An owner of a California solar company was sentenced this week to 30 years in prison for orchestrating a $1 billion Ponzi scheme and using the money to make extravagant purchases, including luxury estates, more than 100 cars and a minor league baseball team, federal prosecutors said.
Jeff Carpoff, 50, received the maximum sentence on Tuesday after he and his wife, Paulette Carpoff, 47, pleaded guilty in January 2020 to a scheme that involved selling investors mobile solar generators, at least half of which didn’t exist, according to the U.S. Attorney’s Office for the Eastern District of California. Ms. Carpoff will be sentenced next week.
From 2011 to 2018, the company claimed, it manufactured 17,000 generators, which are portable power systems, according to prosecutors and a criminal complaint filed in 2020 by the Securities and Exchange Commission. The company, DC Solar, in Benicia, Calif., is now defunct.
DC Solar lured investors by falsifying financial statements and lying about the potential revenue from leasing the machines, also known as M.S.G.s, for which they could receive tax credits, the U.S. attorney’s office said in a statement on Tuesday. The money that the investors received did not come from lease revenue, but rather from payments by new investors, prosecutors said.
“As DC Solar lost vast sums of money with this fraudulent model, Carpoff and other conspirators stopped building the M.S.G.s altogether, selling thousands of M.S.G.s that did not even exist,” prosecutors said.
About $120 million in assets have been recouped from the scheme, which will be paid back to the investors, prosecutors said last year.
Around $8 million of the recouped money came from an auction of 148 cars that were seized from the Carpoffs, including a 1978 Pontiac Firebird that was once owned by the actor Burt Reynolds, prosecutors said. They had also bought jewelry and a sponsorship for a NASCAR vehicle, prosecutors said.
“Carpoff’s egregious scheme fueled his rapacious desire for luxury and prominence,” Sean Ragan, special agent in charge of the F.B.I. office in Sacramento, said in the statement on Tuesday.
Phillip A. Talbert, the acting U.S. attorney for the Eastern District of California, said that Mr. Carpoff’s criminal fraud scheme was the largest in the district’s history.
“He claimed to be an innovator in alternative energy,” Mr. Talbert said in the statement on Tuesday, “but he was really just stealing money from investors.”
Mr. Carpoff pleaded guilty to charges of conspiracy to commit wire fraud and money laundering, prosecutors said. His wife will face up to 15 years in prison at her sentencing next week on charges of conspiracy to commit an offense against the United States and money laundering.
Mr. Carpoff’s lawyer, Malcolm Segal, said in a phone interview on Wednesday that Mr. Carpoff had apologized to the investors in a written statement. “He remains upset that he damaged the investors and that he caused so much harm to his family and fellow employees,” Mr. Segal said.
Tuesday’s sentencing was “certainly a sobering judgment by the court,” William J. Portanova, Ms. Carpoff’s lawyer, said in a phone interview on Wednesday, adding that the Carpoff family was “struggling through this crisis of their own making.”
Five other people have pleaded guilty in the Ponzi scheme and await sentencing, prosecutors said. They include an accountant and a contractor who falsified documents that were shown to investors, according to a 2019 statement from the S.E.C.
Since Bernard L. Madoff was accused of running a $50 billion Ponzi scheme in 2008, the S.E.C. has been more aggressive in Ponzi scheme prosecutions.
The agency in 2019 charged William Neil Gallagher, a Texas radio host, with running a Ponzi scheme that defrauded listeners of his Christian radio show of at least $23 million. He was sentenced in Texas this month to three life terms.
In April, Zachary J. Horwitz, an actor known as Zach Avery, was arrested on wire fraud charges and accused by the agency of defrauding investors in a Ponzi scheme worth at least $227 million.