Wife In Billion-Dollar Solar Ponzi Scheme Sentenced To 11 Years In Federal Prison

A Martinez woman was sentenced to over 11 years in prison for what federal prosecutors said was the biggest fraud scheme in the history of the Eastern District of California, U.S. Attorney Phillip Talbert announced Tuesday.

Paulette Carpoff, 51, pleaded guilty on Nov. 9, 2021 to conspiracy to commit an offense against the United States and money laundering, the DOJ said. Carpoff played the lead role in a large Ponzi scheme as chief operating officer for DC Solar, a former solar power supply company based out of Benicia.

So far, at least five people have been implicated in the $1 billion dollar scheme, including Carpoff’s husband Jeff, who got 30 years in federal prison last November and was ordered to pay a whopping $790.6 million in restitution.

The crimes were sophisticated and complex, but involved mobile solar generators (MSGs) that were mounted on trailers. DC Solar claimed they could provide emergency power to cellphone towers and lighting at sporting and other large events. DC Solar reeled in investors by pointing out that there were generous federal tax credits to be had due to the green energy the MSGs offered.

According to the DOJ, investors would buy the MSGs without ever taking possession of them, paying a percentage of the sale price and financing the balance with DC Solar. Then the investors leased the MSGs back to the company, 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.

Enter the Ponzi scheme. According to the DOJ, when the third-party leases generated little income, the company paid early investors with funds contributed by later investors. Generators were sold that didn’t even exist — at least half DC Solar claimed to have manufactured — making it look like MSGs existed in locations that they did not.

False financial statements and false lease contracts were created to keep the con going. Prosecutors determined that approximately 94 percent of the revenue claimed by DC Solar actually came from transfers of new investor cash.

Paulette Carpoff controlled the Ponzi payments and hid the company’s lack of third-party lease revenue, the court found. She also fooled investors into believing that the company was a success.

The court-ordered restitution for the couple is a hint as to how wealthy they became through this scheme. They owned luxury real estate in Lake Tahoe, Las Vegas, the Caribbean and Cabo San Lucas; over 150 luxury and collector cars, their own private jet service, and lavish jewelry, prosecutors said. Search warrants yielded $18,000 in Paulette’s purse, another $18,000 in her bedroom, $22,000 in a safe, and $9,000 in vehicles parked at their residence.

Other people implicated in the scam had to make high restitution payments. Joseph W. Bayliss was ordered to pay $481.3 million, Robert A. Karmann was ordered to pay $624 million, and Alan Hansen was ordered to pay $619 million. As for Paulette, she has been ordered to pay $661 million.