SACRAMENTO (CN) – Two California men who helped devise a scheme that federal investigators claim siphoned nearly $1 billion from investors and catapulted an auto mechanic to a life of extreme luxury pleaded guilty Tuesday to investment fraud.
In less than a decade, former mechanic Jeff Carpoff and his wife, Paulette, turned a small business selling mobile solar generators into an attractive investment opportunity for major firms, including Berkshire Hathaway. Business was so good that the Carpoffs had not only become multi-millionaires, but also the lead sponsor of a NASCAR team and owners of a minor league baseball team.
But the Carpoff’s lavish spending and, ultimately, the success of their company, San Francisco Bay Area-based DC Solar, was short-lived.
Acting on a tip from a former employee, the FBI began investigating the company and eventually raided its headquarters in December 2018. The now-defunct company has since been tied to myriad bankruptcy, civil and, now, criminal cases.
The Carpoffs were not named in court documents relating to the Tuesday plea deals but they are named as claimants in underlying suits civil suits tied to the company.
According to court documents, the owners of the company diverted most of the investments from the generator-leasing scheme to a company they created to fund shopping sprees that covered vacation homes, $19 million worth of private jet trips, 90 cars and tickets for a $782,000 luxury box at the Las Vegas Raiders stadium-to-be.
DC Solar’s investors thought they were funding more mobile solar generators – essentially solar panels that can be moved from site to site on trailers and are used for sporting and outdoor events – and, in that process, qualifying for lucrative federal renewable energy tax credits. According to investigators, however, investors were dumping money into a Ponzi scheme, not a budding solar industry company.
The Carpoffs were the face of DC Solar, but they relied heavily on at least two other associates to sway a total of 13 investors. On Tuesday, an accountant and a general contractor pleaded guilty to a series of white collar crimes tied to DC Solar.
The plea deals detail how Ronald J. Roach, 53, and Joseph W. Bayliss, 44, created false financial, sales and inventory reports in order to make the company more appealing to investors.
Bayliss, a general contractor and electrician, admitted to preparing thousands of false reports and flying to Las Vegas and destroying evidence after the FBI raided DC Solar. The Securities and Exchange Commission claims the two men made millions while “investors were fleeced.”
“Bayliss advanced the scheme by providing bogus technical certificates of inspection for generators he had never inspected – and in many cases, for generators that never existed,” the SEC said in a federal lawsuit filed Tuesday against the duo. “Roach compiled financial statements, prepared by management, falsely reporting that the business had real and significant revenue from real leases, lent the imprimatur of his accounting firm to the bogus financials and in some cases disseminated them directly to investors.”
The men are scheduled to be sentenced in January. Roach faces a maximum of 10 years and Bayliss five years.
The Carpoffs have yet to be criminally charged but their company and other assets have been liquidated or are on the auction block.
On Wednesday, the U.S. Marshals Service will show off luxury cars tied to the Carpoffs that are slated to be auctioned on Saturday. The service says the 149-car collection, which includes a replica of the Pontiac Trans Am that Burt Reynolds drove in “Smokey and the Bandit” and a 2017 Bentley Continental GT, is “the largest single-owner car collection” it has ever sold.
“It is rare for the U.S. marshals to hold an auction of such a stunning collection of vehicles,” said chief deputy U.S. Marshal Lasha Boyden with the Sacramento office of the agency.Follow @@NickCahill_5
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