Couple plead guilty in massive Ponzi scheme, agree to give up cash, winery, island home

A husband and wife team pleaded guilty in federal court Friday to charges they masterminded a Ponzi scheme that cost investors $1 billion and is the largest financial fraud case ever prosecuted in the Sacramento-based Eastern District of California.

Jeff and Paulette Carpoff, owners of the defunct DC Solar Solutions company based in Benicia, each entered guilty pleas Friday before U.S. District Judge John A. Mendez as part of plea agreements they reached with prosecutors after months of negotiations.

Jeff Carpoff, 49, pleaded guilty to conspiracy to commit wire fraud and money laundering, charges that could net him up to 30 years in prison.

Paulette Carpoff, 46, pleaded guilty to conspiracy to commit an offense against the United States and money laundering and faces up to 15 years in prison.

Both also agreed to pay restitution of between $800 million and $1.6 billion.

Court papers say federal agents seized $60 million in personal property and liquid assets when they raided the DC Solar operations in December 2018, including $1.7 million in cash in a safe inside Jeff Carpoff’s office and another $150,000 in cash in other places in the offices.

“We’ve been chasing every asset that we can,” U.S. Attorney McGregor Scott said at a news conference after the guilty pleas.

As part of the plea agreements, the couple will forfeit the millions seized by federal agents, as well as their interests in a Napa Valley winery, a cafe and various businesses, vehicles ranging from a 1969 Plymouth Roadrunner to a 2000 Porsche Boxer and the “Seagrape Villa” at the Four Seasons Resort on St. Kitts in the Caribbean for which they paid $5.375 million in cash.

The pair already gave up their fleet of 149 exotic and antique vehicles and boats, which were sold at auction in Woodland last year and generated $8.2 million in revenues, and Scott said federal agents have seized 32 properties they Carpoffs had paid $35 million in cash for.

The Carpoffs were accused in what court filings say began as a legitimate business but by 2011 morphed into “a Ponzi-like scheme that defrauded investors of approximately $1 billion through material misrepresentations and omissions” related to the leasing of mobile solar generators.

The company had manufactured 6,000 of the generators, but sold 17,000 to investors, prosecutors said.

“In other words, they sold the same trailers again and again and again,” Scott said.

So far, officials expect $120 million to be returned to investors, and $500 million to be returned to the Treasury from payments investors will make to cover the tax credits they received by leasing the solar devices.

The money the Carpoffs got from the scheme went to everything from a semipro baseball team to a suite at the new Las Vegas Raiders stadium.

“Jeff and Paulette Carpoff used that money to support their lavish lifestyle during the nearly eight-year conspiracy,” the plea agreement states. “Among other things, the Carpoffs used proceeds of their fraud to purchase and invest in more than 150 luxury and collector vehicles, luxury real estate in Lake Tahoe, Las Vegas, the Caribbean, Cabo San Lucas, Mexico, and elsewhere, a suite at a professional football stadium, a subscription private jet service and jewelry.”

Jeff Carpoff, represented by attorney Malcolm Segal, and Paulette Carpoff, represented by William Portanova, are scheduled to be sentenced May 19.

This story was originally published January 24, 2020 at 11:01 AM.