Tulare County Resident Sentenced to Prison for Counterfeit Treasury Check Conspiracy and Identity Theft
SACRAMENTO, Calif. — An owner of DC Solar, a Benicia-based company, was sentenced today for a billion-dollar Ponzi scheme— the biggest criminal fraud scheme in the history of the Eastern District of California, Acting U.S. Attorney Phillip A. Talbert announced.
U.S. District Judge John A. Mendez sentenced Jeff Carpoff, 50, of Martinez, to 30 years in prison. On Jan. 24, 2020, 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. The government’s investigation has resulted in approximately $120 million in assets forfeited that the government intends to seek authorization to use towards restitution to victims of the fraud.
According to court documents, between 2011 and 2018, DC Solar manufactured mobile solar generator units (MSG), 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 due to the solar nature of the MSGs.
The conspirators carried out an accounting and lease revenue fraud using Ponzi-like circular payments. Carpoff and others 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 including 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. As DC Solar lost vast sums of money with this fraudulent model, 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 Acting U.S. Attorney 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. 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.”
“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. “I thank the team of determined FBI special agents, forensic accountants and professional staff who worked tirelessly with IRS Criminal Investigation and FDIC Office of Inspector General to thoroughly investigate this complex case. Our office is committed to identifying and investigating financial fraud and encourage the public to report suspected fraud to tips.fbi.gov.”
“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.”
“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). “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.”
The forfeiture included seizing and auctioning 148 of the Carpoffs’ luxury and collector vehicles, including the 1978 Firebird previously owned by actor Burt Reynolds. This historical auction resulted in recouping approximately $8.233 million. In addition to their collection of luxury and collector vehicles, Jeff and Paulette Carpoff used money from the scheme to pay for a minor-league professional baseball team and a NASCAR racecar sponsorship; to purchase 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: 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. Alan Hansen, 50, of Vacaville, a former employee of a telecom company with which DC Solar purported to do business, pleaded guilty on July 28, 2020, to participating in the fraud scheme and accepting a $1 million bribe to sign a false contract. Karmann, Guidry, and Hansen are scheduled to be sentenced on Dec. 14, 2021. Paulette Carpoff is scheduled to be sentenced on Nov. 16, 2021.
This case is the product of an investigation by the Federal Bureau of Investigation, IRS‑Criminal Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General. Assistant U.S. Attorneys Christopher S. Hales and Kevin C. Khasigian are prosecuting the case.
Paulette Carpoff, Hansen, Karmann, and Guidry face a maximum statutory 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 court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.