August 31, 2023 • 28 mins
A car mechanic named Jeff Carpoff invented a portable solar generator. Companies like Geico and Progressive Insurance bought thousands of his generators because they got tax credits for doing so. But there was something not quite right about Carpoff’s invention. You can read Ariel Saber’s Atlantic story, “The Billion Dollar Ponzi Scheme that hooked Warren Buffett and the US Treasury,” here: https://www.theatlantic.com/magazine/archive/2023/06/dc-solar-power-ponzi-scheme-scandal/673782/
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:15):
Pushkin.
Speaker 2 (00:20):
I'm Ril Sabar, and I wrote the billion dollar ponzi
scheme that hooked Warren Buffett and the US Treasury for
the Atlantic magazine, and it's the story of the week.
Speaker 1 (00:30):
Back in two thousand and seven, I invited the actor
and environmentalist Ed Bagley Junior over to my house because
while there's tons of information online about making your home
more environmentally responsible, I can only hear things when a
celebrity says them to me. After running back to his
electric car for a compass, Baguley determined that my house's
(00:51):
south side was too well shaded for solar panels. I
was super disappointed to find out that a major adult
celebrity carries a compass in his car. I mean, is
he telling his agent to meet him at the new
restaurant at latitude twenty four point seven two six longitude
negative one eighteen point three six three to two. So
(01:14):
I got a pass from Bagley on the solar panels,
But that was actually my last house. A new one
seems a lot sunnier. But the problem is that everyone
who sells solar panels seems like they're working a scam.
I mean, I'm sure they're not. But also they totally are.
Speaker 3 (01:39):
Writing is hard. Who's got that kind of time when
you're already busy trying to be you all stand So
it turns on a mic. Maybe the twitles enough because
a journalist trand has got in that jule jib partitories
single story. Just listen to smart people speak.
Speaker 1 (01:58):
Conversation.
Speaker 3 (02:00):
Film information is the story of the week.
Speaker 1 (02:14):
Ariol Sabar wrote a profile for The Atlantic about a
guy named Jeff Karpoff who had no college education, no
backgrounds in engineering, but was able to create a multi
billion dollar solar panel company, well sort of, Ariel, Like
most of the great stories I tell yours is about
(02:34):
a car mechanic, and this mechanic, Jeff Karpoff, he fell
on some hard times, right so.
Speaker 2 (02:39):
Around two thousand and seven, you know, he was this
kind of pawnchey, thirty somethingter car mechanic living in this
small town of Martinez, California, which is kind of a
refinery town. And so he goes up there kind of
this working class household. He loves cars. He gets in
trouble a lot as a high schooler. He graduates from
high school and he starts trying to open his own garages.
(03:02):
It doesn't go particularly well for him, Like he opens one,
it just doesn't generate enough money. He's out of work.
He doesn't know what he's going to do with his future.
Speaker 1 (03:11):
But now his business is going under, So what is
he going to move on to?
Speaker 2 (03:14):
He basically like harvests a bunch of weed and he
tries to sell it through this marijuana dispensary in San Jose.
And I interviewed the founder of the dispenser and he's like, yeah,
I remember Jeff Karpuff. He came down. He tried to
interest me him in his weed and like we only
sell like really high grade stuff. And we took this
to this lab we used and it was like just terrible.
And he's like, there's no way we're going to carry
(03:35):
this stuff. And so once again Jeffkarpuff is sort of
faces another kind of business failure.
Speaker 1 (03:41):
So just so I can get a picture of this guy,
is he really charismatic? Like what is he like?
Speaker 2 (03:47):
He's unusual, He's he is a charming guy in a
kind of like a Bubba like way. He's like the
guy he's gonna throw his arm around your shoulder and say, hey, man,
you want to come and take a take a spin
in my like my mid nineteen seventy chevelle. Like he's
got these awesome muscle cars, but he's gonna feel like
you're kinda kind of feel cool around him. And you know,
he has a sort of ruddy face. He has a
big goatee. What's interesting about him is this kind of
(04:09):
working class charm. It's not a it's not a like
Wall Street charm.
Speaker 1 (04:14):
Yeah, it's not slick.
Speaker 2 (04:15):
It's not slick. It's kind of like Bo Duke and
the DUSA Hazard going yehah.
Speaker 1 (04:20):
All right. So in two thousand and seven, he's lost
his house, he's declared bankruptcy, he's had mechanic business has failed.
He apparently can't make decent weed. So what does he
turned out?
Speaker 2 (04:32):
So he gets this phone call from a former client
at his garage. His client's like, listen, man, I've got
some solar panels I've just come into I need someone
to help me sell them. And he's talking to one
of his neighbors, and one of his neighbors is like, yeah,
you know, I've always thought about putting solar panels on
my roof, but like, I only live here on the
(04:53):
weekends and I'm worried that these things are going to
get stolen off the roof of my house. So Jef
Karpoff being Jeff Karpoff, how's this kind of like aha
moment where he's like, wait a second, why do solar
panels have to be on the roof? Like what if
you put them on a car trailer? You can wheel
out into the sun when you're at your vacation home
so that you can power your home. But when you're
(05:13):
not there, you can put it in the garage, or
you can just like hitch it to the back of
your car and take with you wherever else you happen
to be going. So he goes out, he gets a patent. Oh,
the patent's title is literally as simple as trailer with
solar panels. Like it's just there's nothing else to it.
Speaker 1 (05:28):
He can do this because he's a mechanic.
Speaker 2 (05:29):
He's a mechanic, although he has no training in solar engineering.
And when I talk to his brother in law Bobby,
he's like, yeah, I didn't know anything about solar I
just figured it. Eh, It's like good thing they got
Google and all that.
Speaker 1 (05:41):
This is the Peter Teele argument against.
Speaker 2 (05:43):
College kind of Yeah, and so like these investors who
live not far from him, they get wind of Jeff
Karpoff building what sounds like solar on wheels. These entrepreneurs
sort of have Jeff wheel it out to like an
empty parking lot, and they're like kind of gobsmack pot.
It's so simple and it makes so much sense, Like
(06:04):
why should solar be fixed? Why can't we make something
that you get you can take on wheel to a
construction site, to a concert venue, to a movie set,
that can send renewable, clean power to users who need
power on the go. And they were thinking, Jeff, no, no,
this is not an anti theft device. This is mobile
solar power. This is like a disruptive generator. This is
(06:26):
disruptive technology. So he goes to Daytona Beach and he
basically pretends to be this like revolutionary in vendor who's
on the verge of releasing this like world changing solar product.
And he sort of calls up this real estate agent
and he says, I want you to show me a
bunch of mansions in Daytona Beach. I'm in the market now.
Of course, while he's doing this, he's basically broke. So
(06:48):
he goes to this real estate agent and he basically says, look, yeah,
I'm shopping for mansions. Oh, by the way, you must
have a lot of really you know, affluent clients. Is
there anyone in your world who you think might be
interested in investing in like a revolutionary solar product. And
this real estate agent is like, yeah, I actually know
this woman in New York and through her connections in
the world of New York find ants, Karpoff gets connected
(07:11):
with some of the top people in this very arcane
world of tax credit financing.
