“I want the Constitution on the back fender.”
May 15, 2023 7:45 AM   Subscribe

It’s hard to know why he didn’t flee earlier. He had told a colleague that he was scared of flying over oceans. But another fear may have been stronger: Running would destroy the fantasy that had turned him from local screwup into local hotshot. Just three days before the raids, he was wearing black sequins and partying with Pitbull at the DC Solar holiday party, as if being Jeff “Mother Fuckin’ ” Carpoff for one more night trumped the grubby unknowns of a lifetime on the run. from The Billion-Dollar Ponzi Scheme That Hooked Warren Buffett and the U.S. Treasury [The Atlantic; ungated]
posted by chavenet (35 comments total) 15 users marked this as a favorite
 
a car trailer decked with solar panels and a heavy battery

I'm mildly flabbergasted that anyone thought that that was a unique enough idea that they'd start throwing money at him. I mean, could you even patent that?
posted by Halloween Jack at 8:17 AM on May 15, 2023 [3 favorites]


I'm mildly flabbergasted that anyone thought that that was a unique enough idea that they'd start throwing money at him. I mean, could you even patent that?

AT&T (Bell Labs) used to hold the patent on several different ways to shuffle cards.
posted by Tell Me No Lies at 8:21 AM on May 15, 2023 [6 favorites]


Given the general outcomes of American capitalism, I wonder for how many people this guy was truly living the American Dream?
posted by Tell Me No Lies at 8:23 AM on May 15, 2023 [1 favorite]


It gives fresh meaning to the term late capitalism.
posted by Brian B. at 8:24 AM on May 15, 2023 [1 favorite]


Carpoff obtained two patents, for the trailer and the tower, and from reading the two independent claims in the patent for the trailer, I would venture to guess that the part the examiner found hard to make obvious was the folding of the panels so the solar reception surfaces were facing each other when stored.
posted by channaher at 8:47 AM on May 15, 2023 [1 favorite]


Karmann’s newfound social status was “probably the biggest reason … I was so willing to go along with stuff I should have walked away from,” he told me this past September, by phone from federal prison.

That is one well-constructed sentence.

On the one hand, these guys are all obvious shitheels. On the other hand, you can't cheat an honest man, and it's pretty clear that many of the marks held their noses when things started smelling fishy.

Anyway, I'm sure he doesn't, but I do sort of hope he has that half a million in meth buried in the cemetery. For the lulz.
posted by uncleozzy at 8:48 AM on May 15, 2023 [2 favorites]


Oh man, I read this. Perpetual motion machines all the way down.

I felt a squiggle of unpleasant gratification at the idea of the hardass boss with the I'LL BE NICER IF YOU'LL BE SMARTER sign going to prison.
posted by Countess Elena at 8:56 AM on May 15, 2023 [8 favorites]


On the other hand, you can't cheat an honest man

That is a statement made up by con men to justify themselves. Honest men are scammed every day by unscrupulous predators.

Unless you're suggesting that all the people he (or Bernie Madoff) took money from were dishonest, in which case I don't know what to tell you.
posted by Tell Me No Lies at 8:58 AM on May 15, 2023 [20 favorites]


30 years seems like an awfully draconian sentence. But perhaps I'm overly swayed by the seedy and outrageous romance of Carpoff's success.
posted by plonkee at 8:59 AM on May 15, 2023 [3 favorites]


Unless you're suggesting that all the people he (or Bernie Madoff) took money from were dishonest

Yep, that’s exactly what I meant, and not what I said in the rest of that sentence. Thanks for the good-faith reading!
posted by uncleozzy at 9:20 AM on May 15, 2023 [5 favorites]


Stories like this make me think the Republicans(*) have a point. I'm 100% in favor of generous tax subsidies to encourage renewable energy and help fight global warming. But in this case the tax code has some stupid loophole where a guy "invented" a solar panel system when really what he invented was a way to game the tax code. (The Ponzi part comes later in the story). Creating tax benefits is hard; you have to ensure you're incentivizing the outcome you want and not a scam like this. Clearly the US government failed in this case.

