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.
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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.