FOR IMMEDIATE RELEASE
Friday, January 24, 2020
Top Executives Plead Guilty to Participating in a Billion Dollar Ponzi Scheme—the Biggest Criminal Fraud Scheme in the History of the Eastern District of California
SACRAMENTO, Calif. — The owners of DC Solar, a Benicia-based company, pleaded guilty today to charges related to a billion dollar Ponzi scheme— the biggest criminal fraud scheme in the history of the Eastern District of California. The government’s investigation has resulted in the largest criminal forfeiture in the history of the District with over $120 million in assets forfeited that will go to victims, and has returned $500 million to the United States Treasury, with more to come, U.S. Attorney McGregor W. Scott announced.
Jeff Carpoff, 49, of Martinez, pleaded guilty today to conspiracy to commit wire fraud and money laundering. His wife, Paulette Carpoff, 46, pleaded guilty today to conspiracy to commit an offense against the United States and money laundering. According to court documents, between 2011 and 2018, DC Solar manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers that were promoted as able to provide emergency power to cellphone towers and lighting at sporting events. A significant incentive for investors were generous federal tax credits due to the solar nature of the MSGs.
The conspirators pulled off their scheme by selling solar generators that did not exist to investors, making it appear that solar generators existed in locations that they did not, creating false financial statements, and obtaining false lease contracts, among other efforts to conceal the fraud. In reality, at least half of the approximately 17,000 solar generators claimed to have been manufactured by DC Solar did not exist.
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 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 auction resulted in recouping approximately $8.233 million for victims. In addition to their collection of luxury and collector vehicles, Jeff and Paulette Carpoff used money from the scheme to pay for a minor-league professional baseball team and a NASCAR racecar sponsorship; to purchase 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.
“The Carpoffs and their co-conspirators wove a web of lies and deceit in a massive fraud scheme. Meticulous review and analysis of millions of documents revealed the operation and true intention of the scheme,” said Special Agent in Charge Sean Ragan. “The FBI is committed to our partnerships with the Internal Revenue Service Criminal Investigation, Federal Deposit Insurance Corporation Office of Inspector General, and U.S. Marshals Service. Together, we seek to uncover fraud that exploits investors and taxpayers, ensuring criminals face justice.”
“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. IRS CI is committed to investigating those who take advantage and impact the financial well-being of others for their own personal gain.”
“The Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG) is pleased to join our law enforcement colleagues in announcing these guilty pleas,” stated Special Agent in Charge Wade Walters for the FDIC OIG San Francisco Regional Office. “The defendants conspired with others to create a fraudulent business venture that duped unsuspecting entities, including banks, to invest approximately $1 billion, which the two later used to support a lavish lifestyle. They also knowingly engaged in a money laundering transaction involving criminally derived property. The FDIC-OIG is committed to ensuring that those who use our Nation’s banks to undermine the integrity of the financial system will be held accountable.”
Four defendants have previously pleaded guilty to federal criminal charges related to the fraud scheme since October. Joseph W. Bayliss, 44, of Martinez, and Ronald J. Roach, of Walnut Creek, each pleaded guilty to related charges on Oct. 22, 2019. Robert A. Karmann, 53, of Clayton, pleaded guilty to related charges on Dec. 17, 2019. Ryan Guidry, 53, of Pleasant Hill, pleaded guilty to related charges on Jan. 14, 2020. A seventh co-conspirator is scheduled to plead guilty on Feb. 11. The investigation into the fraud remains ongoing.
This case is the product of an investigation by the Federal Bureau of Investigation, IRS‑Criminal Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General. Assistant U.S. Attorneys André M. Espinosa and Kevin C. Khasigian are prosecuting the case.
Jeff and Paulette Carpoff are scheduled to be sentenced by U.S. District Judge John A. Mendez on May 19. Jeff Carpoff faces a maximum statutory penalty of 30 years in prison. Paulette Carpoff faces a maximum statutory penalty of 15 years in prison. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
HT/Don V., Sweet Old Bob, J Mac and some I’ve probably missed.
