SACRAMENTO, Calif. — The owners of DC Solar, a Benicia-based company, pleaded guilty today to charges related to a billion dollar Ponzi scheme— the biggest criminal fraud scheme in the history of the Eastern District of California. The government’s investigation has resulted in the largest criminal forfeiture in the history of the District with over $120 million in assets forfeited that will go to victims, and has returned $500 million to the United States Treasury, with more to come, U.S. Attorney McGregor W. Scott announced.

Jeff Carpoff, 49, of Martinez, pleaded guilty today to conspiracy to commit wire fraud and money laundering. His wife, Paulette Carpoff, 46, pleaded guilty today to conspiracy to commit an offense against the United States and money laundering. According to court documents, between 2011 and 2018, DC Solar manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers that 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 pulled off their scheme by selling 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.

U.S. Attorney Scott stated: “This billion dollar Ponzi scheme hurt investors and took money from the United States Treasury. This case represents not only the largest criminal fraud scheme in the history of the District, it also represents the largest criminal forfeiture in the history of the District with over $120 million in assets forfeited. All of this money will be returned to the victims. This scheme also targeted the United States Treasury, and we have returned $500 million to the Treasury to date. Agents, investigators and attorneys from various federal agencies are still working to continue to return money to victims and the United States Treasury. Today’s guilty pleas sends a strong message that fraudsters will get caught and will pay for their crimes. You can run, but you cannot hide.”

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 for victims. 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.

“The Carpoffs and their co-conspirators wove a web of lies and deceit in a massive fraud scheme. Meticulous review and analysis of millions of documents revealed the operation and true intention of the scheme,” said Special Agent in Charge Sean Ragan. “The FBI is committed to our partnerships with the Internal Revenue Service Criminal Investigation, Federal Deposit Insurance Corporation Office of Inspector General, and U.S. Marshals Service. Together, we seek to uncover fraud that exploits investors and taxpayers, ensuring criminals face justice.”

“By all outer appearances this was a legitimate and successful company,” said Kareem Carter, Special Agent in Charge IRS Criminal Investigation. “But in reality it was all just smoke and mirrors — a Ponzi scheme touting tax benefits to the tune of over $900 million. IRS CI is committed to investigating those who take advantage and impact the financial well-being of others for their own personal gain.”

 “The Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG) is pleased to join our law enforcement colleagues in announcing these guilty pleas,” stated Special Agent in Charge Wade Walters for the FDIC OIG San Francisco Regional Office. “The defendants conspired with others to create a fraudulent business venture that duped unsuspecting entities, including banks, to invest approximately $1 billion, which the two later used to support a lavish lifestyle. They also knowingly engaged in a money laundering transaction involving criminally derived property. The FDIC-OIG is committed to ensuring that those who use our Nation’s banks to undermine the integrity of the financial system will be held accountable.”

Four defendants have previously pleaded guilty to federal criminal charges related to the fraud scheme since October. Joseph W. Bayliss, 44, of Martinez, and Ronald J. Roach, of Walnut Creek, each pleaded guilty to related charges on Oct. 22, 2019. Robert A. Karmann, 53, of Clayton, pleaded guilty to related charges on Dec. 17, 2019. Ryan Guidry, 53, of Pleasant Hill, pleaded guilty to related charges on Jan. 14, 2020. A seventh co-conspirator is scheduled to plead guilty on Feb. 11. The investigation into the fraud remains ongoing.

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 André M. Espinosa and Kevin C. Khasigian are prosecuting the case.

Jeff and Paulette Carpoff are scheduled to be sentenced by U.S. District Judge John A. Mendez on May 19. Jeff Carpoff faces a maximum statutory penalty of 30 years in prison. Paulette Carpoff faces a maximum statutory penalty of 15 years in 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.

SACRAMENTO, Calif. — Ryan Guidry, 43, of Pleasant Hill, pleaded guilty today to participating in a massive fraud scheme involving a solar energy company in Benicia that defrauded investors of approximately $1 billion, U.S. Attorney McGregor W. Scott announced.

