Case 1:09-cv-02676-CMA-MJW Document 64 Filed 03/10/2010...

IN TH IT D TAT DI TRICT CO RTFOR TH DI TRICT OF OLORADO

Civil Action 0.: 09-cv-02676- MA-MJW

SECURITIES AND EXCI-IANG COMMI 10 ,

Plaintiff,v.

MA TRIA CORPORA TIOTROY B. WRAGG,AMANDA E. KNORR,SPEED OF WEALTH, LLC,WAYDE M. MCKELVY, andDO A M. MCKELVY,

Defendant.

D CLARA TIO OF JOHN EA ER

I, John eaner, do h r b declar und r penalt of p rjury, pursuant to 28 U.S.c. § 1746,

that the following tatements are true and correct, and I am competent to testify to the matters

stated herein:

1. I am 41 year old and a re ident of Furlong, Penn ylvania. From approximately

July 13 2009 until approximately ovember 16,2009, I was the President and Chief Executive

Officer of a sub idiary of Mantria Indu trie , LLC called EarthMate Technologie , LLC

C'EarthMate").

2. Shortly after the Securities and Exchange Commission ("SEC") filed this action,

Cary Widener, th former Pre ident and hi f Executive Officer of a subsidiary of Mantria

Industries, LLC called Clean nerg Component LLC, ("Clean Energy") and I formed a

company called Enantio , Inc., (Enantio ) with the full knowledge and encouragement ofMr.

Case 1:09-cv-02676-CMA-MJW Document 64 Filed 03/10/2010 USDC Colorado of 6

IN THE UNITED TATE DI TRICT COURT FOR THE 01 TRICT OF COLORADO

Civil Action 0.: 09-cv-02676-CMA-MJW

SECURITIES AND EXCHANGE COMMI SION,

Plaintiff, v.

MANTRIA CORPORATION, TROY B. WRAGG, AMANDA E. KNORR, SPEED OF WEALTH, LLC, W A YDE M. MCKELVY, and DONNA M. MCKELVY,

Defendant.

DECLARATION OF JOHN SEANER

I, John eaner, do hereby declare und r penalt of perjury, pursuant to 28 U.S.C. § 1746,

that the following statements are true and correct, and I am competent to testify to the matters

stated herein :

l. I am 41 years old and a resident of Furlong, Pennsylvania. From approximately

July 13, 2009 until approximately November 16,2009, I was the President and Chief Executive

Officer of a subsidiary of Mantria Indu tries, LLC called EarthMate Technologies, LLC

("EarthMate").

2. Shortly after the Securities and Exchange Commission ("SEC") filed this action,

Cary Widener, the former Pre ident and Chief Executive Officer of a subsidiary of Mantria

Industries, LLC called Clean Energy Components, LLC, ("Clean Energy") and I formed a

company called Enantios, Inc. , (Enantios) with the full knowledge and encouragement ofMr.

Troy Wragg. Enantios wa formed becau e the lean Energy and EarthMate funding by Mantria

was completely cut-off by the EC action and both of our teams, as well as ourselves, incurred

significant monetary los e and damage ; b cau Mr. Wid ner and I believed that our livelihood

had been harmed by th eriou ness of the allegation raised against Mantria; because the Clean

Energy and EarthMat names were publicly damaged a are ult of their inclusions in the SEC

action against Mantria; and because prospective purcha ers of the waste conversion system

refused to continue with any busines relation hip with u if we had any further involvement

with Mantria or Mr. Wragg.

3. Mr. Wragg kn wabout nantio and what Enantio wa planning to do, and he

never implied to me in any way that I should not be pur uing Enantios because of the asset

freeze, or that the EC had any concern regarding the formation or a sets of Enantios.

4. Mr. Wragg r p atedly requ ted Mr. Widener and me to grant him ownership

interest in Enantios. In several phone con ersation with Mr. Widener and me during the month

of December and early January, Mr. Wragg pres ed for an ownership stake in Enantios and told

us he wanted to set it up u ing orne ort of "limit d partnership", "blind trust" or "offshore

holding company' so that hi personal owner hip and connection to Enantios could be hidden

from public view. Mr. Wragg said that hi owner hip needed to be hidden because: (a) pursuant

to the court's order in thi ca e he could not be involved in any capital raising, and (b) so that

both potential cu tomers and potential inve tor in nantios would not know of his involvement

with Enantios and thus damage the company. Mr. Wragg told us that these ideas had been

discu sed with hi attorn ,and they were perfectly legal.

