCKELVY noted that, “I understand real estate very well.” MCKELVY estimated that his clubs added “four to seven” new members and month and each investor contributed, on average, about $100,000. Regarding Retirement TRACS LLC (the entity to which Mantria paid MCKELVY his $6.2 million in undisclosed commissions), MCKELVY admitted that, “It’s my entity.”

IV .  EVIDENCE

In order to prove these charges, the government intends to call approximately 30 witnesses and introduce dozens of exhibits.

A.  Victims

Of the more than 300 victims of this fraud, the government plans to call about 10 victims to testify at trial as representatives all the victims. Most of the victims have a very similar story to tell. The victims will share the lies which MCKELVY, WRAGG, and KNORR told them in order to get them to invest in Mantria. The victims were told that Mantria was a very profitable company selling real estate and biochar. The victims were told that their investments were guaranteed by the real estate in Tennessee. Moreover, the victims will also share what they were not told about Mantria. They were not told about the contingencies in the land. They were not told that Mantria biochar was an unproven commodity. The bottom line is that if the victims knew the truth about Mantria, they never would have invested.

B.  Mantria Employees/Contractors

The government will also call a number of Mantria employees. Contrary to what WRAGG, KNORR, and MCKELVY were telling investors, the government’s evidence will show that Mantria was on the verge of bankruptcy. Mantria was not making any money. The only money coming in was the new investor funds. Moreover, Mantria was spending that money as fast as it came in the door. A large portion of the victims’ money was spent paying MCKELVY’s fees, paying earlier investors, and pretending to be a successful company.

C.  Law Enforcement

The government will also call several witnesses who investigated these crimes.

Jerry Lowe worked for the Colorado Division of Securities. Lowe recorded at the two conferences in May 2009 during which WRAGG and MCKELVY made false statements and material omissions to prospective investors. The government will play portions of these recordings to the jury at trial.

Kurt Gottschall was one of the SEC attorneys who investigated this fraud. While the government does not intend to call Gottschall as an expert witness pursuant to Rule 702 of the Federal Rules of Evidence, he will testify about the facts of this case. He will explain the SEC’s investigation to the jury and the various concepts applicable to that investigation. For example, he will explain what a “PPM” is. He will explain what an “accredited investor” is and why only “accredited investors” should have invested in Mantria’s PPMs. He will explain to the jury the SEC’s licensing procedure in order to sell securities. He will inform the jury that WAYDE MCKELVY was not licensed to sell securities. In addition, Gottschall will authenticate numerous documents provided to the SEC by Mantria, including certain e-mails between MCKELVY, WRAGG, and KNORR. Gottschall will authenticate the three depositions provided by MCKELVY to the SEC and other statements he submitted.

[Footnote 2: The fact that MCKELVY actively evaded SEC scrutiny is relevant to his good faith or lack thereof. MCKELVY admittedly broke SEC rules in selling securities without a license. The government intends to argue that this fact, among other facts, proves that MCKELVY did not act in good faith.]

John Paul Anderson was the receiver appointed by the United States District Court in Colorado to take over Mantria. Anderson will testify to his efforts to try to recoup funds for the investors out of Mantria’s assets. Anderson will testify that Mantria had virtually no assets. Anderson attempted to sell the land in Tennessee, however, the land turned out to be worthless. Despite pouring millions of investor dollars into the biochar technology, Mantria had not successfully developed anything valuable. Anderson will help the government to establish that Mantria was nothing more than a Ponzi scheme.

D.  Amanda Knorr

Co-defendant AMANDA KNORR has pleaded guilty to all 10 counts in the indictment. KNORR will explain the lies she told, TROY WRAGG told, and WAYDE MCKELVY told the victims in this case in order to keep the Mantria Ponzi scheme alive and operating. KNORR will also explain the material facts which she, WRAGG, and MCKELVY hid from the victims.

FLASHBACK:

  • 5280 Magazine:  The Biggest Green Scam in America – Denver’s Wayde McKelvy raised tens of millions of dollars for a new, clean-energy company that the SEC says was nothing more than an old-school Ponzi scheme. 

