There seemed little reason to doubt any of this at the time. A 2016 U.S. Transportation Department press release described DC Solar as among “some of the most innovative folks in the private sector.” The well-known law firm Nixon Peabody LLP was an adviser. (Nixon Peabody said DC Solar is no longer a client.)
The Carpoffs also worked to build their profile locally, gaining favorable media coverage of its charitable pursuits, such as helping Northern California neighborhoods devastated by wildfires. Their professional baseball team, the Martinez Clippers, played in a city-owned stadium. (The team, unaffiliated with Major League Baseball, is now defunct.)
Meanwhile, the couple was living large. At staff meetings, Jeff Carpoff often would pull out a wad of cash from his pocket -- at times more than $2,000 -- and ask employees to guess how much he was holding, according to people familiar with the matter. The person who came closest, if within about $50, would get the money, one of the people said.
Luxury vehicles were common in DC Solar’s parking lot, including Paulette’s burgundy-colored Bentley, according to people who had offices near the warehouse. Just last year, the couple spent $105,682 for a 2018 Dodge Challenger SRT Demon and $192,550 more for a 1967 Ford Mustang GT 500 Super Snake, court filings show.
To boost the brand, the couple relied heavily on auto racing. They had agreed to sponsor Chip Ganassi Racing in the NASCAR Xfinity Series and drivers including Ross Chastain. These associations were useful for more than just publicity, Carpoff suggested in the Inc. interview.
The track “lets us bring in people from the renewable finance industry, show them a great time, show our product in use,” he told the publication.
Overall, DC Solar attracted at least a dozen investors in complex deals that raised money through what’s known as tax-equity funds, according to the government’s allegations. In a typical DC Solar deal, filings show, investors bought each mobile unit for $150,000 but paid in cash only $45,000 -- the maximum amount of the tax credit they could claim.
They were told that the company would then lease the equipment to end-users such as telecom companies. The lease money would pay down the remainder of the $150,000 cost plus provide any profit to the investor.
Except, DC Solar didn’t usually lease the generators to third parties as described by the company, the filings say. Instead, about 90% of the money one of its affiliated companies claimed as lease revenue was actually new investors’ money. In 2016, for example, that sum amounted to $50 million of the claimed $55 million in revenue, a former employee told authorities.
As for the generators themselves, DC Solar allegedly made it appear it had leased more than it did, filings say. Employees placed GPS transponders in various spots where, “in truth, they were not located,” according to the government filings.