5. Mr. Wragg stated to Mr. Widener and me on several occasions that through his

personal ownership in Enantios that he would attempt to pay back the investors. However, we

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Troy Wragg. Enantios was formed because the Clean Energy and EarthMate funding by Mantria

was completely cut-off by the EC action and both of our teams, a well as ourselves, incurred

significant monetary losses and damages; b Gau e Mr. Widener and I believed that our livelihood

had been harmed by the seriousness of the allegations raised against Mantria; because the Clean

Energy and EarthMate names were publicly damaged a a result of their inclusions in the SEC

action against Mantria; and because prospective purchasers of the waste conversion system

refused to continue with any busines relationship with us if we had any further involvement

with Mantria or Mr. Wragg.

3. Mr. Wragg knew about Enantios and what Enantio was planning to do, and he

never implied to me in any way that I should not be pur uing Enantios because of the asset

freeze, or that the SEC had any concerns regarding the formation or assets of Enantios.

4. Mr. Wragg repeatedly reque ted Mr. Widener and me to grant him ownership

interest in Enantios. In several phone conversation with Mr. Widener and me during the month

of December and early January, Mr. Wragg pres d for an ownership stake in Enantios and told

us he wanted to set it up using orne sort of " limited pru1nership", " blind trust" or "offshore

holding company" so that his personal ownership and connection to Enantios could be hidden

from public view. Mr. Wragg said that hi ownership needed to be hidden because: (a) pursuant

to the court's order in this ca e, he could not be involved in any capital raising, and (b) so that

both potential customers and potential inve tor in Enantios would not know of his involvement

with Enantios and thus damage the company. Mr. Wragg told us that these ideas had been

discussed with his attorney, and they were perfectly legal.

5. Mr. Wragg stated to Mr. Widener and me on several occasions that through his

personal ownership in Enantio that he would attempt to pay back the investors. However, we

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were never comfortable with an of Mr. Wragg's proposals, never fully-understood the specifics

of how his per onal owner hip would be u d to pay back in estor , and had reached the point of

questioning ifMr. Wragg had our be tinter t at hand. Mr. Widener and I decided that we

would first determine if w could turnaround the ituation at the Dunlap site and then seek

professional advice on the legal and implications of any of Mr. Wragg's proposals. As such,

we never granted Mr. Wragg any ownership stake in nantios.

6. When we first started discus ion regarding Enantios, then formed the company

and entered into a letter of intent with Green Planet Power olutions, Mr. Wragg was fully aware

of what we were doing, but did not tell us that we needed any sort of approval from the SEC.

Then, sometime in or around late December or early January, when Mr. Widener and I were

attempting to work-out the issues surrounding the Dunlap site, -issues that included the

foreclosure of the land on which the ite re ide, a pending in oluntary bankruptcy at least

$1.6mm in monies owed to endors, and ecuring at I a t $2mm to finish the waste conversion

system- Mr. Wragg began to ugge t to u that nantio would need to eek approval of the SEe.

Mr. Widener and I fully agreed that, when appropriat , we would engage the SEC with a bona

fide proposal and seek its advice as to how w could move forward with the Dunlap site.

7. In or around late eptemb r, Mr. Wragg told me that the SEC had initiated an

"informal non-public inquiry" regarding th capital-rai ing practices of Mantria and that the

'Concerns raised during thi inquiry wer insignificant and mainly involved some sort of minor

failure to complete the proper "paperwork' or the inad ertent omission of a "check" in some sort

of box on an investor di closure form. Mr. Wragg told me that the matter would easily be

resolved very oon for e ntially a "hand lap" and maybe a mall fine. In or around October,

Mr. Wragg then told me that the EC inquir was now centered on Mantria's role in potentially

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were never comfortable with any of Mr. Wragg' s proposals, never fully-understood the specifics

of how his personal owner hip would be used to pay back investors, and had reached the point of

questioning if Mr. Wragg had our best intere t at hand. Mr. Widener and I decided that we

would first determine if we could turnaround the situation at the Dunlap site and then seek

professional advice on the legal and EC implication of any ofMr. Wragg's proposals. As such,

we never granted Mr. Wragg any ownership stake in Enantios.

