So they purchased luxury real estate in the
Caribbean, Nevada, Mexico and Lake Tahoe, Calif. They bought a NASCAR racecar
sponsorship, a minor league baseball team and a private jet, and amassed more
than 150 luxury and collector vehicles — including a 1978 Firebird formerly
owned by actor Burt Reynolds, according to court documents.
The catch? The money used to finance that
opulent lifestyle came from cheating their investors.
Now, Carpoff, 50, is going to federal prison
for 30 years for orchestrating a $1 billion Ponzi scheme, which acting U.S. attorney
Phillip Talbert called Tuesday “the largest criminal fraud scheme in the
history of the Eastern District of California.” Carpoff, who pleaded guilty in
January 2020, received the maximum sentence for conspiracy to commit wire fraud
and money laundering.
“Mr. Carpoff lived a luxurious life as a
successful businessman,” Internal Revenue Service special agent in charge Mark
Pearson said in a news release. “In reality, he manipulated the system to his
advantage by lying to investors, promising significant federal tax credits, and
laundering his ill-gotten gains.”
Carpoff, along with his
wife and five other co-conspirators who also pleaded guilty, carried out the
scheme from 2011 through 2018, according to court documents.
The Carpoffs’ business, DC Solar,
manufactured mobile solar generator units, or MSGs, which are solar panels
mounted onto wheeled trailers that harvest and store solar energy for later
use. The company, based in Benicia, about 36 miles northeast of San Francisco,
promoted the product as an emergency power source for cellphone towers and
lighting at sporting events, construction sites and events in remote areas.
The company’s connection
to solar energy was a major draw for investors because they would receive generous
federal tax credits.
But Carpoff and his co-conspirators quickly
ran into trouble when the business failed to deliver on several promises to
investors, including revenue from third-party leases.
So they began fabricating market demand for
MSGs, falsifying financial statements and lease contracts, and depositing
new investor money into an account to give the appearance they were
profiting from third-party leasing.
The business lost so much money that Carpoff
stopped the production of MSGs, eventually selling thousands of nonexistent
products to investors who believed they were benefiting from
leasing the solar units.
“In reality, at least half of the
approximately 17,000 mobile solar generators claimed to have been manufactured
by DC Solar did not exist,” prosecutors said in a news release.
Carpoff and the co-conspirators tricked
investors into believing the products were in several locations and put new
vehicle identification stickers on older generator.
They also created a Ponzi scheme to pay back
existing investors with money they claimed was from lease revenue
but that was actually from new investors. Only about 6 percent of the funds
paid to investors actually came from subleases.
Carpoff was required to forfeit many of his assets including his collection of luxury and collector cars. An auction of the cars netted $8.2 million. In all, the government has recovered about $120 million in lost assets which it intends to return to investors.
From The Washington Post (edited)