Er…….. A significant incentive for investors were generous federal tax credits 😐
With out these credits, the green scam is dead?
Almost a $B in taxpayer ripoff. A $B here, a $B there … and pretty soon it adds up to a few corruptocrat’s children named; Biden, Pelosi … “earning” $M’s
Plus the cost of the investigation / prosecution and other legal stuff.
AND what should have been their first queue?
Lighting at Sporting Events.
Most indoor sporting events would require more electricity than just lighting AND most outdoor sporting events don’t require lighting during daylight hours and how they operate renders Solar Generators useless at night when lighting would be required.
Obviously there’d be some storage so solar generated during the day could be used at night.
They had real products that performed those very tasks…they just cooked the books and pretended to have far more sales and rentals.
No, that storage is NOT obvious. Nor would it appear large-enough to fit in their trailers that would light-up more than a few bulbs for a few hours. Again … details please. Details that the giddy-with-greenish-excitement investors never asked-for … and got burned.
Spend a few minutes calculating how big the solar array would have to be keep to charge enough batteries during the day, in order to keep field lighting on during a 3 to 5 hour night time game. (Not to mention all the other things that draw power during a game.)
Even if they covered the entire parking lot, they couldn’t do it.
They claimed to have product, it’s not likely that they actually did.
Maybe emergency lighting was just for 20m to clear the stadium and was not intended to light the pitch but just the stands ( if indeed this even refers to stadium sized events which I doubt. ).
Greg, don’t stadiums already have a regulatory requirement to provide that kind of emergency lighting?
MarkW,
you think of cock fighting and bulldog fights.
Bingo!!
Well, that, and sociopolitical inoculation of the blight factor, gauntlets, etc.
I love stuff like this. I am waiting for the rest of it to fall into place.
The whole thing has been a scam from the get-go, no matter what anyone says.
I’ve been looking for that other shoe to drop as well, I thing Squatch has it
What could possibly go wrong? It only takes two people talking to each other at the bottom of the pyramid to initiate instability. If they impugn the next highest layer, the instability is even greater, more focused. Scammers overestimate their own ability to hold a deception together.
I think a “successful Ponzi scheme” is an oxymoron.
The closest thing to a “successful Ponzi scheme” is social security. When SS was first created it was a successful Ponzi scheme, the ratio of workers to collecting retirees was huge and collecting retirees life expectancy was small – so it generated far more money then it was required to pay out. As time went on, however, the demographics changed. the ratio plummeted and life expectancy grew (as well as government adding to who can collect). As it currently stands, it will eventually collapse under its own weigh (IE shelling out more than it takes in, exhausting any “surplus” it has generated over the years) as Ponzi schemes tend to do, if changes to the scheme are not made.
The last time I saw an estimate (about 15 years ago), they were predicting that the “trust fund” would run dry mid 2030’s. At that time, SS will only be able to pay out in one month, what they received during the previous month. The estimate was that SS payments would drop to about 2/3rds of what they are paying now.
Anyone who thinks congress will let that happen doesn’t have a functioning brain stem.
Congress will do some combination of the following:
Make up the difference from general funds (and double the deficit at the same time)
Increase taxes, both general and SS taxes.
Cut payments to the wealthy, (defined as anyone who isn’t on welfare.)
Indeed, the only question is when Congress will do that something. SS isn’t known as a third rail subject for nothing.
John Endicott you know you’re wrong.
The players at the fields + the agencies of the players never run out of money spent by the visitors.
The difference is who governs the money – Bernie Madoff or JPMorgan Chase.
It’s a Ponzi scheme. There is no pyramid* involved.
* These are found in legal codes under “endless chain schemes.”
They could have been selling hydrinos all along and gotten away with it.
The green klepto economy spins on.
Today’s guilty pleas sends a strong message that fraudsters will get caught…
..and yesterday’s says they won’t
government funds…..giving themselves huge raises…and going bankrupt
My thoughts run similarly.
