In fed court, Benicia-based businessman gets 30 years for $1B Ponzi scheme – The Vacaville Reporter

The owner of DC Solar, a Benicia-based company, was sentenced Tuesday for a billion-dollar Ponzi scheme in the biggest criminal fraud case in the history of the Eastern District of California, federal officials announced.

U.S. District Judge John A. Mendez sentenced Jeff Carpoff, 50, of Martinez, to 30 years in prison.

The case, complex, with a lot of moving parts, also involved a 50-year-old Vacaville man who accepted a $1 million bribe to sign a false contract, Acting U.S. Attorney Phillip A. Talbert said in a press statement.

He said court records show that on Jan. 24, 2021, Carpoff pleaded guilty to conspiracy to commit wire fraud and money laundering. His wife, Paulette Carpoff, 47, also pleaded guilty to conspiracy to commit an offense against the United States and money laundering.

Talbert said the government’s investigation yielded some $120 million in assets forfeited that the government intends to seek authorization to use toward restitution for victims of the fraud.

According to court documents, between 2011 and 2018, DC Solar manufactured mobile solar generator units, called MSG for short, which were solar generators that were mounted on trailers and 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 because the generators relied on solar power, noted Talbert.

Carpoff and others carried out an accounting-and-lease-revenue fraud using Ponzi-like circular payments, he added in the prepared statement.

Talbert said they 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 that included 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,” he wrote in the release.

As DC Solar lost vast sums of money with this scheme, 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.

“Jeff Carpoff orchestrated the largest criminal fraud scheme in the history of the Eastern District of California,” said 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.”

On a smaller scale, Carpoff’s actions recall methods used by the late Bernard Madoff, the New York fraudster who ran a Ponzi scheme worth nearly $65 billion, the largest in history.

Said Special Agent in Charge Sean Ragan of the FBI’s Sacramento Field Office: “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.” He urged the public to report suspected fraud to tips.fbi.gov.”

Federal agents seized a jaw-dropping amount of property. They included seizing and auctioning 148 of the Carpoffs’ luxury and collector vehicles, including the 1978 Firebird previously owned by actor Burt Reynolds. The auction, which Talbert called “historical,”  resulted in recouping approximately $8.2 million.

In addition to their collection of luxury and collector vehicles, the Carpoffs used money from the scheme to pay for a minor-league professional baseball team, the Martinez Clippers; to sponsor a NASCAR race team; to buy 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. They include Alan Hansen, 50, of Vacaville, a former employee of a telecom company with which DC Solar purportedly did business, pleaded guilty on July 28, 2021, to participating in the fraud scheme and accepting a $1 million bribe to sign a false contract.

In addition, 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. Karmann, Guidry, and Hansen are scheduled to be sentenced on Dec. 14, 2021.

Assistant U.S. Attorneys Christopher S. Hales and Kevin C. Khasigian prosecuted the case, which stemmed from an investigation by the FFI, IRS‑Criminal Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General.

At sentencing Paulette Carpoff, Hansen, Karmann, and Guidry face a maximum 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 judge and federal sentencing guidelines.

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