The co-owners of a California-based solar company pleaded guilty in connection with an alleged US$1 billion Ponzi scheme whose victims include Berkshire Hathaway Inc.
Jeff Carpoff pleaded guilty Friday in federal court in Sacramento to conspiracy to commit wire fraud and money laundering, according to court records. His wife, Paulette Carpoff, admitted to money laundering and conspiracy to commit an offence against the U.S. Four others with ties to their company, DC Solar, have already pleaded guilty in the case.
DC Solar built mobile solar generators for sporting events and music festivals. The company attracted at least a dozen investors in complex deals that raised money through what’s known as tax-equity funds. They included Progressive Corp., East West Bancorp Inc., Valley National Bancorp and Sherwin-Williams. Warren Buffett’s company invested US$340 million.
DC Solar, however, built and leased only a fraction of the roughly 17,000 mobile units it claimed were in use, authorities said. Instead, DC Solar used money from new investors to pay off old ones, according to a statement from the U.S. Attorney’s Office in Sacramento.
The case is the biggest criminal fraud scheme in the history of the Eastern District of California, prosecutors said. Authorities have recovered more than US$120 million in forfeited assets in connection to the case.
“This is a sad day for the Carpoffs,” Malcolm Segal, a lawyer for Jeff Carpoff, said in a telephone interview. “The business started with the best of intentions.”
Berkshire and the other alleged victims didn’t immediately comment.
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The U.S. Securities and Exchange Commission filed a parallel civil case Friday against the Carpoffs, accusing them of violating federal securities laws.
Proceeds from the fraud fuelled the Carpoffs’ personal spending, authorities said. At one point, the couple owned more than 150 cars, including classic Fords and Bentleys. They also owned properties in Lake Tahoe, Las Vegas and the Caribbean and a professional baseball team based in Martinez, California, northeast of San Francisco, authorities said.
Earlier this year, the U.S. Marshals Service held an auction for about 150 luxury cars seized from the Carpoffs, including a 1978 Pontiac Firebird Trans Am once owned by Burt Reynolds.