Ponzi Schemes aren’t anything new in the vast world of corporate fraud. However, it’s rare to see one of the pyramid scams go as far as to steal billions from its investors, such as what happened to the US-based energy supplier DC Solar in 2018.
Though it’s been a while since the company was shut down, there are still lots of questions regarding the real nature of the company, its owners, and the money they scammed away from investors to live a life of luxury.
So what happened to DC Solar? Did they really steal $1 billion? What about the legal consequences of it all? Stay with us to find out!
What Was DC Solar?
Unlike many other cases of money laundering and billion-dollar schemes, DC Solar wasn’t born to be an intricate money-stealing company. It was founded by Jeffrey Carpoff in 2008, after he became interested in solar energy providing services.
Back then, Carpoff’s professional background had been limited to car repairs, yet the prospect of investing in light towers and power generators seemed positive, given the then-new federal tax credits offered by the government to businesses related to renewable energy. Back in the beginning, DC Solar’s star product was Solar Eclipse, a solar generator which Carpoff designed to run on wheels.
Business at DC Solar wasn’t in the big league in the beginning, as it wasn’t until 2011 that Sherwin-Williams bought the company’s generators for almost $30 million. From then on, DC Solar passed from being a small company to landing big contracts with the likes of Geico and U.S Bancorp.
Interestingly enough, DC Solar’s impact was so great that President Obama’s administration included it in a list of technology companies committed to collaborating against climate change. They also founded DC Solar Freedom, with which they collaborated with educational organizations to spread information about renewable energy.
However, the apparent good intentions of DC Solar on its path to becoming an authority in solar power were lost when their business raised concerns less than a decade into the company’s foundation.
The Owners
While the growth of DC Solar seemed legitimate for a long time, the company’s downfall was deeply intertwined with its success. At the launch of DC Solar, Jeffrey Carpoff didn’t have any knowledge about renewable energy, and worked on his inventions in his house’s garage, describing them as ‘crazy, harebrained’, as reported by The Atlantic.
Before DC Solar made it big, Carpoff had experienced a fair share of failure. His mechanical skills hadn’t provided much financial gain and his repair shop had shut down several times, leaving him unemployed and with no other option but to file a personal bankruptcy case. Years later, his life changed for the better when DC Solar started landing millionaire contracts. By the time the company’s net worth was over $2.5 billion, Carpoff owned dozens of properties, a private jet, and even a baseball team.
Carpoff’s family consists of his wife Paulette and two kids, who also enjoyed the fruits of his genius and good luck. However, information about the Carpoff children is mainly undisclosed.
Legal Action
The first signs that something wasn’t going well with DC Solar became apparent in 2016. At the time, the Internal Revenue Service (IRS) identified irregularities in the company’s operations related to the number of products, sold and the revenue written in accounts.
IN ACTION: DC Solar's Jeff and Paulette Carpoff receiving special recognition from the Martinez City Council and Chief of Police, Manjit Sappal, for their contribution to the city's automated license plate reader (ALPR) program. #GivingBack #CommunityService @cityofmartinez pic.twitter.com/gYEGC0jHSS
— DC Solar (@DCSolar) November 29, 2017
These irregularities existed, yet weren’t as old as assumed. That year, DC Solar moved from its first headquarters in Concord to more polished ones in Benicia, using the money from a recent deal with Geico to finance the move. Nevertheless, it was at this time that the company’s famous Solar Eclipse generator decreased production, making it hard for the company to retain investors interest, while the real revenue wasn’t as positive as thought.
It was at this point that DC Solar started inflating their numbers, and found inventive ways to keep their storage full, using it only for show. It was then that the IRS concluded that the market prices of Solar Eclipse were far less than $150,000, barely making it to $13,000 in value.
Later in 2018, the FBI raided DC Solar’s headquarters, though at that point, the company’s Ponzi scheme was already evident. At that point, DC Solar wasn’t fulfilling its promises to its investors while Jeffery and Paulette used the company’s money to indulge themselves in a life of luxury, while the company didn’t generate any revenue.
Aftermath
Following the first raid to DC Solar headquarters, it was over for the scam that the Carpoffs had been pulling off for years. Amid several lawsuits, both Jeffrey and Paulette were arrested and eventually sentenced for fraud and money laundering, with Jeffrey getting 30 years in prison and his wife 11 years. Nonetheless, the scheme wasn’t DC Solar’s alone, resulting in other partners being investigated and sentenced, after the company’s scandal exploded.
DC Solar was shut down over this scandal, but this case does wonders to teach us how far people can go to make money. What could have been an inspiring story about resilience on Jeffrey’s part, turned into a nightmare for him and his family – one they might well have anticipated!