For another version of this kind of scam, see the 2017 Tesla battery swap. They demonstrated "recharging" a car by swapping in a new battery and thereby qualified themselves for $$$MMM worth of ZEV tax credits. They swapped exactly one battery, once, at a temporary facility powered by a diesel generator. Tesla no longer says they'll do battery swaps. California got played.

The stakes are only getting higher. Global warming is a bigger crisis than ever and demands government-scale action. Biden's primary accomplishment in office is the so-called Inflation Reduction Act, which is mostly a massive subsidy for technologies to fight global warming. It's essential! It's vital!

But it's also important that the $300B - $1.2T that we're investing be spent well. So that it actually fights global warming. And not, say, diesel generators towed on the back of a broken portable solar trailer. And so that it's fundamentally fair, so that it and efforts like it continue to get political approval.

(*) not really, the Republicans are dominated by fascism. But I do wish the other political party would spend a little more time talking about effective governance.
posted by Nelson at 9:25 AM on May 15, 2023 [14 favorites]


On the other hand, you can't cheat an honest man

This is literally (and I do mean literally) the logic a father of a high school classmate of mine used when explaining (to the cops) why he'd take money for alignments/oil changes/tire rotations/etc at his auto shop and then just not perform any of the services the customer gave him money for. Fortunately for everyone affected by his fraud, the Los Angeles County Court system and the jury did not agree with you.
posted by Back At It Again At Krispy Kreme at 9:36 AM on May 15, 2023 [21 favorites]


The chicken and egg problem of weather regulations need to be written to avoid scammers, or whether regulators need to have the resources and capacity to detect the scammers, or whether scammers are hiring lobbyists to write the regulations that allow them through straddles both sides of the aisle.
posted by Jon_Evil at 9:36 AM on May 15, 2023 [5 favorites]


Yep, that’s exactly what I meant, and not what I said in the rest of that sentence. Thanks for the good-faith reading!

You said that you can’t cheat an honest man in a thread that is literally about presumably honest people being scammed out of just short of a billion dollars. I thought maybe you had considered the implications of your statement. Sorry!
posted by Tell Me No Lies at 9:48 AM on May 15, 2023 [3 favorites]


I would argue that fraud and cheat have two very different contexts. Fraud is what we see in the “I’m just not going to do that work but charge them for it lol”, and that definitely gets anyone.

Cheating is when you’re playing a game. And you knew (or convinced yourself that you knew) the rules when you walked up to the table and could come out on top. But there were either rules that you didn’t know about or the game was a con. I don’t think the players of Madoff’s game were entirely innocent, though the people impacted by the fraud without having been standing at the table certainly were.
posted by Slackermagee at 10:05 AM on May 15, 2023 [3 favorites]


he was wearing black sequins and partying with Pitbull at the DC Solar holiday party

I skimmed this post and thought it was Warren Buffet wearing the sequins and partying with Pitbull. The actual story is still pretty interesting even after that initial disappointment wore off, though.
posted by col_pogo at 10:15 AM on May 15, 2023 [10 favorites]


On the other hand, you can't cheat an honest man

That is a statement made up by con men to justify themselves. Honest men are scammed every day by unscrupulous predators.


Hey now, you're both right!

Honest people are indeed scammed every day. Honest people go into everyday transactions with supposed "experts" with good faith and little if any way of knowing whether the "Expert" performed their end of the bargain until it's too late. Honest people are intimidated by scammers pretending to positions of authority. Honest people have their generosity preyed upon. There are lots of ways to cheat honest people.

But the phrase "you can't cheat an honest man" refers to specific types of cons for which, I'd argue, this fits the bill. The "hey lemme get you something for nothing" cons, or the ones based on letting the mark feel like their getting one over on the scammer. (I might be wrong, but I believe this "confidence" is where the term "confidence scheme" is derived.)