For every high profile not too hard to spot set of nouveau scam artists how many are a tad more sophisticated in that they merely siphon off small millions with the plan of going bankrupt from the start?
A mere 50 piranhas will pick a carcass clean faster than a few sharks.
“DC Solar manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers that were promoted as able to provide emergency power to cellphone towers and lighting at sporting events.”
Have to be pretty stupid to believe that cellphone tower owners are going to install something that can only provide emergency power during daylight hours.
And “lighting at sporting events”??? How are Solar generators going to supply lighting at night-time sporting events?
They were going after morons and certainly found them.
Sadly, the vast majority of those morons were investing CALPERS and CALSTRS pension $$$$$ into “socially conscious” baskets of investments. Idgiots.
I know, they can provide lighting for daytime, outdoor events.
They could provide lighting for Indoor sporting events but most of these indoor events require more juice than just for lighting purposes
They might have enough batteries to power the lights, etc. But the idea that they had a portable solar array capable of charging those batteries in a day or less, does not pass the laugh test.
MarkW, the laugh test begins when you start talking about “buying and transporting enough batteries”.
I think I have an idea for a solar breathing air apparatus, and it works both day and night.
Lungs?
My lungs are solar powered. Second and third hand, but still solar powered.
They shine electric powered lights on them.
via Diesel powered Gennie’s
And “lighting at sporting events”??? How are Solar generators going to supply lighting at night-time sporting events?
seems, that is part of the fraud 😀
Having served on the Board of Directors for a municipally owned baseball field, I can assure you that there are people stupid enough to believe that solar backup for field lighting would be a good idea.
I also know such people. My first question would be about the requirement for backup power at all. Maybe five minutes at full power so the players don’t crush each other. After that, some emergency lighting so folks can safely exit the premises. Some batteries, an inverter, a control system, that’s it.
With batteries.
https://www.sol-solutions.com/
And just how big would those batteries have to be to function properly for the duration of a double header Baseball game?
How much would that weigh?
How light could you make the batteries and still have sufficient storage along with road worthiness?
1) Too big to be practical
2) Too much to be transported down the road on flatbed trucks with weight restrictions.
Don’t forget the portable solar array to charge those batteries. How many acres would be needed for that?
Certainly more than a simple transportable solar panel generator could muster. You’d likely have to cover all parking spaces with panels mounted to covered parking structures.
BobM
While seemingly absurd, these do exist and have valuable practical applications.
The lighting these things provide are directional signage and placed along the roads side where power is not available and noise from generators considered a nuisance. They are tow-able trailers with solar panels, batteries and lighting panels. Many of you, no doubt, have seen these. They provide portable high visibility general signage for traffic repairs: LANE CLOSED AHEAD; for sporing and entertainment venues: GENERAL PARKING – TURN LEFT
They certainly are not intended to light a stadium.
here is site of one such company:
https://www.wanco.com/industries/traffic-safety/
These applications are viable because they use LED lights that draw a fraction of the current that incandescent lights would have done, so a modest battery can keep them going all night. In the old days, there would have been a gasoline-powered generator churning away 24/7 to power the lights.
And now we have a slightly better mouse trap. One small niche where such applications can prevail. Each has its best use. While a spider’s web makes a good fly catcher it serves poorly as a cow catcher.
Good for a laugh, RS. And you’re right — solar power & batteries are niche technologies, not base-power tech. Wound springs are fine for driving a watch or a child’s toy, but not for powering much else.
Rocketscientist – completely agree. But “portable high visibility general signage” for traffic is “Road Signs”, not “Lighting” as generally understood. I didn’t get the impression they were selling the common solar powered traffic and venue signs using terms such as “emergency power for cellphone towers and lighting at sporting events”. There’s a big difference. Towers have UPS battery backup while the standby generator starts up. Hard to see where solar even applies.
