Home Courts Martinez Resident Jeff Carpoff Gets 30 Years In Prison For Billion Dollar...

Martinez Resident Jeff Carpoff Gets 30 Years In Prison For Billion Dollar Ponzi Scam

SHARE
Photo: File

Martinez resident Jeff Carpoff, who with his wife Paulette owned Benicia-based DC Solar, was sentenced today for his role in the billion-dollar Ponzi scheme Acting U.S. Attorney Phillip A. Talbert called the biggest criminal fraud scheme in the history of the Eastern District of California.

The Carpoffs both pleaded guilty to the scam in January, 2020.

Today, Tuesday, U.S. District Judge John A. Mendez sentenced Carpoff, 50, to 30 years in prison. Carpoff pleaded guilty to conspiracy to commit wire fraud and money laundering. Paulette Carpoff, 47, also pleaded guilty to conspiracy to commit an offense against the United States and money laundering. The government’s investigation has resulted in approximately $120 million in assets forfeited that the government intends to seek authorization to use towards restitution to victims of the fraud.

A Concord auto mechanic, Jeff Carpoff founded DC Solar in 2008, almost immediately securing $340 in investment funding from Warren Buffet’s Berkshire Hathaway group.

According to court documents, between 2011 and 2018, DC Solar manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers and were promoted as capable of providing 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 carried out an accounting and lease revenue fraud using Ponzi-like circular payments. Carpoff and others lied to investors about the market demand for DC Solar’s MSGs and its revenue from leasing to third parties, then covered up these lies with techniques including false financial statements and fake lease contracts. Their fraud concealed a circular payment structure where Carpoff and others were simply using new investor money to pay older investors the supposed lease revenue that investors were expecting. 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. To carry out this part of the fraud, Carpoff and others made it appear that MSGs existed in locations that they did not, swapped vehicle identification number (VIN) stickers on MSGs that had been built earlier, and attempted to deceive certain investors during equipment inspections. In reality, at least half of the approximately 17,000 mobile solar generators claimed to have been manufactured by DC Solar did not exist.

The money gained from the scheme paid for the couple’s personal collection of 148 luxury and collector vehicles, as well as a number of homes, all bought with cash, in Lake Tahoe, Las Vegas, Mexico, the Caribbean, and elsewhere.

“Jeff Carpoff orchestrated the largest criminal fraud scheme in the history of the Eastern District of California,” said Acting U.S. Attorney Talbert. “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. Today’s substantial sentence reflects the seriousness of the offense and provides just punishment. The U.S. Attorney’s Office is committed to protecting the public and promoting respect for the law.”

“Carpoff’s egregious scheme fueled his rapacious desire for luxury and prominence with showy, public expenditures including the purchase of a sports team, high-end collector’s vehicles, international real estate and a NASCAR team,” said Special Agent in Charge Sean Ragan of the FBI Sacramento Field Office. “I thank the team of determined FBI special agents, forensic accountants and professional staff who worked tirelessly with IRS Criminal Investigation and FDIC Office of Inspector General to thoroughly investigate this complex case. Our office is committed to identifying and investigating financial fraud and encourage the public to report suspected fraud to tips.fbi.gov.”

“Mr. Carpoff lived a luxurious life as a successful businessman,” said Special Agent in Charge Mark H. Pearson. “In reality, he manipulated the system to his advantage by lying to investors, promising significant federal tax credits, and laundering his ill-gotten gains. IRS Criminal Investigation will continue to work with our federal partners to ensure that anyone involved in these types of schemes, no matter how big or small, will be held accountable for their crimes.”

“Today’s sentencing recognizes the importance of holding Mr. Carpoff accountable for his role in conspiring with others to defraud investors of approximately $1 billion through the creation of a fraudulent business venture, and using the proceeds for his and his wife’s own personal gain,” said Special Agent in Charge Jeffrey D. Pittano of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG). “The FDIC OIG is committed to working with our law enforcement partners in bringing to justice those who undermine the integrity of the financial system.”

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. 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.

In addition to the Carpoffs, five other defendants have been charged with criminal offenses related to the fraud scheme: Joseph W. Bayliss, 46, of Martinez, and Ronald J. Roach, 54, of Walnut Creek, each pleaded guilty to related charges on Oct. 22, 2019. Bayliss is scheduled for sentencing on Nov. 16, 2021, and Roach is scheduled for sentencing on Feb. 15, 2022. Robert A. Karmann, 54, of Clayton, pleaded guilty to related charges on Dec. 17, 2019; and Ryan Guidry, 44, of Pleasant Hill, pleaded guilty to related charges on Jan. 14, 2020. Alan Hansen, 50, of Vacaville, a former employee of a telecom company with which DC Solar purported to do business, pleaded guilty on July 28, 2021 to participating in the fraud scheme and accepting a $1 million bribe to sign a false contract. Karmann, Guidry, and Hansen are scheduled to be sentenced on Dec. 14, 2021.

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 Christopher S. Hales and Kevin C. Khasigian are prosecuting the case.

Paulette Carpoff, Hansen, Karmann, and Guidry face a maximum statutory penalty of 15 years in prison. Roach and Bayliss face maximum statutory penalties of 10 years and five years in prison, respectively. 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.

9 COMMENTS

  1. Stealing money from investors is definitely bad, and the government really hates it when people steal subsidies like solar tax credits. This was outcome was perfectly foreseeable and 10% avoidable.

    Still, I dunno, a thirty-year stretch in Club Fed for a fifty-year old man is essentially a life sentence. Courts generally mete our far less harsh penalties to recidivist armed robbers and rapists. Even many convicted murderers get shorter stints.

    To my way of thinking, a thirty-year bid is unlikely to deter a white color crook any more than a 10-, 15- or 20-year stint. It seems morally wrong that the taxpayers this clown defrauded will foot the bill for the rest of this guy’s meals, healthcare and housing expenses; roughy $100 per day (average cost per federal inmate) for thirty years comes to nearly $1.1 million.

    He’s a skilled mechanic; let him out after 5-10 years and make him spend his golden years toiling away in a garage to pay restitution with every dime he earns above the amount required to provide bear necessities of an austere, impoverished existence.

    Flamboyant, megalomaniac crooks loathe economic constraints and social irrelevance more than anything. We can relegate him to socioeconomic obscurity to wallow in self-pity on his own dime.

    • Humor! I’ll bet Warren’s deputies aren’t seeing it the same way. Who’s turn was it to watch the old man? I love him like an eccentric rich uncle, but he’s 91 sitting on $149 billion dollars, cash on hand. Go ride the merry go round, Warren! You’ve earned it!

Leave a Reply