09/17/18 :

09/18/18 :

09/20/18 :

09/23/18 :

09/24/18 :

Because of its special relationship with Indian Tribes, the United States has a strong interest in protecting the integrity of reservation boundaries and promoting tribal self-government within those boundaries. … Information regarding the federal government’s treatment of the [Oneida Nation of Wisconsin / ONWI]’s reservation may provide some information regarding the questions before the Court that have been raised by the parties.

09/28/18 :

 

  • September 28, 2018 Decision, U.S. Tax Court Docket No. 21583-15,  VHC Inc. and Subsidiaries  v.  Commissioner of Internal Revenue Service [IRS]

Pursuant to the determination of the Court, as set forth in its Memorandum Findings of Fact and Opinion (T.C. Memo. 2017-220) dated November 7, 2017, and incorporating herein the facts recited in respondent’s computations as the findings of fact of the Court, it is

ORDERED AND DECIDED that there are deficiencies in income tax due from petitioner [VHC, Inc.] for the taxable years 2011, 2012, and 2013 in the amounts of $1,916,625.00, $8,656,568.00, and $4,259,288.00, respectively.

10/03/18 :

10/04/18 :

10/05/18 :

10/08/18 :

 

  • October 8, 2018 PLEA AGREEMENT, U.S. District Court, Eastern District of Wisconsin, Case No. 17-CR-160,  United States of America  v.  Ronald H. Van Den Heuvel

 

CHARGES

2.  The defendant has been charged in a 14-count indictment, which alleges ten violations of Title 18, United States Code, Sections 1343, 1349 and 2, and four violations of Title 18, United States Code, Sections 1957 and 2.

3.  The defendant has read and fully understands the charges contained in the indictment. He fully understands the nature and elements of the crimes with which he has been charged, and those charges and the terms and conditions of the plea agreement have been fully explained to him by his attorney.

4. The defendant voluntarily agrees to plead guilty to the following count (Count One) set forth in full as follows:

THE GRAND JURY CHARGES:

1. Beginning at least by March 8, 2011, and continuing at least through August 2015 in the State and Eastern District of Wisconsin and elsewhere,

RONALD H. VAN DEN HEUVEL

knowingly devised and participated in a scheme to defraud lenders and investors, and to obtain money from lenders and investors by means of materially false and fraudulent pretenses, representations, and promises related to his “Green Box” business plan, which scheme is more fully described below.

2. As a result of his scheme, Van Den Heuvel fraudulently obtained more than $9,000,000 from a range of lenders and investors, including individual acquaintances, the Wisconsin Economic Development Corporation (“WEDC“), a Canadian institutional investor, and Chinese investors who participated in the EB-5 immigrant investor program. …

The government agrees to recommend a sentence of no longer than 90 months of incarceration, to be served concurrently with the [3 year] sentence the defendant is serving for Case No.16-CR-64, and a term of supervised release.

10/09/18 :

  • October 9, 2018 TEXT ONLY – NOTICE of CHANGE of PLEA HEARING set for 10/12/2018 at 2:30 PM in Courtroom 201, 125 S. Jefferson St., Green Bay, WI 54301 before Chief Judge William C. Griesbach

The case against Van Den Heuvel, and in particular the Wisconsin Economic Development Corp.’s write-off of a $1.1 million loan to Van Den Heuvel, was criticized by Democrats as evidence of mismanagement of the agency by the administration of Republican Gov. Scott Walker.

The Van Den Heuvel loan was one of several botched WEDC deals reported on by the Wisconsin State Journal and other news outlets in 2015 that prompted a review of agency practices and a temporary suspension of the agency’s loan program. …

Under the plea agreement, Van Den Heuvel agreed to pay at least $9.4 million in restitution to lenders and investors. In July, Van Den Heuvel was ordered sent to jail by a federal judge after U.S. Attorney Matthew Krueger presented evidence showing that he had continued to live a lavish lifestyle while free, even as he failed to repay creditors and requested legal representation by a federal defender instead of a private attorney paid from his own pocket.

