The owner of a San Francisco Bay Area solar energy company was sentenced to 30 years in federal prison Tuesday for an audacious Ponzi scheme that defrauded investors of $1 billion. It's the biggest criminal fraud scheme in the history of the federal court district that covers inland Northern California, said Acting US Attorney Phillip Talbert. Jeff Carpoff, 50, received the maximum penalty after pleading guilty in January 2020 to conspiracy to commit wire fraud and money laundering, the AP reports. Paulette Carpoff, 47, faces up to 15 years in prison after pleading guilty at the same time to money laundering and conspiracy to commit an offense against the United States.
The couple agreed to forfeit more than $120 million in assets, including a fleet of collector cars and vacation homes in the Caribbean, Mexico, Lake Tahoe, and Las Vegas purchased entirely with cash. Prosecutors said they intend to use the assets in partial restitution to victims of the fraud. The government already auctioned off 148 vehicles, including the 1978 Firebird previously owned by late actor Burt Reynolds, netting more than $8.2 million. The couple started DC Solar as a legitimate company that made solar generators mounted on trailers, prosecutors said. They marketed the generators between 2011 and 2018 as being able to provide emergency power for cellphone companies or to provide lighting at sporting and other events.
But prosecutors say the owners began telling investors they could benefit from federal tax credits by leasing the generators back to DC Solar, which would then provide them to other companies for their use. In fact, prosecutors say the generators never provided much income, and early investors were paid with funds from later investors. Carpoff and others covered up the scheme with fake financial statements and lease contracts, prosecutors said. They eventually stopped building the mobile generators altogether, and at least half the company's claimed 17,000 generators didn't really exist, prosecutors said.
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"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," Talbert said. The company was involved in $2.5 billion in investment transactions between 2011 and 2018, costing investors $1 billion, prosecutors said. Among the investors was Warren Buffett’s Berkshire Hathaway Inc., which lost some $340 million. Aside from the Carpoffs, five others have pleaded guilty to related offenses and are awaiting sentencing. (More Ponzi scheme stories.)
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