Perhaps it was reported incorrectly, or perhaps the scheme was to let investors think all that “signage” on the roads was their product, along with non-existent “heavy duty” stuff for cellphone towers and sports lighting. That kind of misdirection gives plausibility and is how Ponzi schemes work.
The power draw for a portable sign is a lot less than a cell tower needs.
The power to run a cell tower wouldn’t even count as rounding error when calculating how much power is needed to light a sporting event.
BobM
Excellent reply. They do have a place powering low energy LEDs to warn you that you’re exceeding the speed limit, etc. That gives you a pretty fair gauge of the surface area to power output ratio. Really large!
Maybe the trailers had battery storage?
Gee, I wonder how many Democrat politicians got rich from that ?
With $1B invested and $640M recovered, you can bet it’s a bunch.
I wonder if Where’s Hunter Biden has a seat on the Borad of Directors?
No, no – Hunter Biden sat on the Bored of Directors – not doing very much…
Ralph
You have to call him “Where’s Hunter” now. Trump renamed him, alluding to the fact that Hunter disappeared after his involvement in Ukraine was discovered and none of our illustrious news organizatins could seem to find him.
I had a funny incident happen the other day. I was talking to a friend about Where’s Hunter, and happened to mention that Trump had given Hunter the additional name of “Where’s”, and she said, “I thought Where’s Hunter was his real name!” I said, it is, Now. 🙂
The Democrats have no problem with Hunter Biden getting an $83,000/month no show job with a Ukrainian power company at a time when his father is the Vice President and in charge of setting up US energy policy with Eastern Europe.
However asking the Ukranians to investigate this job is apparently an impeachable event.
And somehow *not* telling the Ukranian’s “investigate or you won’t get the aid” and then giving them the aid without them investigating is a “quid pro quo” and an impeachable event but telling them “fire that prosecutor (who is investigating the company my son has an $83,000/month no-show job with) or you won’t get the money” which results in them firing the prosecutor, isn’t.
I said, ‘You’re not getting the billion. I’m going to be leaving here in,’ I think it was about six hours. I looked at them and said: ‘I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money.’ Well, son of a bitch. [Laughter.] He got fired. – Joe Biden
It’s not just Biden — a number of big-name Demon-crats have family members working in various Ukrainian “companies”. Seems like Ukraine is a massive money-laundering/generating location for the Demons.
microcosm
Not much virtue signalling to be found there now.
Just another example of how promoting something as “green” or “renewable” powered by wind or solar will cause people to suspend all critical analysis and skepticism for the fantasy. I wonder how many other scams like this are currently out there.
“Carbon” credits trading is the doozie.
No actual product, no actual consumers, taxpayer subsidised, no warranties, no audits, no real competition, mandated purchasing –
every scamsters’ wet dream!
+ one trillion
Dollars, and counting.
Green Finance at its finest. Fleecing private investors and taxpayers. I wonder how many banks and other institutional investors put their money in to meet sustainability goals. Bloomberg and others are attempting to use finance as a boa constrictor to strangle the fossil fuel industry. They need legislative action to help pull it off. Like the housing bubble
Troe,
A few years back ratepayers in CA got fleeced via a small wind program-
https://www.greentechmedia.com/articles/read/california-closes-loopholes-on-small-wind-rebates
How much did Nancy and AL have in this one?
“$120 million…will go to victims, and $500 million to the United States Treasury”
This is backwards. The victims should be fully reimbursed first, and the Government gets what’s left over. It was the Government that set up the circumstances with subsidies for rainbow power, but then didn’t police the companies that got the subsidies until it was too late.
First the government has no money, it is all taxpayers money.
Second the article does not tell us how much investors or taxpayers were owed, so what percentage have each got back?
How much are lawyers getting?
Investors should have done diligence on this. They were probably greedy in harvesting the subsidy.
I think the supervising bureaucrats should be fired and forced to reimburse the lost money also.
Not likely.