But the plea agreement states that Van Den Heuvel “understands that because restitution for the offense is mandatory, the amount of restitution shall be imposed by the court regardless of the defendant’s financial resources,” and states that he agrees to cooperate in efforts to collect the restitution that he owes.

Van Den Heuvel also acknowledged that paying restitution won’t restrict or preclude the filing of civil lawsuits against him, the plea agreement states. …

To get the WEDC loan funds, prosecutors said, Van Den Heuvel had to show that Green Box had acquired an EcoFibre facility in De Pere and bought equipment to produce marketable pulp and other products, and provide documentation that VHC Inc., a company controlled by Van Den Heuvel’s brother, had made a $5.5 million capital contribution to the project.

But in fact, Green Box had not acquired the EcoFibre facility. Prosecutors said that instead the facility had gone into foreclosure and was obtained by VHC. WEDC stated that it would not have authorized the loan or disbursement of funds from it had it known of Van Den Heuvel’s false statements.

In addition, a group of Chinese investors lost nearly $4.5 million that it invested with Van Den Heuvel.

Prosecutors will recommend a prison sentence of no more than 7.5 years. The first three years of the sentence would be served at the same time as a three-year sentence in a separate bank fraud case.

The charge carries a maximum sentence of 20 years and a fine of $250,000. …

According to court documents …victims… include the Wisconsin Economic Development Corp, a Green Bay doctor, a Montreal investment firm and nine Chinese individuals who agreed to invest in the business as a pathway to American citizenship. …

In the bank fraud case, Van Den Heuvel pleaded guilty to one count of fraud in connection to a scheme to fraudulently obtain more than $1 million in bank loans under the names of Green Box employees and a relative. Prosecutors portrayed the employees and relative as straw borrowers who did not receive the money and were not expected to repay it.

Van Den Heuvel was allowed to remain free after sentencing to participate in his defense in the Green Box case. However, Griesbach ordered him jailed in July after prosecutors alleged he committed more fraud and also intimidated witnesses.

 

10/10/18 :

 

A De Pere businessman who claimed to have a process that could turn fast-food wrappers into fuel and paper products has agreed to plead guilty to one county of wire fraud after facing allegations that he defrauded the state’s economic-development agency and other investors out of more than $9 million.

10/11/18 :

  • October 11, 2018 ENTRY OF FOREIGN JUDGMENT against Ron Van Den Heuvel and RVDH Development LLC in the amount of $10,623,223 (Cook Co. IL Case No. 2017-L-013037,  GlenArbor LLC v. Partners Concepts Development Inc.; RVDH Development LLC; Ronald Van Den Heuvel), Brown Co. Case No. 18-FJ-13,  GlenArbor LLC  v.  Ron Van Den Heuvel; RVDH Development LLC [dismissed defendant: Partners Concepts Development Inc. / PCDI]

 

Van Den Heuvel called USA TODAY NETWORK-Wisconsin on Thursday from the Brown County Jail. In two calls, the 65-year-old admitted he misled investors about how their money would be used and used some of the money for personal expenses.

“The government is right on the $9 million listed,” he said. “I treated it like the other money from family, friends and investors for business and development use. We put specific uses on those investments and I didn’t pay attention.” …

“I did wrong,” Van Den Heuvel said Thursday. “I misappropriated funds and I gave out misleading information. I’ll have to do some time for that, but I don’t deserve a life sentence.” …

Van Den Heuvel has been jailed since July, when federal prosecutors told U.S. District Court Judge William Griesbach that Van Den Heuvel had continued to deceive potential investors.

Van Den Heuvel said he has lost 60 pounds in jail and has written the first 100 pages of a book.