Those losses resulted from investment transactions in solar energy hardware valued at approximately $2.5 billion. Guidry also pleaded guilty to aiding and abetting money laundering. Guidry is the fourth person to plead guilty to federal criminal charges relating to the fraud scheme since October.

According to court documents, between 2011 and 2018, the solar energy company manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers. The company touted the versatility and environmental sustainability of the MSGs and claimed that they were used by cellphone companies to provide emergency power to cell towers in the case of a power failure. They were also claimed to be used to power lights at sporting and other events.

The company solicited investors by claiming that there were very favorable federal tax benefits associated with investments in alternative energy. The company structured the transactions in order to maximize the tax benefits to the investors. Investors would buy the MSGs without ever taking possession of them. They would pay a percentage of the sales price and finance the balance with the company. Then the investors would lease the MSGs back to the company, which in turn leased them to third parties. A portion of the lease revenue would be used to pay the investors’ debts to the company and to the investors. The third‑party leases, however, generated little income and the company paid early investors with funds contributed by later investors.

According to court documents, Guidry joined the company in 2012 and became its Vice President of Operations. Guidry and his co-conspirators used fraudulent financial statements and other false information to hide from investors the company’s use of later investor payments to pay financial obligations the company made to earlier investors — in a classic Ponzi scheme. Additionally, Guidry accepted $1 million from a co-conspirator to obtain an unauthorized signature on a false contract his co-conspirator later used to induce investments by victims. In another instance, Guidry accepted $20,000 from that co-conspirator to obtain a signature on a related false contract, which the co-conspirator also used to induce an investment by victims. Guidry and another conspirator signed that second contract using a fake name and shared the $20,000. During the conspiracy, Guidry also worked with co-conspirators to frustrate certain investors’ inspections of MSGs to conceal from those investors the fact that the company had not built the MSGs it sold to those investors. For example, in advance of an inspection, Guidry and certain co-conspirators scraped off VIN number stickers identifying MSGs sold to one investor and replaced them with VIN number stickers identifying MSGs sold to a later investor. On another occasion, Guidry and his co-conspirators coordinated the delivery of MSGs to field inspection sites before and on the day of an inspection to trick the inspectors into believing those MSGs had been deployed at those sites all along, when they had not.

Joseph W. Bayliss, 44, of Martinez, and Ronald J. Roach, of Walnut Creek, each pleaded guilty to related charges on Oct. 22, 2019. Robert A. Karmann, 53, of Clayton, pleaded guilty to related charges on Dec. 17, 2019. The investigation into the fraud remains ongoing.

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 André M. Espinosa and Kevin C. Khasigian are prosecuting the case.

Guidry is scheduled to be sentenced by U.S. District Judge John A. Mendez on April 21. Guidry faces a maximum statutory penalty of 15 years in prison. The actual sentence, 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.

SACRAMENTO, Calif. — Robert A. Karmann, 53, of Clayton, pleaded guilty today to his participation in a massive fraud scheme involving a solar energy company in Benicia that defrauded investors of approximately $1 billion, U.S. Attorney McGregor W. Scott announced.

Those losses resulted from investment transactions in solar energy hardware valued at approximately $2.5 billion. Karmann is the third person to plead guilty to federal criminal charges relating to the fraud scheme since October.

According to court documents, between 2011 and 2018, the solar energy company manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers. The company touted the versatility and environmental sustainability of the MSGs and claimed that they were used by cellphone companies to provide emergency power to cell towers in the case of a power failure. They were also claimed to be used to power lights at sporting and other events.

The company solicited investors by claiming that there were very favorable federal tax benefits associated with investments in alternative energy. The company structured the transactions in order to maximize the tax benefits to the investors. Investors would buy the MSGs without ever taking possession of them. They would pay a percentage of the sales price and finance the balance with the company. Then the investors would lease the MSGs back to the company, which in turn leased them to third parties. A portion of the lease revenue would be used to pay the investors’ debts to the company and to the investors. The third‑party leases, however, generated little income and the company paid early investors with funds contributed by later investors.

