Court Opinion

ID: 8488288
Source: CourtListenerOpinion
Date Created: 2022-11-21 18:00:23.005479+00
Date Added: 2024-06-11T16:50:09.754391
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                _______________

                                      No. 21-2547
                                    _______________

                           UNITED STATES OF AMERICA,

                                             v.

                                  WAYDE MCKELVY
                                             Appellant
                                   _______________

                     On Appeal from the United States District Court
                        for the Eastern District of Pennsylvania
                              (D.C. No. 2:15-cr-00398-003)
                       District Judge: Honorable Joel H. Slomsky
                                   _______________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                on November 18, 2022.

                Before: AMBRO, KRAUSE, and BIBAS, Circuit Judges

                               (Filed: November 21, 2022)
                                    _______________

                                       OPINION*
                                    _______________

Krause, Circuit Judge.

       Wayde McKelvy challenges his conviction and sentence for wire fraud, securities

fraud, and related offenses in violation of 18 U.S.C. §§ 2, 371, 1343 and 15 U.S.C.

§§ 78j(b), 78ff in connection with his role in a multimillion-dollar Ponzi scheme. We

*
  This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding
precedent.
discern no error and will affirm.

I.     BACKGROUND

       The Ponzi scheme started in 2005 when McKelvy’s codefendants—Troy Wragg and

later Amanda Knorr—organized and began to operate Mantria Corp. It masqueraded as a

successful real-estate development firm by building a few roads and a model house on

virtually uninhabitable land to dupe investors into believing the area would become a

thriving subdivision. Wragg bolstered the illusion of progress by establishing Mantria

Financial, a Tennessee-licensed lender that provided mortgages on Mantria Corp.’s land.

Borrowers happily entered these mortgages due to their inordinately favorable terms,

including $3,000 cash bonuses and the ability to walk away if the land did not appreciate

within two years. These mortgages created the appearance of growth, but in reality Mantria

Financial lost money on every loan it originated; the land never increased in value, so none

of Mantria Financial’s borrowers repaid their mortgages. Mantria Financial nevertheless

issued securities to unwitting investors.

       Mantria initially struggled to attract victims, so Wragg recruited McKelvy to tout

Mantria Financial’s worthless securities. McKelvy did so at his “Speed of Wealth”

seminars, in which he misrepresented Mantria’s viability and expected returns and urged

attendees to withdraw retirement savings, max out credit cards, and take out second

mortgages to invest in the Ponzi scheme. McKelvy also assured his audience that he was

“deeply involved in Mantria,” as he “kn[e]w where all the money [was] going,” and held

himself out as Wragg’s “partner” in the business. J.A. 596. Unfortunately, attendees

heeded McKelvy’s advice, with many liquidating their retirement savings and assuming

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new debts so they could invest in Mantria Financial.

       When the SEC filed an enforcement action against Mantria, the Ponzi scheme

collapsed. The Government subsequently indicted Wragg, Knorr, and McKelvy for wire-

and securities-fraud offenses. Knorr and Wragg pled guilty. McKelvy instead proceeded

to trial, where a jury found him guilty on all counts. After denying his motion for judgment

of acquittal, the District Court sentenced McKelvy to 216 months’ imprisonment.

II.    DISCUSSION1

       McKelvy challenges the District Court’s denial of his motion for judgment of

acquittal on his wire-fraud convictions as time-barred and contests the procedural and

substantive reasonableness of his sentence. But neither of McKelvy’s objections entitles

him to relief.

       A.        Motion for Judgment of Acquittal

       McKelvy contends the District Court erred in denying his motion for judgment of

acquittal on the wire fraud counts because they were time-barred. Although the default

statute of limitations for federal crimes is five years, 18 U.S.C. § 3282(a), wire-fraud

offenses have a ten-year statute of limitations “if the offense affects a financial institution,”

1
  The District Court had jurisdiction under 18 U.S.C. § 3231 and we have jurisdiction
under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a). We review the denial of a motion for
judgment of acquittal de novo and apply the same standard as the district court, viewing
the record in the light most favorable to the Government. United States v. Bobb, 471
F.3d 491, 494 (3d Cir. 2006). On sentencing issues, we defer to the district court’s
factual findings “and reverse only for clear error” but consider legal rulings de novo.
United States v. Bierley, 922 F.2d 1061, 1064 (3d Cir. 1990). We assess the
reasonableness of a sentence for abuse of discretion. United States v. Pawlowski, 27
F.4th 897, 911 (3d Cir. 2022).

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id. § 3293(2). According to McKelvy, the Ponzi scheme did not affect a financial

institution, so the extended statute of limitations was inapplicable. We disagree.