6. When we first started discussion regarding Enantios, then formed the company

and entered into a letter of intent with Green Planet Power Solutions, Mr. Wragg was fully aware

of what we were doing, but did not tell us that we needed any sort of approval from the SEC.

Then, sometime in or around late December or early January, when Mr. Widener and I were

attempting to work-out the issues surrounding the Dunlap site, -issues that included the

foreclosure of the land on which the site re ide , a pending involuntary bankruptcy at least

$1.6mm in monies owed to vendors, and securing at least $2mm to finish the waste conversion

system- Mr. Wragg began to ugge t to u that Enantios would need to seek approval ofthe SEC.

Mr. Widener and I fully agreed that, when appropriate, we would engage the SEC with a bona

fide proposal and seek its advice as to how we could move forward with the Dlmlap site.

7. In or around late September, Mr. Wragg told me that the SEC had initiated an

"informal, non-public inquiry" regarding the capital-rai ing practices of Mantria and that the

concerns raised during this inquiry were insignificant and mainly involved some sort of minor

failure to complete the proper "paperwork" or the inadvertent omission of a "check" in some sort

of box on an investor di closure form. Mr. Wragg told me that the matter would easily be

resolved very soon for essentially a ' hand slap" and maybe a small fine. In or around October,

Mr. Wragg then told me that the SEC inquiry was now centered on Mantria' s role in potentially

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taking funds from a few unqualified in e tor and that he might have to return any funds in

questions. After the ' ca e again t Mantria wa filed, Mr. Wragg maintained that the entire

matter would likely be quickl ettled for a fin and a di gorgement penalty.

8. In January, during a phone con ration with Mr. Widener and me regarding

getting the Dunlap facility operational, I a ked Mr. Wragg how much money Mantria had raised

on the "green' side of the busines (a oppo ed to it real estate ventures), so that we could

figure out if attempting to commi sion the Dunlap facility and moving forward with the

technology was even possible when adding in what it might take to make those specific investors

whole and satisfy th EC. Mr. Wragg told u that the EC was not concerned about whether

the investors were made whole or not and that, per all Mantria offering disclosures, the investors

had always known they might 10 e their ntir investm nt, 0 we need not worry about it and to

just do the best we could do for them.

9. On February 4 2010 I rec i ed a call from Ms. Allison Lee and Mr. Kurt

Gottschall of the EC. I then I am d for the fir t tim that the EC was very concerned about

the formation of Enantios, and very concerned that the Cow1'S asset freeze order was being

circumvented or violated. 1explained that I wa unaware of any of the issues with which they

were concerned, had absolutely no intention of violating or assisting in the violation of the

Court's orders and agreed to and did halt any operation of Enantios, Inc. Enantios is in the

.process of being formally di olved, Mr. Widener and 1will no longer attempt to get the Dunlap

facility operational or the Hohenwald facility tarted unles directly requested by the Mantria

investors, and Mr. Wid n r and I are formall relinqui hing all of our claims to the technology as

it currently stands in the Dunlap facilit and a it i p cified in the Provisional Patent

Application filed in September, 2009.

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taking funds from a few unqualified inve tors and that he might have to return any funds in

questions. After the SEC' ca e again t Mantria wa filed , Mr. Wragg maintained that the entire

matter would likely be quickly settled for a fine and a disgorgement penalty.

8. In January, during a phone con er ation with Mr. Widener and me regarding

getting the Dunlap facility operational, I a ked Mr. Wragg how much money Mantria had raised

on the "green" side of the business (as opposed to its real estate ventures), so that we could

figure out if attempting to commission the Dunlap facility and moving forward with the

technology was even possible when adding in what it might take to make those specific investors

whole and satisfy th EC. Mr. Wragg told us that the EC was not concerned about whether

the investors were made whole or not and that, per all Mantria offering disclosures, the investors

had always known they might lose their ntir investment, so we need not worry about it and to

just do the best we could do for them.