Speaker 1 (07:17):
So this company it's is it called DC.
Speaker 2 (07:20):
Solar, Yeah, it's called DC Solar.
Speaker 1 (07:22):
And so he finds out about these tax credits, which
how do those work?
Speaker 2 (07:26):
Yeah? So basically, since like the nineteen seventies oil crisis,
when you had like long lines of cars waiting at
gas stations to fill their tanks, Congress has tried to
encourage investment in alternative energy, and so they created something
called the Investment Tax Credit. Basically, what it does is
it gives businesses who buy solar equipment a tax credit.
(07:52):
And that tax credit, for a long time, used to
be just ten percent. In two thousand and five, Congress
tripled the incentive.
Speaker 1 (07:59):
Okay, so that makes it just thirty percent cheaper for
people to buy these things.
Speaker 2 (08:02):
Correct, the taxpayer is subsidizing the purchase essentially, and so
the tax credits become really attractive, such that like there
comes a moment when Karpoff realizes that what people are
really interested in is less my mobile solar device than
the tax credits they can get for buying them.
Speaker 1 (08:24):
But why they still have to pay seventy percent for
this overpriced thing.
Speaker 2 (08:27):
Ah, but they don't. Jeffkarpoff's scheme was. The brilliance of
his scheme is that he allowed buyers of his generators
to put just thirty percent.
Speaker 1 (08:37):
Down the full money they're getting back in gover Like.
Speaker 2 (08:39):
All you have to put down, you know, big corporation
who wants to buy my solar generator, is the thirty
percent that you're going to get back anyway from the
government at the end of the year. So it costs
you nothing. You just put down thirty percent. Now you'll
get it back at the end of the year. I,
Jeff Karpoff and DC Solar will loan you the remaining
seventy percent that you owe me, and you'll gradually pay
(09:00):
it back because I will be renting your generators for
you and getting lease money for doing that.
Speaker 1 (09:06):
So there are these other companies that are buying the
generator for only the thirty percent, which they get back
in tax credits.
Speaker 2 (09:12):
Correct.
Speaker 1 (09:13):
Jeff is then renting out to other the ones that
these new companies own. He's renting them out and giving
the profits on the rentals to this other company. What
kind of companies are these? They're buying these things that
they don't even bother physically owning. Jeff's just renting them
out to other people. What kind of companies make these purchases?
Speaker 2 (09:33):
These are like blue chip companies. These are like some
of the most stable, most sort of like venerable firms
in America, like who like Geico, like Progressive Insurance, like
Sherwin Williams, the bank company, Like.
Speaker 1 (09:47):
Why is the paint company buying generators that they're renting
out to other people.
Speaker 2 (09:51):
One of the things that all these companies have in
common is that they're not particularly exciting. They are not
pritically innovative. But what they do have is a very
predictable revenue stream every year, so they know that at
the end of the year, you're going to have like
this much profit, and they need to do as much
as they can to reduce their tax burden at the
end of the year. What a lot of these companies
do is they invest in these in these tax credit investments.
(10:13):
They give them tax breaks and a little bit of
additional income lease income usually.
Speaker 1 (10:18):
And what kind of numbers are we talking about, like
for Berkshire Hathaway or Sherwan Williams, how many generators are
they buying, how much they spending.
Speaker 2 (10:24):
Sherwan Williams was their first big buyer, and they bought
twenty nine million dollars worth, which for a guy who
was broke wor you know, high school educated mechanic, to
make that much money overnight was just like he just
was living large as anybody would.
Speaker 1 (10:37):
How does he react to that?
Speaker 2 (10:38):
Oh, he's he's over the moon. And almost immediately he
takes out like one point three million dollars cash and
buys himself a new house on the highest hill in
Martinez where he can basically look down and all the
people who thought he'd never amount to much suddenly it's like,
look at me now, man, look at me. Now, Look
what I did.
Speaker 1 (10:55):
He closes this huge twenty nine million dollar deal with
Sherwan Williams. He's getting deals from Geico. These are real companies.
They must be like, you know, kicking the tires on
this thing, right.
Speaker 2 (11:08):
They're not, you know, They're just happy to work. Have
their tax lawyers talk with Jeff Karpoff's tax lawyers, fill
out some forms, and in some cases there were site visits,
not many. They were really just interested in making sure
that they were following kind of the letter of the law.
Speaker 1 (11:24):
Did those site visits go okay?
Speaker 2 (11:26):
Yeah? I mean, Jef Karpoff was really good at making
investors believe that the generators they were looking at belong
to them. But what he'd actually do was he basically
sell the same generators over and over again to multiple buyers.
And I talked to one of Jeff Karpoff's salesmen at
the time, and he said, you know, I went in
there but right, you know, shortly before the Sherwood Williams inspection,
(11:49):
and I noticed that like the first row of generators
was fully assembled. They looked fine, but like the rows
behind them were not. And if you actually knew what
you were looking at, you realized that these things were
only like half built, and he'd hidden all the sort
of half assembled ones behind them fully assembled ones, and
apparently this was enough to fool the inspectors for Sherwin Williams.
Speaker 1 (12:12):
That's a pink company. They're detail oriented. You think, yeah,
hell me is he actually making versus what he's selling.
Speaker 2 (12:18):
So in the end, over a period of seven years,
he sells about seventeen thousand of these mobile solar generators.
In actuality, only six thousand have been manufactured, and investors
have no idea that they're basically all co owning the
same generator, yet receiving independent tax credits for the purchase
of all of them.
Speaker 1 (12:40):
When we come back, Jeff Karpoff's scheme runs into a
big problem. But first, our advertisers are going to tell
you about a great opportunity. All you have to do
is start a podcast and get three of your friends
who start a podcast, and get them to get three
of their friends to start a podcast. You can't lose.
(13:10):
Jeff Karpoff has gone from car mechanic to this solar
panel entrepreneur. How are the panels he's making if he
has no real engineering skill?
Speaker 2 (13:20):
When they work, they work, okay. The trouble is that
they weren't particularly reliable. They go back in some pretty
awful places fairly early on. So the power cut off
during the filming of Disney's Alexander and the Terrible, horrible,
no good, very.
Speaker 1 (13:33):
Good, Bad Day, although all too appropriate for that movie, all.
Speaker 2 (13:36):
Appropriate, it was definitely not a great day for Carpoff either.
There's another story we heard where Pink's trailer lost air
conditioning an MTV concert.
Speaker 1 (13:44):
Oh, I don't want that. You don't want an angry
Pink No, and I think with two exclamation points. Yeah.
Speaker 2 (13:49):
And so what Jeff Karpoff started doing was attaching one
hundred gallon diesel generators to the solar generator as a backup,
so that, I like, there was a breakdown or if
there was a string of cloudy days, you'd have a
diesel generator kick in, okay, And so they were. There
were some technical difficulties and the expanse the fact that
they were charging one hundred and fifty some dollar for these things,
(14:10):
or claimed to be able to get that much, meant
that there was no one really interested in buying them,
and also very very few people interested in leasing them
for the long term short term lease is sure, So
Jeff could not lock in those long term leases, and
those long term leases were what underpinned his business model.
