Green energy executive Robert A. Karmann, who was the chief financial officer for a now non-existent company, was sentenced to six years in prison on Tuesday for his role in a Ponzi scheme encompassing billions of dollars.
Karmann was also ordered to pay $624 million in restitution for his involvement in fraudulent acts related to the DC Solar company, which made mobile solar generator units. According to the U.S. Attorney’s Office for the Eastern District of California, investors were given “generous federal tax credits” for purchasing the units.
The investors were also falsely told that there would be consistent revenue from the units when in actuality there was not very much demand for the units according to federal authorities.
“DC Solar had instead become a fraud scheme that took new investor money to pay older investors, using circular transactions that were fraudulently disguised to look like real third-party lease revenue,” the Department of Justice explained.
One of the holding companies that invested in the project was Berkshire Hathaway Inc, which is owned by Warren Buffett.
“According to court documents, Karmann and the other co-conspirators, including company founder Jeff Carpoff, carried out an accounting and lease revenue fraud using the Ponzi-like circular payments. Carpoff and others lied to investors about the market demand for DC Solar’s MSGs and its revenue from leasing to third parties,” the feds noted in their announcement of Karmann’s sentencing.
Karmann and his co-conspirators then falsified operation reports, financial statements, and written summaries of supposed revenue streams to present to investors. From 2016 to 2018, they used a system of “hidden circular funds” to cheat on tax documents before they were eventually shut down by the FBI.
Authorities said one employee of DC Solar was told to “make it up” by Karmann when the employee was asked by an investor about where the company had some of its mobile solar generator units. Investors pumped $600 million dollars into the scheme before the company went under.
Other key individuals who participated in the fraud have already been sentenced to criminal charges. Carpoff, the company’s founder, was ordered to pay $790 million in restitution and given 30 years in prison. Carpoff’s wife has pleaded guilty to conspiracy charges.
Last November, Joseph W. Bayliss, an electrician who pretended to be an electrical engineer, was ordered to pay more than $481 million in restitution and given three years in prison. Authorities said he “helped to deceive investors by removing and replacing vehicle identification number (VIN) stickers that were affixed” to the mobile solar generator units.
“[A]fter the 2018 search warrants executed at DC Solar, at Carpoff’s direction, Bayliss traveled to a DC Solar warehouse in Nevada and scraped off approximately 200 replacement VIN stickers and destroyed at least 1,000 VIN stickers stored in boxes in the warehouse,” federal authorities noted at the time.
Several defendants also tied to the scheme are still awaiting sentencing.