9. On February 4, 2010, I recei ed a call from Ms. Allison Lee and Mr. Kurt

Gottschall of the EC. I then learned for the fir t time that the SEC was very concerned about

the formation of Enantios, and very concerned that the Court ' s asset freeze order was being

circumvented or violated. I explained that I was unaware of any of the issues with which they

were concerned, had absolutely no intention of violating or assisting in the violation ofthe

Court ' s orders and agreed to and did halt any operations of Enantios, Inc. Enantios is in the

.process of being formally dissolved, Mr. Widener and I will no longer attempt to get the Dunlap

facility operational or the Hohenwald facility tarted unless directly requested by the Mantria

investors, and Mr. Widen r and I are formally relinquishing all of our claims to the technology as

it currently stands in the Dunlap facility and a it is specified in the Provisional Patent

Application filed in September, 2009.

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10. Mr. Wragg also told me on numerous occasions that the two autoclaves which

originated from CDI in Hawaii, wer tran port d to Florida, were transported again to the

Dunlap facility, and then were later moved to th Hohenwald facility, were not subject to the

Court's asset freeze order. Mr. Wragg said he had con ulted his attorney, Steve McDonald and

said that Mr. McDonald had confirm d that the e autoclave were not subject to the asset freeze

because they were CDI as et and CDI wa not a part of the court order.

11. Mr. Wragg kn w that I wa attempting to get the Dunlap facility operational

during the week of December 15,2009 in order to demon trate the ystem to Mr. Mike Columb

of Green Planet Power olutions (GPP ) and to have Mr. Columb complete his third-party

engineering a sessment in an effort to sati fy the conditions of a letter of intent Enantios had

entered into with GPP . Mr. Wragg knew that, as part of that effort I was trying to plead with a

group of former Clean Energy emplo ees (including Mr. Mike Mentikov, Mr. Earl Decker, Mr.

Dave Hemenway, Mr. Doug McPherson, and Mr. Carl Melanson), to assist Mr. Widener and me

at the Dunlap facility despit th fact that they w re ow d back pay and expenses by Mantria.

Mr. Wragg told me that it was okay to tr to II the e two autoclaves to Mr. Columb as part of

his purchase of a system, and that it wa okay to tell the e former employees that if they could be

sold, the money would b u ed toward their back pay and expen es, the back pay and expenses

of the former EarthMate employees. the back pay and expenses of Mr. Widener and myself, as

well as payment for the continuation of group h alth in urance coverage for all of us.

12. Approximately in th morning ofD cemb r 15,2009, I called and spoke with the

above-li ted group of people (who were together on a speaker phone) and urged them to please

assist us with getting the Dunlap facility operational in anticipation of the GPPS visit. After that

call, I sent them the e-mail attached hereto a Exhibit 1 in order to confirm and assure them that

5


10. Mr. Wragg also told me on numerous occasions that the two autoclaves which

originated from CDI in Hawaii , were transported to Florida, were transported again to the

Dunlap facility , and then were later moved to the Hohenwald facility, were not subject to the

Court ' s asset freeze order. Mr. Wragg said he had consulted his attorney, Steve McDonald and

said that Mr. McDonald had confirmed that the e autocla es were not subject to the asset freeze

because they were CDI assets and CDl was not a part of the court order.

11 . Mr. Wragg knew that I was attempting to get the Dunlap facility operational

during the week of December 15, 2009 in order to demon trate the system to Mr. Mike Columb

of Green Planet Power olutions (GPP ) and to have Mr. Columb complete his third-party

engineering assessment in an effort to satisfy th conditions of a letter of intent Enantios had

entered into with GPP . Mr. Wragg knew that, as part of that effort, I was trying to plead with a

group of former Clean Energy employees (including Mr. Mike Mentikov, Mr. Earl Decker, Mr.