So he can't find these leases, and that puts them
(14:31):
in a pickle because if he can't, if he can't
raise money for the leases, he can't pay back the
seventy percent. So he's in a pickle, and he has
a few options. At that point. He can either shut
down the business.
Speaker 1 (14:42):
I know enough about Jeff Karpoff now to know that
that's not even a consideration.
Speaker 2 (14:46):
Not a consideration. He wants to keep this great thing going.
He wants to keep this snowball rolling until it's larger
than life, and that's what he decides to do. He
and some of his associates have a meeting in twenty
twelve in which they decided, like, well, wait a second,
we were still able to convince a lot of these
blue chip companies to buy our solar devices as a
(15:07):
tax credit investment. So I think we can close like
a number of additional deals worth hundreds of hundreds of
million dollars. Now, what we're gonna do is we're gonna
take that money from new sales and not use them
to build new generators. But we're gonna give most of
that money, not all of it because we want some
for ourselves, but give most of that money to earlier investors.
And mate, we're gonna make them think that that money
(15:28):
is coming from the leases of their generators when it's not.
Speaker 1 (15:32):
Oh, that's just pure Ponzi scheme, right, pure ponzi.
Speaker 2 (15:35):
Yeah, okay, pure Ponzi with a twist, because in most
Ponzi schemes, you have to raise all of that money,
oh right, that you need to give to the to
the last guy. What's awesome about this or terrible is
that in this case, Jeff's load is lightened by the
fact that the American taxpayer is subsidizing it through the
tax credits, right, so he doesn't have to come up.
Speaker 1 (15:53):
With So it's a Ponzi scheme with a thirty percent discount, Yeah, exactly.
Speaker 2 (15:56):
So he gets a thirty percent right off on his
Ponzi on the amountain.
Speaker 1 (16:00):
That's not enough. You're still screwed eventually.
Speaker 2 (16:03):
But it buys you time.
Speaker 1 (16:05):
So he's taking in all this money through this Ponzi scheme.
Is he spending it? Like, what's he doing with all
this money?
Speaker 2 (16:11):
He's definitely spending it, you know, on on on muscle cars,
on luxury seats at the new NFL Stadium in Las
Vegas on a pro private jet service. But he's also
using it to kind of tell a story, which is interesting.
You know, he's basically surrounding himself with this sort of
like mythology that he is this embodiment of the American dream, right,
(16:35):
and so like when he would pull into too work
in the morning, like a hard rock version of the
Star Spangled banner would like thunder from the speakers of
his rent pickup Roman. He later installed this like giant,
like six panel photograph for the American flag on his
factory walls and claimed that his family said the Pledge
of Allegiance instead of grace at holiday meals. That's awesome
(16:55):
and one of my favorite moments was actually found in
an old episode of Counting Cars, which is a reality
TV show. Oh, he goes into like a custom car
place in Vegas and he says, I want a motorcycle
with an America theme. Paine job. He wants like the
statue of Liberty on the side of the tanks, like
waving the American flag, and he wants like like a
(17:16):
kind of an image of the Constitution on the back
of the bike that says, we the people.
Speaker 1 (17:21):
And you wrote this thing that blew me away about
him and cash at his meetings.
Speaker 2 (17:27):
Oh yeah, he loves cash. He loves cash. So he
would like come into the office like randomly with like
shopping bags full of cash. Like he just of no
discernible provenance, but he'd come in with like bags of cash,
walk through the accounting department, and you can imagine their orror,
like unaccounted for cash if you're a professional accounting department.
He's like, hey, guys, sid what I got. He'd open
(17:48):
up his plastic bag. He's like, there's two hundred and
fifty thousand dollars of cash in this bag, and I
got another guy who had spoke to you. He remembered
walking past his office one day and noticing that Jeff
had his like giant cash safe open and he had
just this huge pile of cash on his desk. It
was like a pile so large that if two people
were sitting on opposite sides of the desk, they wouldn't
(18:09):
have been able to see each other. And he would
do things too to make people just feel like super
lucky to work for him. So at the end of
like all hands business meetings, which were held once a month.
He would reach into his pocket pull out like a
giant wat of cash, and he'd go around the room
asking each of his employees to guess how much cash
was in his fist, and whatever employee came closest to
(18:31):
guessing it, some would get the cash. And it was fun.
It was like you were in a casino, like you might.
You might be this working class guy putting together generators
all day. But guess what if you guess that he
had three thousand dollars in his hand, That money was
yours to take home and do what you wanted. And
the other thing he spent his money on a really
really big parties. Now d C Solar at its largest
(18:51):
had like maybe one hundred employees, but he would show
throw these lavish Christmas parties at the Fairmount Hotel, which
one of the nicest hotels in San Francisco. And he's
paying for live private performances by like the pop band
Sugar Ray, by the rapper Pitbull, by the country band
Big and Rich, just for his employees, with like elaborate
(19:12):
light shows, go go dancers, full video production for one
hundred employees.
Speaker 1 (19:17):
How does he show off in front of his employees.
Speaker 2 (19:19):
At some point I wasn't deftly sure when he comes
up with this nickname for himself, which is that he's
now he's no longer just Jeff Karpoff, He's Jeff motherfucking Carpoff.
Becomes such a well known acronym, he's just basically abbreviates
it to JMFC. So like he would have like JMFC
emblazoned on I don't know hats, and also on his
parking space outside of work would say JMFC. He would
(19:42):
openly refer to himself at these holiday parties as Jeff
motherfucking Karpoff. So he loved like sort of like basking
in the limelight of his success. But he also, I
think was smart about it, because if you're running a
criminal scheme, your employees should probably have having some doubts
and some questions, but you didn't need to make them
have such a great time that they're like, you know what,
I don't need to look too closely at whether these
(20:04):
generators work. So he's given them a great time.
Speaker 1 (20:07):
No, it's the opposite. He's got cash everywhere. It's like scarface.
I would definitely question this, Okay, are investors at all
starting to catch on.
Speaker 2 (20:15):
They are eventually starting to develop some suspicions, and I
think you know there is word does start to leak
that the IRS has begun audits because the numbers don't
really work. The IRS has to be sure if you're
claiming a forty five thousand dollars tax credit on one
hundred and fifty thousand dollars purchase, the RS wants to
(20:35):
be sure that the thing you're selling is actually worth
one hundred and fifty thousand dollars. So the IRS starts
looking at, well, how much are these things actually worth?
And once they actually do an audit, they decide that
these devices aren't worth one hundred and fifty thousand dollars.
They're worth thirteen.
Speaker 1 (20:48):
Thousand oh so not even close, not even close.
Speaker 2 (20:51):
Yeah.
Speaker 1 (20:52):
So, even while the IRS is investigating, is the Obama
administration still into this company and giving them all these
tax breaks.
Speaker 2 (21:00):
THEBOMA administration is certainly interested interested in combating climate change
and one of the initiatives that they that they launch
is this program called the Smarts City Challenge, And so
amazingly like DC Solar gets chosen to be among the
companies that are part of this smart city challenge, and so.
Speaker 1 (21:16):
Shouldn't the irs have warned them not to put them on.
Speaker 2 (21:19):
I'm not really sure how those kinds of communications happen.
