morethan$150millionstemmingmostlyfromits
DCSolarinvestments.
Thefederaltaxcredithashelpedfuelsince 2006
solar’sshiftfromanalternativeelectricalresourceto
theU.S.mainstream.Whiletheprogramhasbeen
largelyfreeofirregularities,theDCSolartalestands
asa warningofhowinvestors,perhapstoohungry
forthecredits,maybelaxinscrutinizingthehealth
oftheunderlyingbusiness.Theallegedscamstarted
tocrackonlywhenfederalauthoritieswerealerted
bya formeremployeewhobelievedthenumberof
leasedmobileunitsclaimedbyDCSolarwasfalse,
accordingtoa courtfiling.
JeffCarpoffdidn’trespondtoinquiriesseeking
comment.“DCSolarSolutionswasaninnovative,
substantialandcrediblesolar-energybusiness.It
manufacturedthousandsofmobilesolargener-
ators,whichwereexaminedandphysicallydeliv-
ered,”CarpoffattorneyMalcolmSegalsaidinastatement. “Any allegation that there was a Ponzi
scheme or anything illegal about the operation of
the business is without merit.” The Securities and
Exchange Commission and the FBI have said they
are investigating, according to separate February fil-
ings. Representatives for the FBI and SEC declined
to comment.
Carpoff once ran a company servicing Land
Rovers and Jaguars, according to his LinkedIn page.
He founded DC Solar more than a decade ago, build-
ing a line of generators and light towers. Veering
from the usual bets on panels scattered across large
farmsoratophomes,heofferedportableunitsthat
couldbeplacedonwheeledtrailers.
“Withina shorttime,weweredoingover$60mil-
lion in sales,” he told Inc. magazine, in an inter-
view published before reports emerged about
the federal raids. The key was the investment tax
credit. It “helped us create a financial model that
enabled us to keep growing.” There seemed little
reason to doubt any of this at the time. A 2016 U.S.
Transportation Department press release described
DC Solar as among “some of the most innovative28
◀ Larson and his
DC Solar-sponsored car
after winning a race in
Bristol, Tenn.JeffCarpoffhada lottocelebrateathiscompany’s
Christmas partylast year. The onetime auto
mechanicandhiswife,Paulette,hadstarteda busi-
nessabouta decadeearlierthatwasdoingsowell
it couldcountWarrenBuffett’sBerkshireHathaway
Inc.asaninvestor.Theirbusiness,makingmobile
solargenerators,hadaffordedthemlavishgoodies.
Theyownedmorethan 90 cars,fromclassicFords
toBentleys,atleast 20 properties,andevena pro-
fessionalbaseballteaminMartinez,Calif.
Nowastheyearcametoa close,herewasthe
rapperPitbullheadliningtheirpartyattheswanky
FairmonthotelinSanFrancisco,accordingtopeo-
plefamiliarwiththeevent.KyleLarson,a race-
cardriveroncesponsoredbya Carpoffcompany,
tweetedthattheeventwasthe“bestholidayparty
I’veeverbeentobyfar!!”
A fewdayslater,whenFBIagentsshowedupat
theCarpoffs’frontdoor,theirextravagantlifecame
crashingdown.It waslargelybuiltonanalleged
fraud—aPonzi-typescheme,inessence,saidfed-
eralauthoritiesincourtfilingsrelatedtocorporate
bankruptcyproceedings.Theircompany,DCSolar,
is nowoutofbusiness.Their4,100-square-foothome
inMartinezis inforeclosure.Whentheagentscame
knockingthatdayinlateDecember,theytookmany
oftheluxurycars.Theyalsoseizeda pileofcash—
$1.8millioninall—thathadbeensecretedinoneof
thecouple’soffices.
TheCarpoffs,authoritiescontended,hadman-
agedtoparlayanincentivetoencouragesolarinvest-
mentsintoan$800millionfraudscheme.Promising
bigfederaltaxcreditsandprofits,theirpitchenticed
sophisticatedinvestors,eventhoughit camefrom
anenterpriselittle-knownoutsideCaliforniaandthe
car-racingworld.NotonlydidBerkshirebite,invest-
ing$340million alone, but so did insurer Progressive
Corp. A half-dozen or so regional banks were finan-
cial backers too. All put their money in funds set up
by DC Solar that offered significant tax credits and
possible profits.
The company was supposed to use the money
to build mobile generators, which supply power at
sporting events and other outdoor venues. But evi-
dence suggested DC Solar “engaged in nearly no
legitimate business,” the government said. The com-
pany built and leased out only a fraction of the more
than 12,000 mobile units it had claimed were in use,
the FBI said. Instead, the company allegedly used
much of the money from new investors to pay off old
ones—and to fund the Carpoffs’ spending.
DC Solar’s precipitous fall is forcing many of
the investors to take charges on tax breaks that
they thought were worth millions of dollars.
Progressive had to reverse tax benefits worth◼ FINANCE Bloomberg Businessweek June 10, 2019