  • October 11, 2018 ORDER that the USA Motion to Exclude Testimony of McKelvy’s Expert Witnesses is withdrawn, U.S. District Court for the Eastern District of Pennsylvania, Case No. 15-CR-398,  United States of America  v.  Troy Wragg, Amanda Knorr & Wayde McKelvy

 

10/12/18 :

The 1838 Treaty between the Nation and the United States established the Oneida Reservation for the Nation. The Oneida Reservation was not diminished by the Dawes Act, the Burke Act, the 1906 Oneida Provision, or any other statute. Accordingly, the United States respectfully urges the Court to grant the Nation’s Motion for Summary Judgment and deny the Village’s Motion.

 

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Wayde McKelvy, of Colorado, was convicted by a jury of the following crimes: Conspiracy to Commit Wire Fraud (one count); Wire Fraud (seven counts); Conspiracy to Engage in Securities Fraud (one count); and Securities Fraud (one count). The trial was held before United States District Judge Joel H. Slomsky.

The government established at trial that McKelvy and his co-conspirators ran an elaborate Ponzi scheme operating as Mantria Corporation, which received more than $54 million in fraudulently obtained new investor funds. The co-conspirators promised investors huge returns, as high as 484%, for securities investments in supposedly profitable business ventures in real estate and green energy. In reality, Mantria was a classic Ponzi scheme in which new investor money was used to pay “returns” to early investors, and the business generated meager revenues and no actual profits.

To induce investors to invest money, McKelvy and his co-conspirators repeatedly made fraudulent representations and material omissions about the economic state of Mantria. McKelvy also promoted himself as a financial wizard through aggressive marketing tactics, even though he had little financial acumen and was an unlicensed securities salesman. McKelvy operated what he called “Speed of Wealth” clubs, which advertised on television, radio and the Internet, held seminars for prospective investors, and promised to make them rich. During those seminars and other programs, McKelvy lied to prospective investors to dupe them into investing in Mantria.

Mantria, based in Bala Cynwyd, Pennsylvania, sent McKelvy “commissions” via wire transfer to an entity he controlled called “Retirement TRACS, LLC.” Mantria also used wire transfers to pay for other portions of the Ponzi scheme, including payments for both the real estate and green energy projects. When the SEC shut down Mantria in November 2009, the pyramid scheme collapsed and was exposed.

“McKelvy repeatedly lied about Mantria’s bright future in the green energy business, often delivering his sales pitch before a live audience full of prospective investors in order to dupe as many people as he could into investing in the company. McKelvy and his co-conspirators talked a big game, promising investment returns as high as 484 percent – but it was all a ruse,” said U.S. Attorney McSwain. “Instead of high returns, the over 300 victims of this fraud unwittingly invested in uninhabitable land and a bogus trash-to-green energy business idea based on bogus scientific methodology. We are pleased that the jury held McKelvy accountable for his part in this massive fraud.”

“Wayde McKelvy actively marketed himself as some kind of financial genius, when in fact he was nothing but a fraud,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “He and his buddies lured investors in by promising sky-high returns on their money, taking full advantage of people’s trust and their hopes for the future. Ponzi schemes can do real damage to victims’ lives, and the FBI is determined to hold the perpetrators accountable.”

This case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys Robert Livermore and Sarah Wolfe. Additionally, the Securities and Exchange Commission, Denver Regional Office, assisted with the investigation.

 

 

…Ronald Van Den Heuvel was was convicted Friday [October 12] in a second fraud case in federal court.

[Ron] Van Den Heuvel was convicted previously of conspiracy to commit bank fraud for arranging an illegal loan from Horicon Bank for his business Green Box [NA]. He was sentenced to three years in prison in that case.

After that federal prosecutors filed 14 additional counts against Van Den Heuvel, alleging he raised more than $9 million from investors – including the Wisconsin Economic Development Corp. [WEDC] – but used some of the money on personal items, including a car and Packers tickets.

Earlier this week, Van Den Heuvel agreed to plead guilty to a count of wire fraud – a plea which was accepted Friday – and the 13 other counts were dismissed. Sentencing is scheduled for December 10.

10/16/18 :

A sentencing hearing has been scheduled for a De Pere businessman accused of defrauding investors and lenders of more than $9 million in his Green Box business plan.