Speaker 1 (21:22):
So now that the walls are kind of closing again,
they're running out of time, how do they react?
Speaker 2 (21:28):
So Jeff and his wife have kind of really different reactions.
Like Jeff Karpoff's still like outwardly seems to be having
the time of his life. But Paulette, who's kind of
behind the scenes, who's helping run the company, she has
to do kind of all the dirty work in the
sense of like making sure that everybody stays in line.
The Carpoffs actually installed dozens of these surveillance cameras around
(21:50):
their office and shop floor, and Paullette would like look
at all the feeds from these cameras, which played on
like a really big TV screen in her office, So
like she was constantly looking at like who's going into
what office? Like why is that person spending so much
time in the bathroom? That's that's suspicious. She was sort
of short women, but she was very sort of powerful
(22:11):
within the company, and the employees lived in fear of her.
And she also apparently had this plaque on her desk
that said, I'll be nicer if you'll be smarter, and
that persona was amplified by these two large dogs Belgian mellanoise,
one named Diesel interesting, the other food which I think
means crazy in French. That one of them was trained
to attack. There's like a level three attack dog. I
(22:33):
forget what the terminology is. So you have this really
like good cop bad cop thing happening between Jeff, who's
like the fun guy I always joke in handing out
cash to Paullette, who's like really anxiously trying to hold
everything together behind the scenes.
Speaker 1 (22:46):
So the Carbovs know that they are on a limited
amount of time with this Ponzi scheme, or how are
they going to deal with this?
Speaker 2 (22:53):
They start moving money overseas into offshore accounts. They also
buy kind of a mansion on the Caribbean island nation,
at the Caribbean nation of Saint Kitts and Nevis. One
of the contingency plans that he claimed to have made
was that he claimed to have buried a half a
million dollars worth of math at a cemetery, and Martinez.
Speaker 1 (23:14):
Of course he did.
Speaker 2 (23:15):
Whether that story is true or not. I don't know,
but he told he told someone about it. He said,
don't worry if anything goes south. I've got money stashed
away in different places, including a bunch of myth in
a cemetery. I'm not sure the FBI knew about that
before my story, but they do now. I'm not sure
if there's been any exhumations since then.
Speaker 1 (23:32):
So listeners, hurry before the FBI takes this up. There's
a half a million dollars worth of math in the
desert somewhere.
Speaker 2 (23:39):
It's pretty wild.
Speaker 1 (23:40):
So how does he get busted?
Speaker 2 (23:41):
Yeah, so like after you know, a fairly long, intensive investigation,
like one hundred and seventy vehicles stream out towards DC
Solar headquarters.
Speaker 1 (23:51):
One hundred and seventy's a lot.
Speaker 2 (23:53):
Yeah, And you know, they go to his house and
they go to DC Solar headquarters. They do have to
knock down the door at Jeff Karpov's house. I think
they had to had to be a bit of a surprise.
There were some precautions they had to take. There was
a swat team.
Speaker 1 (24:08):
And what do they find that.
Speaker 2 (24:09):
They find a lot of cash, like how much cash?
Like I think in Jeff's safe they found like one
point seven million dollars.
Speaker 1 (24:16):
What does it look like? I can't picture like how
big a pile that is.
Speaker 2 (24:20):
I think it's like a Scrooge mcdoug level of cash.
Speaker 1 (24:24):
And that's his emergency running away to Saint KITT's money.
Speaker 2 (24:27):
Yeah, I think it's part of his go bag of like, okay,
if I need to get out of here. And the
irony is that, like he could have left earlier. He
probably could have fled the country earlier, but he doesn't
do it. And just three days before the raid, he's
wearing like a black sequin tuxedo of course, and partying
with Pitbull at the Fairmont Hotel at a holiday party.
(24:48):
He's having one more glorious day as Jeff motherfucking Carpoff
before it all comes crashing down.
Speaker 1 (24:53):
So does he wind up going to trial?
Speaker 2 (24:55):
No, he does not wind up going to trial. The
US Attorney's Office in the Eastern District of California basically
gets all of his underlings to flip on him. They
all basically make plea agreements. That's gonna land in prison time,
but less prison time than they than they get if
they went to trial.
Speaker 1 (25:10):
So a lot of people got to a lot of
people go to prison.
Speaker 2 (25:12):
Yeah, a lot of people say this is you can't
pull off a Ponzi scheme like this without a lot
of help. And they're basically corner. They have no where,
nowhere else to go, and they agree to plead guilty
to a number of felonies.
Speaker 1 (25:24):
How much time does he get?
Speaker 2 (25:26):
He gets some thirty years, which is a long time,
and his wife, paul ed she gets about eleven years
in total.
Speaker 1 (25:34):
How much did these people scam the government out of?
Speaker 2 (25:36):
They wind up scamming these companies and by extension, the
US taxpayer out of about a billion dollars.
Speaker 1 (25:43):
How does Jeff Karpoff compare to the other great scammers
of our time? The Bernie made Offs, the Elizabeth Holmes.
Speaker 2 (25:50):
What I like about Jeff Karpov is that he inverts
the traditional Ponzi story. A lot of times Ponzi schemes,
especially those involving like mom and pop investors, are due
by like a financial whiz kid who went to way
better schools, who has way better connections. This inverts that
by making the small town, high school educated little guy
who everyone's written off out maneuver. The likes of Warren Buffett,
(26:14):
the executives of US Bank Progressive Insurance. So it's a
kind of like it's a revenge of the little guy
against all these big companies who've been screwing the little
guy forever. And that's part of what attracted me to
the piece.
Speaker 1 (26:28):
Ario El Sabar, you wrote the billion dollar ponzi scheme
that hooked Warren Buffett and the US Treasury for the Atlantic,
and it's the story of the week and possibly also
the longest headline we've had on the show.
Speaker 2 (26:40):
Thanks so much for having Rachel.
Speaker 1 (26:43):
As we learned in episode thirty six, titled The Never
Ending Treasure Hunt, people love to look for bury treasure.
Ario revealed in his story that there is possibly five
hundred thousand dollars worth of methamphetamine under the ground in
a cemetery in Martinez, California. Listeners, the Martinez meth Treasure
(27:06):
Hunt is on. Whoever finds this chat will not only
have a lifetime supply of stimulants, but a special mention
at the end of a future episode, good luck and
made the best grave digger win. Pushkin Industry is not
responsible for any of all laws broken on the Martinez
Metz Treasure Hunt.
Speaker 3 (27:26):
At the end of the show.
Speaker 1 (27:27):
What's next for Joel Stein?
Speaker 3 (27:29):
Maybe he'll take a naper poker round online.
Speaker 1 (27:33):
Our show today was produced by Kate mccauliffe and Nishavenka.
It was edited by Lydia Jane Kott. Our engineer is
Amanda kay Way and our executive producer is Catherine Shiradah.
And our theme song was written and performed by Jonathan
Colton and a special thanks to my voice coach Vicky
Merrick and my consulting producer Laurence Alasnik. To find more
(27:55):
Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts, or
wherever you listen to your podcasts. I'm Joel Stein and
this is the story of the week.
Speaker 2 (28:07):
There's a very very obscure You're an exotic financial instrument.
