Robert A. Karmann of Clayton was sentenced to six years in prison and ordered to pay $624 million in restitution for participating in a billion-dollar Ponzi scheme involving DC Solar, U.S. Attorney Phillip A. Talbert announced.
Article continues below
According to court documents, Karmann was a certified public accountant (CPA) that DC Solar hired first as its Controller in 2014, and later as its Chief Financial Officer.
DC Solar manufactured mobile solar generator units (MSG), which were solar generators that were mounted on trailers.
The MSGs were sold to investors who were given generous federal tax credits, and who were falsely led to believe that there was extensive demand from third parties to lease these MSGs to create a revenue stream.
In fact, that demand was virtually non-existent. 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.
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.
Then Karmann, Carpoff, and others covered up these lies with techniques including false financial statements, false operation reports, and false written summaries of the supposed revenue from leasing MSGs to third parties.
In 2016, 2017, and 2018, Karmann oversaw the hidden circular transfers of funds, delivered false financial information to another co-conspirator for use in tax returns and tax documents, provided false compiled financial statements to an investor representative for multiple funds, and provided other false information to investor representatives about DC Solar’s third-party leasing.
Karmann also directed others in DC Solar’s accounting department, including one subordinate whom Karmann told to “make it up†when responding to a customer request for location reports on their MSGs.
During these years that Karmann knowingly joined in the fraud, DC Solar pulled in over $600 million in investor funds as a result of this scheme.
On Nov. 9, 2021, Jeff Carpoff was sentenced to 30 years in prison and ordered to pay $790.6 million in restitution for conspiracy to commit wire fraud and money laundering. His wife, Paulette Carpoff, 47, has pleaded guilty to conspiracy to commit an offense against the United States and money laundering, and is scheduled to be sentenced on May 10, 2022.
On Nov. 16, 2021, Joseph W. Bayliss was sentenced to three years in prison and ordered to pay $481.3 million in restitution for securities fraud and conspiracy in connection with the DC Solar scheme.
Other defendants have pleaded guilty to criminal offenses related to the fraud scheme and are scheduled for sentencing: Alan Hansen of Vacaville, is scheduled to be sentenced on April 26, 2022; Ronald J. Roach of Walnut Creek, is scheduled to be sentenced on May 3, 2022; and Ryan Guidry of Pleasant Hill is scheduled to be sentenced on June 7, 2022.
This case is the product of an investigation by the Federal Bureau of Investigation, IRS Criminal Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General. Assistant U.S. Attorneys Christopher S. Hales and Kevin C. Khasigian are prosecuting the case.
Paulette Carpoff, Hansen, and Guidry face a maximum statutory penalty of 15 years in prison. Roach faces a maximum statutory penalty of 10 years prison.
The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. ■