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Bay Area man sentenced to 30 years in billion-dollar generator Ponzi scheme

The perpetrator of the largest criminal fraud scheme in the history of the Eastern District of California was sentenced Tuesday to 30 years in prison for his role in running a Ponzi scheme.

SACRAMENTO (CN) — The owner of the now-defunct DC Solar, who sold mobile solar generators that didn't exist and fleeced investors out of about $1 billion, was sentenced to 30 years Tuesday for orchestrating the Ponzi scheme.

The scam's ringleader, Jeff Carpoff, 50, was sentenced to 30 years by U.S. District Judge John A. Mendez of the Eastern District of California. Carpoff’s wife, Paulette, 47, and a number of their associates are also due to be sentenced soon, each facing between five and 15 years in prison.

The sentencing came more than a year after Carpoff, of Martinez, Calif., pleaded guilty to conspiracy to commit wire fraud and money laundering.

Carpoff, a former auto mechanic, along with his wife and some of their associates, bilked investors out of about $1 billion under the guise of building and leasing mobile solar generators. The generators are essentially solar power systems attached to trailers that can move between construction sites, concert venues and other outdoor locations where portable clean power generation is useful.

The technology made DC Solar, based in Benicia, Calif., a temping choice for investors as the world moved toward a preference for renewable energy – and even more so because the systems qualified for lucrative federal renewable tax credits.

“Jeff Carpoff orchestrated the largest criminal fraud scheme in the history of the Eastern District of California,” said Acting U.S. Attorney Talbert in a statement. “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.”

With investors’ money piling up, the Carpoffs developed a taste for luxury goods and an extravagant lifestyle, buying up lavish With investors’ money piling up, the Carpoffs developed a taste for luxury goods and an extravagant lifestyle, buying up lavish vacation homes, expensive jewelry, $19 million worth of private jet trips and a fleet of automobiles, including a 1978 Pontiac Firebird once owned by the late Burt Reynolds. The couple also netted a NASCAR team sponsorship, a minor league baseball team and $782,000 box seats at the Las Vegas Raiders future stadium, among other ill-gotten gains.

“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.

“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.”

In the end, the government took it all, including seizing 148 luxury and collector vehicles, which they turned around and auctioned for more than $8 million.

According to the U.S. Attorney's Office, the Carpoffs repeatedly lied about DC Solar's prospects and created fake financial statements and lease contracts to continue bilking new investors out of capital so they could pay earlier investors the lease revenue they were expecting. As the company increasingly lost money, the Carpoffs eventually stopped building new mobile solar generators entirely and sold thousands of generators that didn't exist.

They used a range of smoke-and-mirror tricks to pull of their deceit, including swapping vehicle identification number stickers on existing generators to fool investors during equipment inspections. At least half of the 17,000 mobile solar generators pitched to investors had never actually been built.

Five other defendants connected to the scheme have pleaded guilty, including Joseph W. Bayliss, 46, of Martinez, and Ronald J. Roach, 54, of Walnut Creek, Calif., who each pleaded guilty on Oct. 22, 2019. Robert A. Karmann, 54, of Clayton, Calif., pleaded guilty on Dec. 17, 2019, as did Ryan Guidry, 44, of Pleasant Hill, Calif., who pleaded guilty on Jan. 14, 2020. Alan Hansen, 50, of Vacaville, Calif., also admitted to accepting a $1 million bribe to sign a false contract and pleaded guilty on July 28, 2021.

They face sentencing in the coming weeks and months, along with Paulette Carpoff.

Paulette Carpoff, Hansen, Karmann and Guidry face up to 15 years in prison each, while Roach and Bayliss face sentences of 10 years and five years, respectively.

“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) in a statement. “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.”

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Categories / Criminal, Financial, Securities

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