Speaker 1 (28:11):
Uh oh, I like this.
Speaker 2 (28:13):
Yeah, I know it's scary. I'll try to make it
really simple, please. And it's called a tax equity fund.
And what a tax equity
Speaker 1 (28:20):
You've already lost me
Pushkin.
Speaker 2 (00:20):
I'm Ril Sabar, and I wrote the billion dollar ponzi
scheme that hooked Warren Buffett and the US Treasury for
the Atlantic magazine, and it's the story of the week.
Speaker 1 (00:30):
Back in two thousand and seven, I invited the actor
and environmentalist Ed Bagley Junior over to my house because
while there's tons of information online about making your home
more environmentally responsible, I can only hear things when a
celebrity says them to me. After running back to his
electric car for a compass, Baguley determined that my house's
(00:51):
south side was too well shaded for solar panels. I
was super disappointed to find out that a major adult
celebrity carries a compass in his car. I mean, is
he telling his agent to meet him at the new
restaurant at latitude twenty four point seven two six longitude
negative one eighteen point three six three to two. So
(01:14):
I got a pass from Bagley on the solar panels,
But that was actually my last house. A new one
seems a lot sunnier. But the problem is that everyone
who sells solar panels seems like they're working a scam.
I mean, I'm sure they're not. But also they totally are.
Speaker 3 (01:39):
Writing is hard. Who's got that kind of time when
you're already busy trying to be you all stand So
it turns on a mic. Maybe the twitles enough because
a journalist trand has got in that jule jib partitories
single story. Just listen to smart people speak.
Speaker 1 (01:58):
Conversation.
Speaker 3 (02:00):
Film information is the story of the week.
Speaker 1 (02:14):
Ariol Sabar wrote a profile for The Atlantic about a
guy named Jeff Karpoff who had no college education, no
backgrounds in engineering, but was able to create a multi
billion dollar solar panel company, well sort of, Ariel, Like
most of the great stories I tell yours is about
(02:34):
a car mechanic, and this mechanic, Jeff Karpoff, he fell
on some hard times, right so.
Speaker 2 (02:39):
Around two thousand and seven, you know, he was this
kind of pawnchey, thirty somethingter car mechanic living in this
small town of Martinez, California, which is kind of a
refinery town. And so he goes up there kind of
this working class household. He loves cars. He gets in
trouble a lot as a high schooler. He graduates from
high school and he starts trying to open his own garages.
(03:02):
It doesn't go particularly well for him, Like he opens one,
it just doesn't generate enough money. He's out of work.
He doesn't know what he's going to do with his future.
Speaker 1 (03:11):
But now his business is going under, So what is
he going to move on to?
Speaker 2 (03:14):
He basically like harvests a bunch of weed and he
tries to sell it through this marijuana dispensary in San Jose.
And I interviewed the founder of the dispenser and he's like, yeah,
I remember Jeff Karpuff. He came down. He tried to
interest me him in his weed and like we only
sell like really high grade stuff. And we took this
to this lab we used and it was like just terrible.
And he's like, there's no way we're going to carry
(03:35):
this stuff. And so once again Jeffkarpuff is sort of
faces another kind of business failure.
Speaker 1 (03:41):
So just so I can get a picture of this guy,
is he really charismatic? Like what is he like?
Speaker 2 (03:47):
He's unusual, He's he is a charming guy in a
kind of like a Bubba like way. He's like the
guy he's gonna throw his arm around your shoulder and say, hey, man,
you want to come and take a take a spin
in my like my mid nineteen seventy chevelle. Like he's
got these awesome muscle cars, but he's gonna feel like
you're kinda kind of feel cool around him. And you know,
he has a sort of ruddy face. He has a
big goatee. What's interesting about him is this kind of
(04:09):
working class charm. It's not a it's not a like
Wall Street charm.
Speaker 1 (04:14):
Yeah, it's not slick.
Speaker 2 (04:15):
It's not slick. It's kind of like Bo Duke and
the DUSA Hazard going yehah.
Speaker 1 (04:20):
All right. So in two thousand and seven, he's lost
his house, he's declared bankruptcy, he's had mechanic business has failed.
He apparently can't make decent weed. So what does he
turned out?
Speaker 2 (04:32):
So he gets this phone call from a former client
at his garage. His client's like, listen, man, I've got
some solar panels I've just come into I need someone
to help me sell them. And he's talking to one
of his neighbors, and one of his neighbors is like, yeah,
you know, I've always thought about putting solar panels on
my roof, but like, I only live here on the
(04:53):
weekends and I'm worried that these things are going to
get stolen off the roof of my house. So Jef
Karpoff being Jeff Karpoff, how's this kind of like aha
moment where he's like, wait a second, why do solar
panels have to be on the roof? Like what if
you put them on a car trailer? You can wheel
out into the sun when you're at your vacation home
so that you can power your home. But when you're
(05:13):
not there, you can put it in the garage, or
you can just like hitch it to the back of
your car and take with you wherever else you happen
to be going. So he goes out, he gets a patent. Oh,
the patent's title is literally as simple as trailer with
solar panels. Like it's just there's nothing else to it.
Speaker 1 (05:28):
He can do this because he's a mechanic.
Speaker 2 (05:29):
He's a mechanic, although he has no training in solar engineering.
And when I talk to his brother in law Bobby,
he's like, yeah, I didn't know anything about solar I
just figured it. Eh, It's like good thing they got
Google and all that.
Speaker 1 (05:41):
This is the Peter Teele argument against.
Speaker 2 (05:43):
College kind of Yeah, and so like these investors who
live not far from him, they get wind of Jeff
Karpoff building what sounds like solar on wheels. These entrepreneurs
sort of have Jeff wheel it out to like an
empty parking lot, and they're like kind of gobsmack pot.
It's so simple and it makes so much sense, Like
(06:04):
why should solar be fixed? Why can't we make something
that you get you can take on wheel to a
construction site, to a concert venue, to a movie set,
that can send renewable, clean power to users who need
power on the go. And they were thinking, Jeff, no, no,
this is not an anti theft device. This is mobile
solar power. This is like a disruptive generator. This is
(06:26):
disruptive technology. So he goes to Daytona Beach and he
basically pretends to be this like revolutionary in vendor who's
on the verge of releasing this like world changing solar product.
And he sort of calls up this real estate agent
and he says, I want you to show me a
bunch of mansions in Daytona Beach. I'm in the market now.
Of course, while he's doing this, he's basically broke. So
(06:48):
he goes to this real estate agent and he basically says, look, yeah,
I'm shopping for mansions. Oh, by the way, you must
have a lot of really you know, affluent clients. Is
there anyone in your world who you think might be
interested in investing in like a revolutionary solar product. And
this real estate agent is like, yeah, I actually know
this woman in New York and through her connections in
the world of New York find ants, Karpoff gets connected
(07:11):
with some of the top people in this very arcane
world of tax credit financing.
Speaker 1 (07:17):
So this company it's is it called DC.
Speaker 2 (07:20):
Solar, Yeah, it's called DC Solar.
Speaker 1 (07:22):
And so he finds out about these tax credits, which
how do those work?
