Trailer Trash Solar
A failed auto mechanic blew sunshine at Warren Buffett. Now even his lawyer is headed to prison.
This Week In Blunders – March 8-14
“For the good ‘ol American life. For the money, for the glory, and for the fun. Mostly for the money.” – Burt Reynolds in the 1977 film “Smokey and the Bandit.”
Jeff Carpoff, a down-and-out car mechanic in Martinez, Calif., had a genius idea: Bolt Chinese solar panels onto a trailer and call it a portable generator.
The next thing he knew, Warren Buffett and several other shrewd investors were throwing hundreds of millions at his startup, DC solar.
Inc. magazine called the company “a renewable energy powerhouse.” No more dirty diesel on jobs sites or disaster zones. Why didn’t somebody think of this sooner?
Never mind Carpoff’s personal bankruptcy, home foreclosure, failed auto shops, unemployment and lack of a college degree or any of the training that usually goes with spawning a green-energy revolution. The praise kept coming – especially after the Obama administration named DC Solar a partner in a national program to fight climate change.
No surprise Carpoff, 55, then made the classic startup mistake of thinking investors’ money was his money.
He bought tens of millions worth of automotive trophies, including a 1978 Firebird previously owned by “Smokey and the Bandit” star Burt Reynolds.
He sponsored a NASCAR team. He bought the Martinez Clippers, a minor-league pro baseball team. He snapped up luxury vacation homes and pursued every financial fantasy that a deadbeat car mechanic from a working-class refinery town could dream about.
He must have been having so much fun that he forgot about the 17,000 trailers he promised to build and deploy.
Instead, he ran a complex financial scheme in which investors would purchase and lease back his contraptions to the company. For this, they were promised a steady stream of lease payments and valuable federal tax credits, but … well … you know how it goes.
Now Carpoff, 55, is serving a 30-year prison sentence for running what the Fed’s called a billion-dollar Ponzi scheme, and he’s been ordered to pay $790.6 million in restitution.
His wife, Paulette Carpoff, 52, is doing more than 11 years. Several others involved are also doing time. And on Monday, the attorney who made the whole scheme possible, Ari J. Laurer, 61, was sentenced to 11 years and five months.
“Without the participation of Lauer, the DC Solar fraud scheme would never have been operational,” said U.S. Attorney Eric Grant in a press release.
It takes more than a small-town grease monkey with a few commercially available trailers and some cheap Chinese solar panels to get the Oracle of Omaha’s money.
It takes a great lawyer who can move funds between accounts, draft deceptive documents and lend legal legitimacy to a business model that barely exists.
Lauer was a partner at Lewis Brisbois Bisgaard & Smith LLP, a large national litigation and corporate law firm headquartered in Los Angeles, and he gave the solar fraud quite a shine.
Buffett’s Berkshire Hathaway, which invested between 2015 and 2018, is reportedly out $377 million.
“If someone walks in with a solar project tomorrow and it takes a billion dollars or three billion dollars, we’re ready to do it,” Buffett said at his 2017 shareholders’ meeting. “The more the better.”
What else could Carpoff have bolted onto a trailer and sold him? A solar-powered Porta Potty?
Read More: The Billion-Dollar Ponzi Scheme That Hooked Warren Buffett And The U.S. Treasury (The Atlantic)
‘Pharma Bro’ showed us the limit
Profiteering from the sick and dying is a national pastime that is bankrupting Americans and the U.S. government.
It’s capitalism, baby, and if you complain about it too much you’ll be branded a socialist. But how far can someone go jacking up the price of a lifesaving drug before there’s a Congressional backlash?
A self-styled Millennial disruptor, Martin Shkreli, found the limit.
The hedge-funder’s company, Turing Pharmaceuticals, acquired the rights to Daraprim in 2015, and within days, boosted its price from $13.50 to $750 per pill. This was a decades-old drug used to treat toxoplasmosis, a potentially deadly infection that particularly affects AIDS and cancer patients.
Perhaps it was only a matter of the degree to which Shkreli took his price hike. If he were Pfizer, Merck or Johnson & Johnson he might have moved prices more delicately and gotten away with it.
In addition to being dragged before Congress to defend the indefensible, Shkreli ended up in prison for cheating his hedge-fund investors. Today, he remains internationally reviled as the “Pharma Bro.”
So much for the 30 Under 30 award Forbes gave this wunderkind in 2012. Today, we’re adding him to the Business Blunders Hall Of Shame.
Read More: Martin Shkreli – Turing Pharmaceuticals (Business Blunders Hall Of Shame)
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We've clearly been in the wrong business, Al. Find and exposing fraud is great. But the real 'pay-day' is in P. T. Barnum's motto.