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The final person has been sentenced in what the U.S. Department of Justice said is the biggest criminal fraud scheme in the history of the Eastern District of California, U.S. Attorney Eric Grant announced.
On Monday, Walnut Creek resident Ronald Roach, 59, was given five and a half years in federal prison for his role in the Benicia-based company DC Solar’s Ponzi scheme case that began in 2019.
Roach served as the company’s accountant and paid a central role in the fraud which has sent eight people to prison.
The crimes at DC Solar were sophisticated and complex but involved mobile solar generators (MSGs) that were mounted on trailers. DC Solar claimed they could provide emergency power to cellphone towers and lighting at sporting and other large events. DC Solar reeled in investors by pointing out that there were generous federal tax credits to be had due to the green energy the MSGs offered.
According to the DOJ, investors would buy the MSGs without ever taking possession of them, paying a percentage of the sale price and financing the balance with DC Solar. Then the investors leased the MSGs back to the company, which in turn purported to lease them to third parties. A portion of the lease revenue was supposed to go to the investors and a portion would be used to pay the investors’ debts to DC Solar.
Enter the Ponzi scheme. According to the DOJ, when the third-party leases generated little income, the company paid early investors with funds contributed by later investors. Generators were sold that didn’t even exist — at least half DC Solar claimed to have manufactured — making it look like MSGs existed in locations that they did not.
False financial statements and false lease contracts were created to keep the con going. Prosecutors determined that approximately 94 percent of the revenue claimed by DC Solar actually came from transfers of new investor cash.
Roach’s part in the scheme was to lie to investors and conceal the lack of any third-party revenue, prosecutors said.
Between March 2011 and Dec. 18, 2018, investors invested approximately $759.4 million, and several financial institutions and other investors transferred $152.7 million to DC Solar as part of related transactions for the purchase and lease of generators.
In total, DC Solar closed transactions with investors that contributed more than $912 million to purchase generators. Those transactions were purported to involve approximately 17,000 generators, at approximately $2.5 billion in value.
Other people sentenced in this case include owners Jeff and Paulette Carpoff, with Jeff receiving a 30-year sentence and a fine of $780.6 million. His wife received 11 years and three months in federal prison. Martinez resident Joseph Bayless received three years and a fine of $481.3 million for posing as a licensed engineer who signed off on the fraud.
— Story by Katy St. Clair, Bay City News
