The owner of a solar energy company in Benicia, California, has been sentenced for masterminding a billion-dollar Ponzi scheme. According to prosecutors, it is the largest scam in the history of the Eastern District of California.
Jeff Carpoff, 50, was sentenced on Nov. 9 to 30 years in federal prison by U.S. District Judge John A. Mendez. Carpoff pleaded guilty in January 2020 of conspiracy to commit wire fraud and money laundering. In the same year, his wife Paulette Carpoff, 47, also pleaded guilty of conspiracy to commit an offense against the United States and money laundering.
Carpoff was the co-owner of DC Solar, a company that manufactured mobile solar generator units (MSG), which were solar generators placed on trailers. They were marketed as being able to supply emergency power to cell phone towers and lighting at sporting events.
Between 2011 and 2018, the company claimed that it had manufactured around 17,000 generators. Carpoff managed to attract investors by lying about the market demand for MSGs and the potential revenue from third-party leasing for which the investors would receive federal tax credits.
The MSGs failed to generate sufficient income and Carpoff along with his conspirators falsified financial statements and lease contracts to assure investors that leasing was still going on.
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According to authorities, at least half of the 17,000 units claimed to have been manufactured did not exist and DC Solar only managed to lease a fraction of the units. This led to a Ponzi-like circular payment scheme where money from new investors was used to pay older investors.
“As DC Solar lost vast sums of money with this fraudulent model, Carpoff and other conspirators stopped building the MSGs altogether, selling thousands of MSGs that did not even exist to investors,” the Department of Justice (DOJ) stated.
In order to pull off the fraud, Carpoff and other schemers switched vehicle identification number (VIN) stickers on older units, placed GPS transponders in locations where the MSGs didn’t exist, and even managed to con investors during equipment inspections.
With their ill-gotten wealth, Carpoff and his wife led a luxurious lifestyle. The money was used to buy a NASCAR sponsorship, a suite at a professional football stadium, a subscription to a private jet service, and a minor-league professional baseball team.
Court documents also reveal that the money was spent on buying luxury real estate in Nevada, California, Mexico, the Caribbean, and elsewhere. Among their assets were a fleet of over 100 luxury and collector vehicles that included a 1978 Pontiac Firebird previously owned by actor Burt Reynolds.
The Federal Bureau of Investigation (FBI) raided the company headquarters in December 2018, and the fraud was exposed. DC Solar eventually filed for bankruptcy in January 2019, with an equipment auction at the company’s headquarters in May 2019 bringing the chapter to an end.
“Jeff Carpoff orchestrated the largest criminal fraud scheme in the history of the Eastern District of California… He claimed to be an innovator in alternative energy, but he was really just stealing money from investors and costing the American taxpayer hundreds of millions in tax credits,” said Acting U.S. Attorney Talbert.
Among the investors who have fallen prey to the scheme are Warren Buffett’s Berkshire Hathaway which invested $340 million, East West Bancorp Inc., Sherwin-Williams Co., Valley National Bancorp, and Progressive Corp.
The government’s inquisition so far has resulted in the forfeiture of roughly $120 million in assets. It includes Carpoff’s collection of vehicles that were confiscated and auctioned, netting approximately $8.23 million. The proceeds will be used to indemnify the victims of the fraud.
Along with Carpoff and his wife, there were five other defendants who were involved in the scheme. Ronald J. Roach, 54, of Walnut Creek, and Joseph W. Bayliss, 46, of Martinez, both plead guilty to related charges on Oct. 22, 2019; Ryan Guidry, 44, of Pleasant Hill, plead guilty on Jan. 14, 2020; Robert A. Karmann, 54, of Clayton, pleaded guilty on Dec. 17, 2019.
Alan Hansen, 50, of Vacaville, an ex-employee of a telecom company with which DC Solar conducted business, pleaded guilty on July 28, 2020, to being involved in the conspiracy and having signed a false contract after receiving a kickback of $1 million.