Sherwin-Williams was told that they were getting tax credits for nothing, to be followed by (if I understand the article) lease revenue on the generators once the loans were paid off. ISC was getting roughly double in sponsorship revenue what they were paying for generators (which didn't exist.) The fact that their "due diligence" didn't raise enough red flags (and that Geico's due diligence did raise red flags, but DC Solar managed to get the deal through anyway) says a lot about how much these companies were willing to overlook when it came to free money. (Geico's case is a little iffier, of course. The red flags arose after it may well have been too late to realistically get out of the deal, and Buffett, whose level of direct involvement is unclear, was bullish on investing in solar power generally, which it's hard for me to blame him for.)

Put another way: the IRS was looking into this almost immediately by IRS standards. Sherwin-Williams was just seeing free money. And it's a corporation's job to try to find free money, but that's an inherently dishonest incentive.

Also, uncleozzy's original statement was referring to one of the "mopes" who signed on for plainly fraudulent activities at DC Solar because it granted him the life he'd always wanted. His dishonesty is pretty unquestionable here (as evidenced by his quote.)

That said, there are obviously innocent victims here. Aside from the defrauded taxpayers and the environment at large, and the folks employed by a vaporware company making huge promises of future riches while Paulette created an abusive workplace environment so Jeff could play "good cop," there are the folks who actually rented the trailers. Film productions paying way more than what should be reasonable costs for green generators is something they do because they want to actually get in on green technology - whatever sound issues diesel generators may cause would not be offset by a little less time spent in post on audio - and those productions were getting stalled out for their troubles, which is hugely expensive. Maybe not a huge deal in the grand scheme of things, but just saying that there were definitely good-faith victims involved here.

Just not, from the looks of it, any of the folks now serving sentences for this.
posted by Navelgazer at 10:30 AM on May 15, 2023 [12 favorites]


All that said, there's also a great bit in Terry Pratchett's "Going Postal" (recently covered on Fanfare!) where the Golem assigned to watch over con-man protagonist Moist von Lipwig shoots down his "can't cheat an honest man" justification for his actions, going over the outward ripples and ramifications of his schemes upon not just his marks but the people in his marks' lives, and calculates his actions as adding up to something like 2.3 murders in total. Dominoes rarely stop falling with the "guilty."
posted by Navelgazer at 10:36 AM on May 15, 2023 [7 favorites]


This is literally (and I do mean literally) the logic a father of a high school classmate of mine used when explaining (to the cops) why he'd take money for alignments/oil changes/tire rotations/etc at his auto shop and then just not perform any of the services the customer gave him money for.

No, no, no! You can't con an honest man. Con games are designed to rope in someone who thinks they're getting something for nothing.

You can absolutely steal from an honest man. That part's not hard at all.
posted by Naberius at 10:52 AM on May 15, 2023 [26 favorites]


I just remember in the early 80’s, a bunch of newly rich people at Apple were investing in those giant windmills to generate power. But… When you drove through the Altamont pass on 580, most of the many, many windmills there didn’t operate. Instead of electricity, they generated tax write-offs. Since then I’ve been very suspicious of green energy investments.
posted by njohnson23 at 10:52 AM on May 15, 2023 [4 favorites]


If generators went unused, the IRS could bar buyers from claiming the solar tax credits. And if the IRS barred the credits, DC Solar would lose the only thing anyone seemed interested in.

Probably the least of their worries, because the IRS is historically terrible at actually doing even the slightest bit of diligence on that claim. A true story: I audited a class on public policy at my university several years ago, and one of our assignments was to pick and analyze an extant piece of policy with regard to how well the incentives matched desired goals in both theory and practice. I, being a big supporter of green initiatives, picked the 30% residental energy tax credit, expecting a mixed but mostly positive report. My results were dismal, with the centerpiece of my anaylsis being a 2011 TIGTA report which indicated that in a random sample audited more deeply, at least 30% of claimants seemed to have no evidence of significant residential-solar installation. 5% were such transparent frauds that they didn't even own a home. There were a number of minors and incarcerated people who had claimed to have made such investments, despite the impossibility of doing so. None of those were actually caught by routine IRS return-validation procedures. It was such a horrifyingly badly-administered credit that my professor was actually rather stunned by the figures I cited.
posted by jackbishop at 11:04 AM on May 15, 2023 [11 favorites]