Speaker 2 (07:26):
Yeah? So basically, since like the nineteen seventies oil crisis,
when you had like long lines of cars waiting at
gas stations to fill their tanks, Congress has tried to
encourage investment in alternative energy, and so they created something
called the Investment Tax Credit. Basically, what it does is
it gives businesses who buy solar equipment a tax credit.
(07:52):
And that tax credit, for a long time, used to
be just ten percent. In two thousand and five, Congress
tripled the incentive.
Speaker 1 (07:59):
Okay, so that makes it just thirty percent cheaper for
people to buy these things.
Speaker 2 (08:02):
Correct, the taxpayer is subsidizing the purchase essentially, and so
the tax credits become really attractive, such that like there
comes a moment when Karpoff realizes that what people are
really interested in is less my mobile solar device than
the tax credits they can get for buying them.
Speaker 1 (08:24):
But why they still have to pay seventy percent for
this overpriced thing.
Speaker 2 (08:27):
Ah, but they don't. Jeffkarpoff's scheme was. The brilliance of
his scheme is that he allowed buyers of his generators
to put just thirty percent.
Speaker 1 (08:37):
Down the full money they're getting back in gover Like.
Speaker 2 (08:39):
All you have to put down, you know, big corporation
who wants to buy my solar generator, is the thirty
percent that you're going to get back anyway from the
government at the end of the year. So it costs
you nothing. You just put down thirty percent. Now you'll
get it back at the end of the year. I,
Jeff Karpoff and DC Solar will loan you the remaining
seventy percent that you owe me, and you'll gradually pay
(09:00):
it back because I will be renting your generators for
you and getting lease money for doing that.
Speaker 1 (09:06):
So there are these other companies that are buying the
generator for only the thirty percent, which they get back
in tax credits.
Speaker 2 (09:12):
Correct.
Speaker 1 (09:13):
Jeff is then renting out to other the ones that
these new companies own. He's renting them out and giving
the profits on the rentals to this other company. What
kind of companies are these? They're buying these things that
they don't even bother physically owning. Jeff's just renting them
out to other people. What kind of companies make these purchases?
Speaker 2 (09:33):
These are like blue chip companies. These are like some
of the most stable, most sort of like venerable firms
in America, like who like Geico, like Progressive Insurance, like
Sherwin Williams, the bank company, Like.
Speaker 1 (09:47):
Why is the paint company buying generators that they're renting
out to other people.
Speaker 2 (09:51):
One of the things that all these companies have in
common is that they're not particularly exciting. They are not
pritically innovative. But what they do have is a very
predictable revenue stream every year, so they know that at
the end of the year, you're going to have like
this much profit, and they need to do as much
as they can to reduce their tax burden at the
end of the year. What a lot of these companies
do is they invest in these in these tax credit investments.
(10:13):
They give them tax breaks and a little bit of
additional income lease income usually.
Speaker 1 (10:18):
And what kind of numbers are we talking about, like
for Berkshire Hathaway or Sherwan Williams, how many generators are
they buying, how much they spending.
Speaker 2 (10:24):
Sherwan Williams was their first big buyer, and they bought
twenty nine million dollars worth, which for a guy who
was broke wor you know, high school educated mechanic, to
make that much money overnight was just like he just
was living large as anybody would.
Speaker 1 (10:37):
How does he react to that?
Speaker 2 (10:38):
Oh, he's he's over the moon. And almost immediately he
takes out like one point three million dollars cash and
buys himself a new house on the highest hill in
Martinez where he can basically look down and all the
people who thought he'd never amount to much suddenly it's like,
look at me now, man, look at me. Now, Look
what I did.
Speaker 1 (10:55):
He closes this huge twenty nine million dollar deal with
Sherwan Williams. He's getting deals from Geico. These are real companies.
They must be like, you know, kicking the tires on
this thing, right.
Speaker 2 (11:08):
They're not, you know, They're just happy to work. Have
their tax lawyers talk with Jeff Karpoff's tax lawyers, fill
out some forms, and in some cases there were site visits,
not many. They were really just interested in making sure
that they were following kind of the letter of the law.
Speaker 1 (11:24):
Did those site visits go okay?
Speaker 2 (11:26):
Yeah? I mean, Jef Karpoff was really good at making
investors believe that the generators they were looking at belong
to them. But what he'd actually do was he basically
sell the same generators over and over again to multiple buyers.
And I talked to one of Jeff Karpoff's salesmen at
the time, and he said, you know, I went in
there but right, you know, shortly before the Sherwood Williams inspection,
(11:49):
and I noticed that like the first row of generators
was fully assembled. They looked fine, but like the rows
behind them were not. And if you actually knew what
you were looking at, you realized that these things were
only like half built, and he'd hidden all the sort
of half assembled ones behind them fully assembled ones, and
apparently this was enough to fool the inspectors for Sherwin Williams.
Speaker 1 (12:12):
That's a pink company. They're detail oriented. You think, yeah,
hell me is he actually making versus what he's selling.
Speaker 2 (12:18):
So in the end, over a period of seven years,
he sells about seventeen thousand of these mobile solar generators.
In actuality, only six thousand have been manufactured, and investors
have no idea that they're basically all co owning the
same generator, yet receiving independent tax credits for the purchase
of all of them.
Speaker 1 (12:40):
When we come back, Jeff Karpoff's scheme runs into a
big problem. But first, our advertisers are going to tell
you about a great opportunity. All you have to do
is start a podcast and get three of your friends
who start a podcast, and get them to get three
of their friends to start a podcast. You can't lose.
(13:10):
Jeff Karpoff has gone from car mechanic to this solar
panel entrepreneur. How are the panels he's making if he
has no real engineering skill?
Speaker 2 (13:20):
When they work, they work, okay. The trouble is that
they weren't particularly reliable. They go back in some pretty
awful places fairly early on. So the power cut off
during the filming of Disney's Alexander and the Terrible, horrible,
no good, very.
Speaker 1 (13:33):
Good, Bad Day, although all too appropriate for that movie, all.
Speaker 2 (13:36):
Appropriate, it was definitely not a great day for Carpoff either.
There's another story we heard where Pink's trailer lost air
conditioning an MTV concert.
Speaker 1 (13:44):
Oh, I don't want that. You don't want an angry
Pink No, and I think with two exclamation points. Yeah.
Speaker 2 (13:49):
And so what Jeff Karpoff started doing was attaching one
hundred gallon diesel generators to the solar generator as a backup,
so that, I like, there was a breakdown or if
there was a string of cloudy days, you'd have a
diesel generator kick in, okay, And so they were. There
were some technical difficulties and the expanse the fact that
they were charging one hundred and fifty some dollar for these things,
(14:10):
or claimed to be able to get that much, meant
that there was no one really interested in buying them,
and also very very few people interested in leasing them
for the long term short term lease is sure, So
Jeff could not lock in those long term leases, and
those long term leases were what underpinned his business model.
So he can't find these leases, and that puts them
(14:31):
in a pickle because if he can't, if he can't
raise money for the leases, he can't pay back the
seventy percent. So he's in a pickle, and he has
a few options. At that point. He can either shut
down the business.
Speaker 1 (14:42):
I know enough about Jeff Karpoff now to know that
that's not even a consideration.