“Green” investors are very snowflakey, and will throw their money at anything that advertises itself to be “green”. That’s why investment firms are into divesting of oil and gas, saying how green they are becoming…..Why ? Just substitute ‘d’ for ‘n’…
The Green renewable energy industry is based on a big climate lie spun into an enormous fraud on taxpayers and electricity rate-payers across many nations. It is vastly larger than this one case of Solar energy criminal fraud. Most the Green scam is “legal” fraud (an oxymoron, I realize). It’s a fraud on public trust.
The Green energy scam industry is top-down directed, sustained only by subsidies and tax breaks available. This makes it fragile when the hidden assumptions crumble under the weight of evidence. Remove the tax credits and subsidies and it would all collapse in a short order. Allow the real evidence of low climate sensitivity to CO2 and it crumbles.
This why I frequently refer to the deep pocketed investors in this scam on the middle class as the GreenSlime. They leave their slime trail of money to feed ethically-challenged academics and bootlick politicians, rent-seekrs who do the GreenSlime’s bidding to continue the scam.
All you have to do is look at the many $100’s millions that GreenSlimers like Bloomberg and Steyer are currently spending on their own Democratic Prez nomination campaigns. They know they have Zero Chance at getting the Dem’s nomination in their June party convention, so then why do these intelligent billionaires do it?
It’s an an ego-soothing play-toy for them and more likely an investment, just like a marketing or advertisement campaign for a business or corporation costs money. A few $100 million here, another $100 million there, and on and on. They are looking for many billions of dollars as a fat ROI reward down the road. They are playing the long game on the Green Scam. In the process they are setting up multi-million dollar campaign fund accounts that when they do finally end their campaign, they can then transfer those monies to the Democrats’ campaigns, effectively bypassing the FEC contribution limits by 3 to 4 orders of magnitude from individual donors (set for 2020 at $35,500/yr per campaign). And in doing so they buy the influence of those Democrats who receive that largess. The past evidence is there, with Bloomberg and Steyer’s money helping elect State’s Attorney Generals across a swath of Blue States, that have gone on to do their biddings on everything from the #ExxonKnew attacks on energy companies, to getting favorably written ballot initiatives before voters or keeping Greenscam-unfriendly initiatives off the ballots.
The Green Scam is completely has always about the money. And the GreenSlime billionaires are central financiers in this scam, with tax-payers being the real victims.
Solyndra 2.0 on steroids, and it took the Feds much longer to catch these people. May they spend the rest of their lives where the sun never shines.
Your taxpayer dollars at “work”…
Given the nature of the scheme, many people must have been aware that something wasn’t right. It’s not like the Bernie Madoff scheme, where only a few people (that we can be sure of) were aware that the trades were fictitious.
Not really, a lot of generators did exist and the people operating or maintaining them would just assume that somebody else was dealing with the fictional ones. Also they are mobile, so finding one location was missing its generator could be explained by it being redeployed.
Which is worse an unsanctioned solar Ponzi scheme or an official state carbon tax that misrepresents the uses of the funds or uses some of it to appease construction unions building a high rail line to nowhere?
Which are you calling “nowhere” – – Bakersfield or Merced?
I think I’ll notify the locals. [ winking smiley face – – Poe’s Law]
Are you speaking of Calizuela?
They are probably demonrats from California who truly thought that what they were doing was OK and legal.
The State seems to have supported them.
Eastern California District? The biggest? I live in Eastern California, there’s practically nothing out here. I wonder what the runner up fraud scheme was?
The Eastern District covers Sacto, Fresno, Bakersfield etc.
I think Lone Pine is also in there, but not by itself… 😉
A rose by any other name? Ponzi scheme? Carbon tax?
social security ….
Another solar panel scheme exposed. Even some, not all, of the roof top installations have scammed the unwary and locked them into contracts for decades of increased electricity costs by purposefully under estimating monthly usage/costs and then charging exorbitant kwh fees to “make up for what you overused”. For the most part though I’ve talked to people that are happy with their rooftop panel electricity $ returns. At least for now while they haven’t incurred any maintenance or replacement costs. I would definitely stay away from the “lease” contracts though.
another curious solar scam going on in Sth Asu
media ran a small paywalled item re the homeowners who are getting subsidised batteries for soalr pv on homes to now REsell power back to grid at FIVE times the cost of usual suppied power
now tell me how that works and whos really paying?
sa has the mst expensice power in Aus at the moment i think. maybe wa is higher but I dont think so.
