SUMMARY:
“Within a short time,
we were doing
over $60 million in sales,”
CEO Jeff Carpoff
told Inc. magazine,
in a December 2018
interview.
We now know,
that back In 2016,
new investor money
accounted for
$50 million of the
company's claim
of having $55 million
in sales revenue,
according to
a former employee.
From 2011 to 2018,
DC Solar
manufactured
mobile solar
generator units
( MSGs )
solar generators
mounted on
small trailers,
claimed to provide
emergency power
for cellphone towers,
emergency lighting
at sporting events,
and emergency
lighting in large
parking lots
of retail stores.
There are two MSGs
in the parking lot of
a nearby Lowe's
home improvement
store, located in
Southfield Michigan
( a different brand )
A big incentive
for investors was
generous federal
tax credits, due to
the solar nature
of the MSGs.
The Carpoffs
sold securities
( investment contracts )
through their two
solar generator
companies,
C Solar Solutions, and
DC Solar Distribution.
The Securities
and Exchange
Commission
charged that
California based
Jeffrey and
Paulette Carpoff
raised about
$910 million,
from 17 investors,
between the years
of 2011 and 2018.
The $910 million
is being reported
as including
$300 million from
famous investor
Warren Buffett.
“By all outer appearances
this was a legitimate
and successful company,”
said Kareem Carter,
Special Agent in Charge
IRS Criminal Investigation.
“But in reality it was all
just smoke and mirrors
— a Ponzi scheme
touting tax benefits
to the tune of
over $900 million. "
It now appears
the Carpoffs lied,
to significantly
increase reported
MSG leases.
At least half
of about 17,000
solar generators
that were claimed
to have been
manufactured
by DC Solar,
did NOT exist.
The Carpoffs
made it appear
those solar
generators
existed by
using false
lease contracts,
and false financial
statements,
Jeff Carpoff, 49,
of Martinez,
pleaded guilty
to conspiracy
to commit wire fraud
and money laundering.
He faces a maximum
statutory penalty
of 30 years in prison.
His wife,
Paulette Carpoff, 46,
pleaded guilty to conspiracy
to commit an offense
against the United States
and money laundering.
She faces a maximum
statutory penalty
of 15 years in prison.
Jeff and
Paulette Carpoff
are scheduled
to be sentenced by
U.S. District Judge
John A. Mendez
on May 19, 2020.
DETAILS:
The owners
of DC Solar,
a Benicia-based
solar energy
company,
pleaded guilty
to charges
related to their
billion dollar
Ponzi scheme—
the biggest
criminal fraud
scheme
in the history of
the Eastern District
of California.
Daniel Michael,
Chief of the
Enforcement
Division's Complex
Financial Instruments
Unit said:
"While the Carpoffs' pitch
to investors seemed
new and innovative,
their alleged fraud
was old and simple.
This case is a reminder
that fraudsters often try
to lure investors
by associating
themselves with
trendy technologies."
The SEC
complaint
stated that:
"The Carpoffs allegedly
promised investors tax credits,
lease payments, and profits
from the operation of
mobile solar generators.
In reality,
the complaint alleges,
most of the generators
were never manufactured,
and the vast majority
of the purported
lease revenue
paid to investors
in fact came from
new investor funds."
( the Carpoffs also )
"arranged for investors
to receive false documents,
including financial statements,
lease arrangements,
and generator certifications"
and that
"throughout the scheme,
the Carpoffs siphoned off
investor funds and used
at least $140 million
of investor money
to fund their
lavish lifestyle,
which included
150 luxury and
sports cars,
dozens of properties,
and a share in
a private jet service."
U.S. Attorney Scott stated:
“This billion dollar Ponzi scheme
hurt investors and took money
from the United States Treasury.
This case represents
not only the largest
criminal fraud scheme
in the history of the District,
it also represents
the largest criminal forfeiture
in the history of the District
with over $120 million
in assets forfeited.
All of this money
will be returned
to the victims.
This scheme also targeted
the United States Treasury,
and we have returned
$500 million to the Treasury
to date.
Agents, investigators
and attorneys
from various federal agencies
are still working to continue
to return money to victims
and the United States Treasury.
Today’s guilty pleas
sends a strong message
that fraudsters will get caught
and will pay for their crimes.
You can run, but you cannot hide.”
The asset forfeiture included
seizing and auctioning
148 of the Carpoffs’
luxury and collector vehicles,
including the 1978 Firebird
previously owned
by actor Burt Reynolds.
This historical
vehicle auction
resulted in
recouping
$8,233,000
for victims.
In addition
to vehicles,
Jeff and
Paulette Carpoff
used money
from the scheme
to pay for:
a minor-league
professional
baseball team
a NASCAR
race car
sponsorship
luxury real estate
in California, Nevada,
the Caribbean, Mexico,
and elsewhere;
a subscription
private jet service;
a suite at a professional
football stadium; and
jewelry.
Four other defendants
previously pleaded guilty
to federal criminal charges
related to the fraud scheme,
since October 2019.
Joseph W. Bayliss, 44,
of Martinez,
and
Ronald J. Roach,
of Walnut Creek,
each pleaded guilty
to related charges
on October 22, 2019.
Robert A. Karmann, 53,
of Clayton, pleaded guilty
to related charges
on December 17, 2019.
Ryan Guidry, 53,
of Pleasant Hill,
pleaded guilty
to related charges
on January 14, 2020.
An unknown
co-conspirator
is scheduled
to plead guilty
on February 11, 2020.