Former Fresno-Area Auto Dealer Sentenced to 4.5 Years in Prison for Bank Fraud and Aggravated Identity Theft
SACRAMENTO, Calif. — U.S. District Judge John A. Mendez sentenced Paulette Carpoff, 51, of Martinez, to 11 years and three months in prison for her role in the biggest criminal fraud scheme in the history of the Eastern District of California, U.S. Attorney Phillip A. Talbert announced.
On Nov. 9, 2021, Paulette Carpoff pleaded guilty to conspiracy to commit an offense against the United States and money laundering. According to court documents, Carpoff played a key role in the fraud as Chief Operating Officer of DC Solar and the owner and operator of its so-called distribution arm.
Between 2011 and 2018, DC Solar manufactured mobile solar generators (MSG) that were mounted on trailers. The company touted the versatility and environmental sustainability of the mobile solar generators and claimed that they were used to provide emergency power to cellphone towers and lighting at sporting and other events. A significant incentive for investors were generous federal tax credits due to the solar nature of the MSGs. Investors would buy the MSGs without ever taking possession of them, paying a percentage of the sales price and financing the balance with DC Solar. Then the investors leased the MSGs back to DC Solar, which in turn purported to lease them to third parties. A portion of the lease revenue was supposed to go to the investors and a portion would be used to pay the investors’ debts to DC Solar.
But in fact, when the third‑party leases generated little income, the company paid early investors with funds contributed by later investors, and DC Solar became a Ponzi-like scheme. They sold solar generators that did not exist to investors, making it appear that solar generators existed in locations that they did not, creating false financial statements, and obtaining false lease contracts, among other efforts to conceal the fraud.
In reality, at least half of the approximately 17,000 solar generators claimed to have been manufactured by DC Solar did not exist. Contrary to what investors were told, approximately 94% of the revenue claimed by DC Solar Distribution from supposed third-party leasing actually came instead from transfers of new investor cash.
Paulette Carpoff controlled the Ponzi-like payments that hid the company’s lack of third-party lease revenue, caused fake engineering reports for MSGs that the company sold but never built, and helped fool investors into thinking that DC Solar was a success. Eventually, DC Solar simply stopped building the mobile-solar generators that it claimed to be selling to investors.
While carrying out the fraud, Carpoff and her husband enjoyed an excessive accumulation of wealth that included luxury real estate in Lake Tahoe, Las Vegas, the Caribbean, and Cabo San Lucas, over 150 luxury and collector vehicles, a private subscription jet service, and lavish jewelry. When search warrants were executed in this case in December 2018, law enforcement found over $18,000 cash in Carpoff’s purse, another over $18,000 cash in the master bedroom, over $22,000 cash in a safe in the master bedroom closet, and over $9,000 cash in the Carpoffs’ vehicles parked at their residence.
“Paulette Carpoff played an integral part in a massive criminal fraud scheme. Knowing that DC Solar at best could only expect to lease a tiny fraction of its mobile solar generators, she continued the lie about the high demand for DC Solar’s products,” said U.S. Attorney Talbert. “Thanks to the hard work of attorneys in this Office and agents in the investigating agencies, this fraud was stopped and millions of dollars have been recouped. It is my hope that Carpoff’s sentence will afford adequate deterrence to criminal conduct and the need to protect the public from further crimes of the defendant and promote respect for the law.”
“Mrs. Carpoff participated in and enjoyed the spoils of an egregious, complex fraud scheme that provided the Carpoff family and associates with a luxurious lifestyle and esteemed position in the community at the expense of their community and business contacts,” said Acting Special Agent in Charge Dennis Guertin of the FBI Sacramento Field Office. “Complex cases like these are truly a team effort. I am grateful to the dedicated FBI special agents, forensic accountants and professional staff who worked tirelessly to investigate this case in concert with our equally dedicated partners at IRS Criminal Investigation, FDIC Office of Inspector General, and U.S. Attorney’s Office. Our office is deeply committed to identifying and investigating financial fraud. We encourage anyone who is aware of fraud to reach out to our office or submit a tip by calling 1-800-CALL-FBI or submitting information online at tips.fbi.gov.”
“The Chief Operating Officer of DC Solar, Paulette Carpoff, who indulged herself in luxury goods while engaged in lies and deceit, is not an innocent spouse but rather an active conspirator who played a significant and integral role in the largest Ponzi scheme in the Eastern District of California,” said IRS Criminal Investigation Special Agent in Charge Mark H. Pearson. “Her lies and deception finally caught up to her, as her hunger to amass ill-gotten wealth and material goods led her astray. Today’s sentencing sends a clear message of ‘you will be held accountable’ to those involved in schemes to defraud. This case and the outcome is representation of the great work being accomplished when collaborating with our federal partners: the Federal Bureau of Investigation, the Federal Depository Insurance Corporation Office of Inspector General, and the United States Attorney’s Office, EDCA.”
“Today, Paulette Carpoff was sentenced and held accountable for conspiring with others to carry out a Ponzi scheme that defrauded investors of approximately $1 billion and funded her and her husband’s lavish lifestyle,” 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 to bring to justice those who undermine the integrity of the Nation’s financial system.”
This case was 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 prosecuted the case.
On Nov. 9, 2021, Jeff Carpoff was sentenced to 30 years in prison and ordered to pay $790.6 million in restitution for conspiracy to commit wire fraud and money laundering.
On Nov. 16, 2021, Joseph W. Bayliss, 46, of Martinez, was sentenced to three years in prison and ordered to pay $481.3 million in restitution for securities fraud and conspiracy in connection with the DC Solar scheme. On April 12, 2022, DC Solar CFO Robert A. Karmann, 55, of Clayton, was sentenced to six years in prison and ordered to pay $624 million in restitution. On May 31, 2022, former DC Solar employee Alan Hansen was sentenced to eight years in prison and ordered to pay $619 million in restitution.
Two defendants have pleaded guilty to criminal offenses related to the fraud scheme and are scheduled for sentencing: Ryan Guidry, 45, of Pleasant Hill, is scheduled to be sentenced on July 26, 2022, and Ronald J. Roach, 55, of Walnut Creek, is scheduled to be sentenced on Sept. 13, 2022. Guidry faces a maximum statutory penalty of 15 years in prison. Roach faces a maximum statutory penalty of 10 years prison. 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.