       Mantria Financial is a “financial institution,” specifically a “mortgage lending

business,” id. § 20(10), because it “finance[d] . . . debt secured by an interest in real estate,”

id. § 27. A financial institution need not be “the object of fraud” for § 3293(2) to apply,

United States v. Pelullo, 964 F.2d 193, 216 (3d Cir. 1992), so it is immaterial that Mantria

Financial “played an active part in the scheme,” United States v. Serpico, 320 F.3d 691,

695 (7th Cir. 2003); see also United States v. Heinz, 790 F.3d 365, 367 (2d Cir. 2015). The

fraud affected Mantria Financial because the scheme required it to issue unprofitable loans

to simulate demand, and it was ultimately liquidated as a result of the SEC enforcement

action against the Ponzi scheme. See United States v. Mullins, 613 F.3d 1273, 1279 (10th

Cir. 2010) (Gorsuch, J.) (explaining a fraud affects a financial institution when it “exposed

[the] institution to a new or increased risk of loss”).

       The fraud affected other financial institutions as well. At McKelvy’s trial, two

victims testified that they struggled to repay the “insured depository institution[s],” 18

U.S.C. § 20(1), that had loaned these victims the funds they invested in Mantria’s valueless

securities. Thus, the Ponzi scheme affected those lenders by increasing the risk that

McKelvy’s victims would default.

       Because the fraud affected multiple financial institutions, the wire-fraud counts

were subject to a ten-year statute of limitations, see 18 U.S.C. § 3293(2), and McKelvy’s

contention that the five-year statute of limitations rendered them untimely is incorrect.

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       B.     Reasonableness of McKelvy’s Sentence

       McKelvy’s objections to the procedural and substantive reasonableness of his

sentence are also unavailing. A sentence is procedurally reasonable if the district court

applies the appropriate enhancements and deductions under the Sentencing Guidelines and

weighs the sentencing factors under 18 U.S.C. § 3553(a). United States v. Seibert, 971

F.3d 396, 399 (3d Cir. 2020). A procedurally reasonable sentence is also substantively

reasonable unless “no reasonable sentencing court would have imposed the same sentence

on that particular defendant for the reasons the district court provided.” United States v.

Shah, 43 F.4th 356, 367 (3d Cir. 2022) (quoting United States v. Tomko, 562 F.3d 558, 568

(3d Cir. 2009) (en banc)).

       Here, there was no procedural error. The District Court properly applied the

guideline enhancement for offenses that jeopardize the safety and soundness of a financial

institution, U.S.S.G. § 2B1.1(b)(17)(B)(i), because the fraud did indeed affect a financial

institution, as discussed above. Nor was there error in the District Court’s enhancement

under U.S.S.G. § 3A1.1(b)(1) for McKelvy’s targeting of victims. As McKelvy was

undoubtedly aware, having held many seminars in person and having spoken directly with

audience members, many of them were born in the 1920s, 1930s, and 1940s, and all were

sufficiently unsophisticated to follow McKelvy’s advice to liquidate their retirement

savings and assume substantial debts to invest in the risky securities of a single company.

See United States v. Adeolu, 836 F.3d 330, 333 (3d Cir. 2016).

       The District Court also correctly determined that McKelvy was not entitled to a

downward adjustment under U.S.S.G. § 3B1.2 because he was not a minimal or minor

                                            5
participant in the fraud. District courts have “broad discretion in applying this section, and

their rulings are left largely undisturbed by the courts of appeal,” United States v. Self, 681

F.3d 190, 201 (3d Cir. 2012) (quoting United States v. Isaza-Zapata, 148 F.3d 236, 238

(3d Cir. 1998)), and the District Court here did not abuse that discretion in light of

McKelvy’s close relationship with Wragg, indispensable role in recruiting investors, and

awareness of Mantria’s true financial condition, see id. Finally, the District Court did not

err in failing to consider under 18 U.S.C. § 3553(a)(6) whether McKelvy’s sentence would

create unwarranted disparities with his codefendants because “a defendant cannot rely upon

§ 3553(a)(6) to seek a reduced sentence designed to lessen disparity between co-

defendants’ sentences.” United States v. Parker, 462 F.3d 273, 277 (3d Cir. 2006); United

States v. Douglas, 885 F.3d 145, 153 n.6 (3d Cir. 2018) (same).

       The sentence imposed by the District Court was also substantively reasonable.

McKelvy’s argument to the contrary is that the sentence exceeded the Court’s stated reason

for incarceration, namely specific deterrence. But he ignores the other reasons the Court

articulated: promoting respect for the law and deterring others from engaging in similar

misconduct. As we explained in Tomko, “[t]he touchstone of ‘reasonableness’ is whether

the record as a whole reflects rational and meaningful consideration of the factors

enumerated in 18 U.S.C. § 3553(a).” 562 F.3d at 568 (quoting United States v. Grier, 475

F.3d 556, 571 (3d Cir.2007) (en banc)). Here, the District Court appropriately emphasized

the need to promote respect for the law and deterrence in light of the seriousness of

McKelvy’s offense—“a $54 million Ponzi scheme that affect[ed] 300 victims” and “was

motivated by greed[.]” J.A. 633, 638. Considering these circumstances, McKelvy has not

                                              6
established that “no reasonable sentencing court would have imposed” his sentence. Shah,

43 F.4th at 367 (quoting Tomko, 562 F.3d at 568).

IV.   CONCLUSION

      For the foregoing reasons, we will affirm the judgment of the District Court.

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