According to court documents, Karmann, a certified public accountant, joined the company in 2014 and became its Chief Financial Officer (CFO). Karmann and his co-conspirators used fraudulent financial statements and other false information to hide from investors the company’s use of later investor payments to pay financial obligations the company made to earlier investors—in a classic Ponzi scheme. In his role as CFO, Karmann managed and directed the periodic transfers of new investor money to pay the company’s obligations to existing investors. Karmann also disseminated false financial and other information to investors to mislead them about material aspects of the MSG investments. Karmann’s criminal conduct was intended to create the false impression for investors that the MSG investments were operating as promised, which helped lull existing investors, lured prospective investors, and caused investors to seek more than $1 billion in tax benefits from the Internal Revenue Service to which they were not entitled. Karmann also pleaded guilty to securities violations associated with the same investment fraud scheme.

On Oct. 22, Joseph W. Bayliss, 44, of Martinez, and Ronald J. Roach, of Walnut Creek, each pleaded guilty to related charges. The investigation into the fraud is ongoing.

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 André M. Espinosa and Kevin C. Khasigian are prosecuting the case.

Karmann is scheduled to be sentenced by U.S. District Judge John A. Mendez on March 31, 2020. Karmann faces a maximum statutory penalty of 15 years in prison. The actual sentence, 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.

SACRAMENTO, Calif. — Two defendants pleaded guilty today to their participation in a massive fraud scheme involving a solar energy company in Benicia, that defrauded investors of approximately $1 billion, U.S. Attorney McGregor W. Scott announced. Those losses resulted from investment transactions in solar energy hardware valued at approximately $2.5 billion.

According to court documents, between 2011 and 2018, the solar energy company manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers. The company touted the versatility and environmental sustainability of the MSGs and claimed that they were used by cellphone companies to provide emergency power to cell towers in the case of a power failure. They were also claimed to be used to power lights at sporting and other events.

The company solicited investors by claiming that there were very favorable federal tax benefits associated with investments in alternative energy. The company structured the transactions in order to maximize the tax benefits to the investors. Investors would buy the MSGs without ever taking possession of them. They would pay a percentage of the sales price and finance the balance with the company. Then the investors would lease the MSGs back to the company, which in turn leased them to third parties. A portion of the lease revenue would be used to pay the investors’ debts to the company and to the investors. The third‑party leases, however, generated little income and the company paid early investors with funds contributed by later investors.

According to court documents, Ronald J. Roach, 53, of Walnut Creek, a certified public accountant, provided accounting and tax services to the solar energy company. To trick investors, Roach prepared years of financial statements that falsely characterized investments to purchase MSGs as revenue earned from the rental of those MSGs. Roach and his co-conspirators used those fraudulent financial statements to hide from investors the company’s use of later investor payments to pay financial obligations the company made to earlier investors—in a classic, Ponzi-like scheme. Roach also pleaded guilty to securities violations associated with the same investment fraud scheme.

Joseph W. Bayliss, 44, of Martinez, a general contractor and electrician who provided services to the solar energy company, pleaded guilty to conspiring with Roach and others in connection with the same scheme to defraud investors. Bayliss admitted to preparing thousands of false reports certifying the existence and operating specifications of thousands of MSGs sold to investors. Bayliss admitted that, for at least two years, he signed many of those false reports knowing that the MSGs associated with them did not exist, and knowing investors would rely on those false reports. Bayliss also admitted that, at the direction of a co-conspirator, he flew to Las Vegas to destroy evidence after the execution of search warrants at the company’s headquarters and other locations in December 2018.

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 André M. Espinosa and Kevin C. Khasigian are prosecuting the case.

The investigation is ongoing. Roach and Bayliss are schedule to be sentenced by U.S. District Judge John A. Mendez on Jan. 28, 2020. Roach faces a maximum statutory penalty of 10 years in prison. Bayliss faces a maximum statutory penalty of five years in 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.