Ron Van Den Heuvel is scheduled to go before a federal judge in Green Bay on December 10 at 9:30 a.m. Van Den Heuvel faces a maximum of 20 years in federal prison and a $250,000 fine at sentencing. …

According to the indictment, Van Den Heuvel produced false financial statements that inflated his personal wealth, giving investors the idea that he would be able to afford the equipment needed for his Green Box plan. He also misled the investors about major companies being interested in Green Box. …

Van Den Heuvel also convinced Wisconsin [Dept. of Commerce]  officials that Green Box would create 116 new jobs at the EcoFibre facility in De Pere. The Wisconsin Economic Development Corporation [WEDC] loaned him $1,116,000 to purchase and install necessary equipment. He faked the mortgage statement on the EcoFibre building – he had never purchased it. He also received about $95,000 grant from the state for worker training. …

In a separate case, Van Den Heuvel was sentenced to three years in federal prison for defrauding Horicon Bank between 2008 and 2009.

Federal prosecutors say Van Den Heuvel, with the help of loan officer Paul Piikkila, arranged a series of loans, worth $1 million, to straw borrowers. …

These borrowers included Van Den Heuvel’s [foreign] nanny [Julie Gumban,] his administrative assistant [& Nature’s Way Tissue Corp. Vice President Debra Stary, as well as Ron’s son-in-law Patrick Hoffman, and Van Den Heuvel family-owned Vos Electric Inc. Vice President William ‘Bill’ Bain – Ron’s partner in Ron & Bill Investments LLP who served as a straw borrower for former brother-in-law Ron beginning as early as 2000].

 

The parties state this is a contract case and further discuss the note as well as the relationship between the defendant and Ronald VanDenHeuvel. The parties believe Fortune Avenue, LLC is owned by Mr. VanDenHeuvel’s brothers. Mr. Smies is unsure as to bringing Mr. VanDenHeuvel into this matter. …

Court trial set for September 11, 2019 at 9:00 a.m. with the understanding that the parties may move for a jury trial.

10/17/18 :

 

 

  • October 17, 2018 TEXT ONLY – NOTICE of Oral Argument on Motions for Summary Judgment Hearing set for 11/29/2018 at 1:30 PM in Courtroom 201, 125 S. Jefferson St., Green Bay, WI 54301 before Chief Judge William C. Griesbach, U.S. District Court, Eastern District of Wisconsin, Green Bay Division, Case No. 16-CV-1217,  Oneida Nation of Wisconsin  v.  Village of Hobart, Wisconsin

10/18/18 :

Paul Jadin, the first CEO of the Wisconsin Economic Development Corp., informed the board of the Madison Region Economic Partnership on Wednesday that he was resigning from his $208,000-a-year job. He said the resignation was necessary to avoid entangling the agency with his political activity.

On Thursday, Jadin released to the Wisconsin State Journal an open letter, co-signed by former Corrections Secretary Ed Wall and former Financial Institutions Secretary Peter Bildsten, slamming Walker and endorsing Walker’s Democratic opponent State Superintendent Tony Evers. …

Another ex-cabinet official, former Transportation Secretary Mark Gottlieb, has also come out against Walker in recent months, saying the governor hasn’t been telling the truth about road funding. …

In their letter, the three former secretaries say they joined his administration with a “fervent belief” that Walker shared their desire to improve the state. But over time, they said, “it became clear that his focus was not on meeting his obligations to the public but to advancing his own political career at a tremendous cost to taxpayers and families.“

Walker’s campaign did not respond directly to the former officials’ critique. But in a statement, Walker spokesman Austin Altenburg obliquely criticized Jadin’s stewardship of WEDC, citing a nonpartisan Legislative Audit Bureau memo from May 2013, seven months after Jadin left the agency.