Dave Hemenway, Mr. Doug McPherson, and Mr. Carl Melanson), to assist Mr. Widener and me

at the Dunlap facility despite th fact that they were owed back pay and expenses by Mantria.

Mr. Wragg told me that it was okay to try to sell these two autoclaves to Mr. Columb as part of

his purchase of a system, and that it wa okay to tell these former employees that if they could be

sold, the money would be used toward their back pay and expenses, the back pay and expenses

of the former EarthMate employees, the back pay and expenses of Mr. Widener and myself, as

well as payment for the continuation of group health insurance coverage for all of us.

12. Approximately in the morning of December 15 2009, I called and spoke with the

above-listed group of people (who were together on a speaker phone) and urged them to please

assist us with getting the Dunlap facility operational in anticipation of the GPPS visit. After that

call , I sent them the e-mail attached hereto as Exhibit 1 in order to confirm and assure them that

5

if we could sell the autoclaves to Mr. olumb as part of selling to him a ystem, we would use

the money towards sati fying Mantria alar ,expen e and b nefits obligations. I was not

"bluffing" this group of employee about elling the autoclaves, and I never told Mr. Wragg that

I was "bluffing' them. In the end, I ne er had the opportunity to e en uggest to Mr. Columb

that he purchase these autoclave becau e we were never able to satisfy the conditions of the

letter of intent and thus he never purchased a waste conver ion syst m.

13. On approximately December 15,2009 late in the evening, I received a call from

Mr. Wragg who said that the SChad received a copy of my e-mail to these former employees

about selling the autoclave to Mr. Columb and that the EC was concerned that the asset freeze

was being violated. I wa very upset b this becau e I wa repeatedly told by Mr. Wragg that

these autoclave wer n er ubject to th a t fre ze and I was only trying to get the former

employee the monie owed to them b Mantria. During that call, Mr. Wragg assured me once

again that the autoclave were not part of th a t freeze. I contemplated calling the SEC

to figure out what wa going on; how v r, I did not because a couple of days later on a call with

Mr. Wragg in which I a ked what had happened with this entire matter, he told me there was

never any issue and that the EC had "backed off' of its claim that the autoclaves were subject to

the freeze becau e they were CDI assets and CDI was not listed in and subject to the court order.

I certify under penalty ofperjur under the laws of the United States that the foregoing is

true and correct,

Dated thi 2-.day of _M----L...:~___''(..C=....<:,,-'-~_2010, in ---L.H~(,-,l,-,,(//,--,--,b~__ Philadelphia.

6


if we could sell the autoclaves to Mr. Columb as part of selling to him a system, we would use

the money towards satisfying Mantria salary, expen e and benefits obligations. I was not

. bluffing" this group of employees about !ling the autoclaves, and I never told Mr. Wragg that

I was "bluffing' them. In the end, r never had the opportunity to even suggest to Mr. Columb

that he purchase these autoclaves because we were never able to satisfy the conditions of the

letter of intent and thus he never purchased a waste conversion system.

13. On approximately December 15, 2009 late in the evening, I received a call from

Mr. Wragg who said that the SEC had received a copy of my e-mail to these former employees

about selling the autoclaves to Mr. Columb and that the SEC was concerned that the asset freeze

was being violated. I was very upset by this becau e I was repeatedly told by Mr. Wragg that

these autoclaves were ne er ubject to the a s t fre ze and I was only trying to get the former

employees the monies owed to them by Mantria. During that call , Mr. Wragg assured me once

again that the autoclaves were not part ofth E a et freeze. I contemplated calling the SEC

to figure out what wa going on; however, 1 did not because a couple of days later on a call with

Mr. Wragg in which I asked what had happened with this entire matter, he told me there was

never any issue and that the SEC had " backed off' of its claim that the autoclaves were subject to

the freeze because they were cor assets and CDr was not listed in and subject to the court order.

r certify under penalty of perjury under the laws of the United States that the foregoing is

true and con·ect.

Dated this 2-day of M ~'£C<,CJ. --2010, in t-urlO1 b Philadelphia.

(-

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Case 1:09-cv-02676-CMA-MJW Document 64 Filed 03/10/2010...

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