Speaker 2 (14:46):
Not a consideration. He wants to keep this great thing going.
He wants to keep this snowball rolling until it's larger
than life, and that's what he decides to do. He
and some of his associates have a meeting in twenty
twelve in which they decided, like, well, wait a second,
we were still able to convince a lot of these
blue chip companies to buy our solar devices as a
(15:07):
tax credit investment. So I think we can close like
a number of additional deals worth hundreds of hundreds of
million dollars. Now, what we're gonna do is we're gonna
take that money from new sales and not use them
to build new generators. But we're gonna give most of
that money, not all of it because we want some
for ourselves, but give most of that money to earlier investors.
And mate, we're gonna make them think that that money
(15:28):
is coming from the leases of their generators when it's not.
Speaker 1 (15:32):
Oh, that's just pure Ponzi scheme, right, pure ponzi.
Speaker 2 (15:35):
Yeah, okay, pure Ponzi with a twist, because in most
Ponzi schemes, you have to raise all of that money,
oh right, that you need to give to the to
the last guy. What's awesome about this or terrible is
that in this case, Jeff's load is lightened by the
fact that the American taxpayer is subsidizing it through the
tax credits, right, so he doesn't have to come up.
Speaker 1 (15:53):
With So it's a Ponzi scheme with a thirty percent discount, Yeah, exactly.
Speaker 2 (15:56):
So he gets a thirty percent right off on his
Ponzi on the amountain.
Speaker 1 (16:00):
That's not enough. You're still screwed eventually.
Speaker 2 (16:03):
But it buys you time.
Speaker 1 (16:05):
So he's taking in all this money through this Ponzi scheme.
Is he spending it? Like, what's he doing with all
this money?
Speaker 2 (16:11):
He's definitely spending it, you know, on on on muscle cars,
on luxury seats at the new NFL Stadium in Las
Vegas on a pro private jet service. But he's also
using it to kind of tell a story, which is interesting.
You know, he's basically surrounding himself with this sort of
like mythology that he is this embodiment of the American dream, right,
(16:35):
and so like when he would pull into too work
in the morning, like a hard rock version of the
Star Spangled banner would like thunder from the speakers of
his rent pickup Roman. He later installed this like giant,
like six panel photograph for the American flag on his
factory walls and claimed that his family said the Pledge
of Allegiance instead of grace at holiday meals. That's awesome
(16:55):
and one of my favorite moments was actually found in
an old episode of Counting Cars, which is a reality
TV show. Oh, he goes into like a custom car
place in Vegas and he says, I want a motorcycle
with an America theme. Paine job. He wants like the
statue of Liberty on the side of the tanks, like
waving the American flag, and he wants like like a
(17:16):
kind of an image of the Constitution on the back
of the bike that says, we the people.
Speaker 1 (17:21):
And you wrote this thing that blew me away about
him and cash at his meetings.
Speaker 2 (17:27):
Oh yeah, he loves cash. He loves cash. So he
would like come into the office like randomly with like
shopping bags full of cash. Like he just of no
discernible provenance, but he'd come in with like bags of cash,
walk through the accounting department, and you can imagine their orror,
like unaccounted for cash if you're a professional accounting department.
He's like, hey, guys, sid what I got. He'd open
(17:48):
up his plastic bag. He's like, there's two hundred and
fifty thousand dollars of cash in this bag, and I
got another guy who had spoke to you. He remembered
walking past his office one day and noticing that Jeff
had his like giant cash safe open and he had
just this huge pile of cash on his desk. It
was like a pile so large that if two people
were sitting on opposite sides of the desk, they wouldn't
(18:09):
have been able to see each other. And he would
do things too to make people just feel like super
lucky to work for him. So at the end of
like all hands business meetings, which were held once a month.
He would reach into his pocket pull out like a
giant wat of cash, and he'd go around the room
asking each of his employees to guess how much cash
was in his fist, and whatever employee came closest to
(18:31):
guessing it, some would get the cash. And it was fun.
It was like you were in a casino, like you might.
You might be this working class guy putting together generators
all day. But guess what if you guess that he
had three thousand dollars in his hand, That money was
yours to take home and do what you wanted. And
the other thing he spent his money on a really
really big parties. Now d C Solar at its largest
(18:51):
had like maybe one hundred employees, but he would show
throw these lavish Christmas parties at the Fairmount Hotel, which
one of the nicest hotels in San Francisco. And he's
paying for live private performances by like the pop band
Sugar Ray, by the rapper Pitbull, by the country band
Big and Rich, just for his employees, with like elaborate
(19:12):
light shows, go go dancers, full video production for one
hundred employees.
Speaker 1 (19:17):
How does he show off in front of his employees.
Speaker 2 (19:19):
At some point I wasn't deftly sure when he comes
up with this nickname for himself, which is that he's
now he's no longer just Jeff Karpoff, He's Jeff motherfucking Carpoff.
Becomes such a well known acronym, he's just basically abbreviates
it to JMFC. So like he would have like JMFC
emblazoned on I don't know hats, and also on his
parking space outside of work would say JMFC. He would
(19:42):
openly refer to himself at these holiday parties as Jeff
motherfucking Karpoff. So he loved like sort of like basking
in the limelight of his success. But he also, I
think was smart about it, because if you're running a
criminal scheme, your employees should probably have having some doubts
and some questions, but you didn't need to make them
have such a great time that they're like, you know what,
I don't need to look too closely at whether these
(20:04):
generators work. So he's given them a great time.
Speaker 1 (20:07):
No, it's the opposite. He's got cash everywhere. It's like scarface.
I would definitely question this, Okay, are investors at all
starting to catch on.
Speaker 2 (20:15):
They are eventually starting to develop some suspicions, and I
think you know there is word does start to leak
that the IRS has begun audits because the numbers don't
really work. The IRS has to be sure if you're
claiming a forty five thousand dollars tax credit on one
hundred and fifty thousand dollars purchase, the RS wants to
(20:35):
be sure that the thing you're selling is actually worth
one hundred and fifty thousand dollars. So the IRS starts
looking at, well, how much are these things actually worth?
And once they actually do an audit, they decide that
these devices aren't worth one hundred and fifty thousand dollars.
They're worth thirteen.
Speaker 1 (20:48):
Thousand oh so not even close, not even close.
Speaker 2 (20:51):
Yeah.
Speaker 1 (20:52):
So, even while the IRS is investigating, is the Obama
administration still into this company and giving them all these
tax breaks.
Speaker 2 (21:00):
THEBOMA administration is certainly interested interested in combating climate change
and one of the initiatives that they that they launch
is this program called the Smarts City Challenge, And so
amazingly like DC Solar gets chosen to be among the
companies that are part of this smart city challenge, and so.
Speaker 1 (21:16):
Shouldn't the irs have warned them not to put them on.
Speaker 2 (21:19):
I'm not really sure how those kinds of communications happen.
Speaker 1 (21:22):
So now that the walls are kind of closing again,
they're running out of time, how do they react?
Speaker 2 (21:28):
So Jeff and his wife have kind of really different reactions.