They merely copied the social security model that our government uses.
You have to admit, they had a lot of nerve. The story is almost unbelievable.
The stupidity of government bureaucrats is not surprising.
You have to admit, they had a lot of nerve. The story is almost unbelievable.
The stupidity of government bureaucrats is not surprising.
Can we get a list of investors that were at the top of the pyramid and made money? Someone somewhere signed off on this baloney.
Small-time crooks. Do it in style, like Solar Reserve. Their Crescent Dunes solar plant received a $737 million loan guarantee from the Department of Energy. Currently mothballed, the plant produced 418,849 MWh over its lifetime. That comes to $1.76 per kWh generated. I wonder why there could not have been a cheaper pilot plant?
+1.
One would of thought Ivanpah’s less than stellar performance might of been a heads up to the decision makers on that pilot plant discussion/choice.
The news item I’m waiting for:
“By all outer appearances the IPCC was a legitimate and successful scientific organisation,” 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 trllion.
Perhaps in 100 or 200 years time a historian will come to that conclusion. But while the people involved still live, that won’t happen.
“Shovel ready jobs!” said progressively Barackward Hussein Obama. The DC Solar con artists were surely ‘shoveling it’. Obama is undoubtedly proud, sitting in his $15 million dollar mansion just a few feet above sea level in Martha’s vineyard, as he takes a ‘teaching moment’ to make sure his daughters understand that the 1st Rule of every really good con game is to make sure somebody else ends up holding the bag after the marks get fleeced.
When I saw the DC Solar sponsored NASCAR team my first thought was “scam”.
Actually, the article does not make the connections to establish that it was a Ponzi scheme. A Ponzi scheme must have perpetrators at sublevels below the “mastermind”, who agree to farm out the fraud to others for a cut, and whose victims are allowed or encouraged to bring other victims in so they can recoup their own losses. The seven “co-conspirators” here are arrested on various fraud charges, and the confiscated money is being restored to “the victims”. Nowhere do I see the relevant detail explaining the “Ponzi scheme” link. Everyone in the article is either a victim or a perpetrator. Ponzi schemes depend on victims becoming predators themselves.
(…some trouble posting)
Not quite, Bill Parsons. What you describe is a classic Pyramid scheme (which is merely one type of Ponzi scheme).
The definition of a ponzi scheme is: a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
(In the article the “nonexistent enterprise” was the nonexistent solar generators.)
It doesn’t have to be in a pyramid structure to be a ponzi. Basically, in a ponzi, investor A gets paid by investments made by investor B who gets paid by investments from investor C, and so on. Investor C does not have to be recruited by investor B (as would be the case in a pyramid), all the investors could be recruited by the guy whose scheme it is.
https://www.differencebetween.com/difference-between-pyramid-scheme-and-vs-ponzi-scheme/
Back in the 1980s. there was a buzz of media excitement when a US railway installed solar panels on the caboose of a train, to provide electricity to light up the tail lamps and so make the train visible at night. We laughed then; we laugh now, but with more sorrow. Geoff S
Looks like the culprits are now fully qualified to represent the East Bay in Congress.
A solar developer – guilty of fraud? How can that even be? Are those solar folks not the heroes of mankind that will take no matter how much abuse the world throws at them in order to save the day for our children? Sure they cannot possibly be motivated by the lowly attractions of the green. Tell Greta so she can start bringing light to this.
Doesn’t anybody respect moral superior Jeff Carpoff, 49, of Martinez, and wife, Paulette Carpoff, 46, prevented spectators at sporting events from sitting in the dark reliant on self-brought flashlights.
Or the KKK illuminating the scene by renewable torches.