Among other things, that audit found WEDC “did not have sufficient policies, including some that are statutorily required, to administer its programs effectively,” “awarded some grants, loans, and tax credits to ineligible recipients, for ineligible projects, and for amounts that exceeded specified limits” and “did not consistently perform statutorily required program oversight duties, such as monitoring the contractually specified performance of award recipients, and could report more clearly on the number of jobs created and retained as a result of its programs.” …

Jadin, a former Green Bay mayor, was WEDC CEO until taking a job with the Madison economic development agency, then known as Thrive, in November 2012. During his time at WEDC the agency came under heavy scrutiny for its handling of several awards and not following certain statutorily required policies.

In 2015 Jadin told the State Journal that he rebuffed then-Department of Administration Secretary Mike Huebsch‘s push for a $4.5 million loan to a top Walker donor. WEDC gave the donor’s company $500,000, but the loan was never repaid. A subsequent agency review could not locate underwriting documentation for that and more than two dozen other awards. …

“The Governor and his team do not like to leave a paper trail or state record of their actions relating to the conduct of state business,” Bildsten, Wall and Jadin wrote. “They simply did everything in their power to avoid transparency in his decision-making process so they could not be held to account.“

Paul Jadin is a former mayor of Green Bay and was the first secretary of [WI GOv. Scott] Walker’s economic development agency. He co-signed an open letter with former Corrections Secretary Ed Wall and former Financial Institutions Secretary Peter Bildsten sharply criticizing Walker and calling for Evers’ election.

“Governor Walker has consistently eschewed sound management practices in favor of schemes or coverup and has routinely put his future ahead of the state,” Jadin, Wall and Bildsten wrote. “The result is micromanagement, manipulation and mischief. We have all been witness to more than our share of this.”

Walker’s campaign issued a statement praising the work of the Wisconsin Economic Development Corp. since Jadin left in November 2012, without addressing criticisms of the governor laid out in the letter. …

The Wisconsin State Journal was the first to report on the letter and Jadin’s criticism of the governor. Jadin told the State Journal that he quit his $208,000-a-year job at the Madison Regional Economic Partnership on Wednesday so he could speak freely.

Walker and the Republican-controlled Legislature created the Wisconsin Economic Development Corp., a public-private hybrid agency, in 2011. It was plagued with problems under Jadin’s leadership, including the loss of several top staff, not following policies and mishandling of loans. It has since been instrumental in negotiating several economic development projects, most notably the Foxconn Technology Group campus that could result in a $10 billion investment.

 

10/19/18 :

 

10/23/18 :

 

Philip Reinhart of De Pere is scheduled to enter his plea Monday in federal court in Green Bay. The offense carries a maximum penalty of five years in prison and a $250,000 fine. Reinhart would likely face substantially less.

According to his plea agreement, Reinhart and an unnamed co-conspirator were hired to create records or purported training sessions at Green Box [NA] Green Bay [LLC], run by Ronald Van Den Heuvel of De Pere, already convicted of bank and wire fraud. …

“Between approximately 2011 and 2015,” Green Box and related entities got money from lenders and investors “under materially false pretenses, representations and promises,” according to the plea agreement.

WEDC [Wisconsin Economic Development Corp.] had offered $95,000 to reimburse Green Box [NA] Green Bay for training workers how to sort waste, make fuel pellets and about liquefaction. At Van Den Heuvel’s direction, Reinhart helped create three sets of records showing such training took place — even though it did not — and submitted them to WEDC in order to get the money.

 

To date, no notice of appearance by an attorney for Defendant has been filed. Further, Defendant has not responded to the Courts order to show cause, or requested an extension of the deadline to do so. See Docket. Defendant’s willful failure to comply with the Court’s orders and to retain counsel is an abusive litigation practice which interferes with the Court’s ability to hear this case, delays litigation, wastes judicial resources, and threatens the integrity of the Court’s orders and the administration of justice. …

Sanctions less drastic than default judgment are unavailable here because Defendant has willfully refused to comply with the Court’s orders and to obtain counsel in order to continue to participate in the case at hand.

Accordingly, the undersigned RECOMMENDS that default judgment be entered against Defendant.

IT IS SO ORDERED.

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