How much power do portable diesel generators produce? Could you get that much power from a portable solar panel system?
posted by Nancy Lebovitz at 11:35 AM on May 15, 2023 [1 favorite]


A portable diesel generator can generate an awful lot, depending on the size. This looks like a bankruptcy auction listing for some DC Solar gear? It mentions 7kW or 11kW generators and what looks like a trailer with 2.3kW of solar panels. You never run a diesel generator at full power but even at 50% the generator still generates more power than the solar. And of course the solar only generates peak power a couple hours a day. The 22kWh battery seems like a key art of this system too, at least if you care about using solar for real. The listing shows 2 inverters each rated for 5.7kW. All told this looks like a system intended to produce 2-5kW of power for a few hours.

The idea of a portable solar panel generator makes a lot of sense. As the article notes they didn't build particularly good ones. And the purpose of the business was the scam, not the generator.

(For comparison, my house in California has 11kW of solar panels on the roof and a 22kW propane generator; ~5x the solar capacity of one of these trailers. OTOH my house is not mobile.)
posted by Nelson at 11:48 AM on May 15, 2023 [4 favorites]


I feel like the process for any new tax legislation should include consultation from game theorists.

This feels like tragedy of the commons, late-stage-capitalism style.
posted by Dashy at 12:21 PM on May 15, 2023 [6 favorites]


Robbing Peter to pay Paul, rather.
posted by clew at 12:26 PM on May 15, 2023 [1 favorite]


I've installed 750kW generators mounted in 20' sea-cans which were trucked to site on trailers designed for sea-cans. I believe such equipment is readily available in sizes over 1GW.
posted by Mitheral at 12:29 PM on May 15, 2023 [2 favorites]


“I’m kind of entrepreneur,” he joked. “More manure than entre.”

He wasn't wrong.
posted by doctornemo at 12:42 PM on May 15, 2023 [1 favorite]


30 years seems like an awfully draconian sentence.

That's what you get when you commit the most heinous financial crime there is; ripping rich people off without being in, what George Carlin called, The Big Club.
posted by Reyturner at 5:23 PM on May 15, 2023 [8 favorites]


presumably honest people being scammed out of just short of a billion dollars

On the one hand, there does seem to be some out-and-out scammery here that would have caught even the honestest of folks. But I'm not really prepared to say that anyone who is in a position to be scammed out of that much money in the first place could be considered presumably honest.
posted by Not A Thing at 8:48 PM on May 15, 2023 [1 favorite]


at least 30% of claimants seemed to have no evidence of significant residential-solar installation

At least one major solar company's product was structured so that they owned the panels and only leased them to the homeowner. Then they basically sold the tax offsets to some funds offering investment by the class of rich corporations careless enough to have taxes to offset (fewer than you might think).
posted by praemunire at 10:23 PM on May 15, 2023 [1 favorite]


All told this looks like a system intended to produce 2-5kW of power for a few hours.

Just for comparison, you can carry a 2kW gasoline generator in one hand, and run it all day on a few gallons of fuel. At that point the DC Solar units are not even worth the fuel used to bring them to the site.

Even if these things had actually been produced as promised, at that capacity their main output for the users would have been greenwashing PR rather than electricity.
posted by hovey at 6:14 AM on May 16, 2023 [5 favorites]


I feel like the process for any new tax legislation should include consultation from game theorists.

In a sense, it does. They're just not on your side, if you know what I mean.
posted by pwnguin at 11:13 AM on May 16, 2023 [4 favorites]


Finally got around to reading this one. I recently rewatched Shattered Glass, and all I could think of is that it's too bad Stephen Glass wasn't around to cover this company while that scam was going down.

Jukt Environics
posted by morspin at 12:39 PM on May 17, 2023


I feel like the process for any new tax legislation should include consultation from game theorists.

Loopholes are rarely, if ever accidental. It's how the game is played.
posted by Dark Messiah at 2:28 PM on May 17, 2023


I feel like the process for any new tax legislation should include consultation from game theorists.

Well let me share with you Price Waterhouse Cooper tax consultant game theory Aussie style...
posted by srboisvert at 1:16 PM on May 21, 2023


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