If you take the tray out, you have to prop smaller items up on something to bring it into range. The laser can reach from the tray surface (at about 1.4" from the bottom of the machine floor) to about 1.9" from the bottom. You have to bring the surface that you want to engrave on up into that 1/2" range in order to get the correct placement and focus.
How thick is the wallet? (Measure with calipers.)
If it is under 1/2" you can put it on the tray. (Try unfolding it).
If it’s thicker than 1/2", then you need to prop it up on something that is less than 1.4" tall and then run the Set Focus routine to calculate the difference automatically.