Like Jeff Karpoff's still like outwardly seems to be having
the time of his life. But Paulette, who's kind of
behind the scenes, who's helping run the company, she has
to do kind of all the dirty work in the
sense of like making sure that everybody stays in line.
The Carpoffs actually installed dozens of these surveillance cameras around
(21:50):
their office and shop floor, and Paullette would like look
at all the feeds from these cameras, which played on
like a really big TV screen in her office, So
like she was constantly looking at like who's going into
what office? Like why is that person spending so much
time in the bathroom? That's that's suspicious. She was sort
of short women, but she was very sort of powerful
(22:11):
within the company, and the employees lived in fear of her.
And she also apparently had this plaque on her desk
that said, I'll be nicer if you'll be smarter, and
that persona was amplified by these two large dogs Belgian mellanoise,
one named Diesel interesting, the other food which I think
means crazy in French. That one of them was trained
to attack. There's like a level three attack dog. I
(22:33):
forget what the terminology is. So you have this really
like good cop bad cop thing happening between Jeff, who's
like the fun guy I always joke in handing out
cash to Paullette, who's like really anxiously trying to hold
everything together behind the scenes.
Speaker 1 (22:46):
So the Carbovs know that they are on a limited
amount of time with this Ponzi scheme, or how are
they going to deal with this?
Speaker 2 (22:53):
They start moving money overseas into offshore accounts. They also
buy kind of a mansion on the Caribbean island nation,
at the Caribbean nation of Saint Kitts and Nevis. One
of the contingency plans that he claimed to have made
was that he claimed to have buried a half a
million dollars worth of math at a cemetery, and Martinez.
Speaker 1 (23:14):
Of course he did.
Speaker 2 (23:15):
Whether that story is true or not. I don't know,
but he told he told someone about it. He said,
don't worry if anything goes south. I've got money stashed
away in different places, including a bunch of myth in
a cemetery. I'm not sure the FBI knew about that
before my story, but they do now. I'm not sure
if there's been any exhumations since then.
Speaker 1 (23:32):
So listeners, hurry before the FBI takes this up. There's
a half a million dollars worth of math in the
desert somewhere.
Speaker 2 (23:39):
It's pretty wild.
Speaker 1 (23:40):
So how does he get busted?
Speaker 2 (23:41):
Yeah, so like after you know, a fairly long, intensive investigation,
like one hundred and seventy vehicles stream out towards DC
Solar headquarters.
Speaker 1 (23:51):
One hundred and seventy's a lot.
Speaker 2 (23:53):
Yeah, And you know, they go to his house and
they go to DC Solar headquarters. They do have to
knock down the door at Jeff Karpov's house. I think
they had to had to be a bit of a surprise.
There were some precautions they had to take. There was
a swat team.
Speaker 1 (24:08):
And what do they find that.
Speaker 2 (24:09):
They find a lot of cash, like how much cash?
Like I think in Jeff's safe they found like one
point seven million dollars.
Speaker 1 (24:16):
What does it look like? I can't picture like how
big a pile that is.
Speaker 2 (24:20):
I think it's like a Scrooge mcdoug level of cash.
Speaker 1 (24:24):
And that's his emergency running away to Saint KITT's money.
Speaker 2 (24:27):
Yeah, I think it's part of his go bag of like, okay,
if I need to get out of here. And the
irony is that, like he could have left earlier. He
probably could have fled the country earlier, but he doesn't
do it. And just three days before the raid, he's
wearing like a black sequin tuxedo of course, and partying
with Pitbull at the Fairmont Hotel at a holiday party.
(24:48):
He's having one more glorious day as Jeff motherfucking Carpoff
before it all comes crashing down.
Speaker 1 (24:53):
So does he wind up going to trial?
Speaker 2 (24:55):
No, he does not wind up going to trial. The
US Attorney's Office in the Eastern District of California basically
gets all of his underlings to flip on him. They
all basically make plea agreements. That's gonna land in prison time,
but less prison time than they than they get if
they went to trial.
Speaker 1 (25:10):
So a lot of people got to a lot of
people go to prison.
Speaker 2 (25:12):
Yeah, a lot of people say this is you can't
pull off a Ponzi scheme like this without a lot
of help. And they're basically corner. They have no where,
nowhere else to go, and they agree to plead guilty
to a number of felonies.
Speaker 1 (25:24):
How much time does he get?
Speaker 2 (25:26):
He gets some thirty years, which is a long time,
and his wife, paul ed she gets about eleven years
in total.
Speaker 1 (25:34):
How much did these people scam the government out of?
Speaker 2 (25:36):
They wind up scamming these companies and by extension, the
US taxpayer out of about a billion dollars.
Speaker 1 (25:43):
How does Jeff Karpoff compare to the other great scammers
of our time? The Bernie made Offs, the Elizabeth Holmes.
Speaker 2 (25:50):
What I like about Jeff Karpov is that he inverts
the traditional Ponzi story. A lot of times Ponzi schemes,
especially those involving like mom and pop investors, are due
by like a financial whiz kid who went to way
better schools, who has way better connections. This inverts that
by making the small town, high school educated little guy
who everyone's written off out maneuver. The likes of Warren Buffett,
(26:14):
the executives of US Bank Progressive Insurance. So it's a
kind of like it's a revenge of the little guy
against all these big companies who've been screwing the little
guy forever. And that's part of what attracted me to
the piece.
Speaker 1 (26:28):
Ario El Sabar, you wrote the billion dollar ponzi scheme
that hooked Warren Buffett and the US Treasury for the Atlantic,
and it's the story of the week and possibly also
the longest headline we've had on the show.
Speaker 2 (26:40):
Thanks so much for having Rachel.
Speaker 1 (26:43):
As we learned in episode thirty six, titled The Never
Ending Treasure Hunt, people love to look for bury treasure.
Ario revealed in his story that there is possibly five
hundred thousand dollars worth of methamphetamine under the ground in
a cemetery in Martinez, California. Listeners, the Martinez meth Treasure
(27:06):
Hunt is on. Whoever finds this chat will not only
have a lifetime supply of stimulants, but a special mention
at the end of a future episode, good luck and
made the best grave digger win. Pushkin Industry is not
responsible for any of all laws broken on the Martinez
Metz Treasure Hunt.
Speaker 3 (27:26):
At the end of the show.
Speaker 1 (27:27):
What's next for Joel Stein?
Speaker 3 (27:29):
Maybe he'll take a naper poker round online.
Speaker 1 (27:33):
Our show today was produced by Kate mccauliffe and Nishavenka.
It was edited by Lydia Jane Kott. Our engineer is
Amanda kay Way and our executive producer is Catherine Shiradah.
And our theme song was written and performed by Jonathan
Colton and a special thanks to my voice coach Vicky
Merrick and my consulting producer Laurence Alasnik. To find more
(27:55):
Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts, or
wherever you listen to your podcasts. I'm Joel Stein and
this is the story of the week.
Speaker 2 (28:07):
There's a very very obscure You're an exotic financial instrument.
Speaker 1 (28:11):
Uh oh, I like this.
Speaker 2 (28:13):
Yeah, I know it's scary. I'll try to make it
really simple, please. And it's called a tax equity fund.
And what a tax equity
Speaker 1 (28:20):
You've already lost me
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.