California attorney convicted in DC Solar $1 billion Ponzi scheme gets 11 years in prison
By Tim Fang
A former San Francisco Bay Area attorney has been sentenced to more than a decade in prison after being convicted in connection with the $1 billion DC Solar Ponzi scheme, prosecutors said.
U.S. Attorney Eric Grant of the Eastern District of California announced Monday that 61-year-old Ari J. Lauer of Lafayette received a sentence of 11 years and five months.
Lauer, who was indicted in 2023, pled guilty in October to conspiracy to commit wire fraud and bank fraud, 12 counts of bank fraud and 10 counts of wire fraud affecting a financial institution, a week before a trial against him was scheduled to start.
Following his conviction, the California State Bar put Lauer on “involuntary inactive status”, making him ineligible to practice law in the state.
“Without the participation of Lauer, the DC Solar fraud scheme would never have been operational,” said Grant, who described the scheme as the largest ever criminal fraud in the district’s history. “As the only attorney involved, he should have been the first person to recognize the fraud and stop it. Instead, he was the last person to accept responsibility, only doing so on the eve of trial.”
Prosecutors said the Benicia-based company manufactured mobile solar generators that were mounted on trailers, which they claimed were used to provide emergency power to cellphone towers and lighting at sporting and other events. Generous federal tax credits due to the solar nature of the generators also provided a significant incentive for investors.
Jeff Carpoff, his wife Paulette Carpoff, and their co-conspirators solicited investors using a variety of fraudulent techniques between 2011 and 2018, prosecutors said. The husband and wife pled guilty in 2020.
Prosecutors said a key part of the fraud was that investors never took possession of the generators. DC Solar leased the generators back from investors and claimed to sublease to third parties to generate revenue.
After finding little demand for the generators, prosecutors said Lauer and the other coconspirators falsely represented to investors that the market was robust.
“The conspirators agreed to conceal that lack of third-party lease revenue from current and prospective investors, by, among other things, making periodic transfers of investor money from one account to another and misrepresent that the flow of funds was third-party lease revenue,” the U.S. Attorney’s Office said in a statement.
During the scheme, about $759.4 million was raised from investors, while financial institutions and other investors transferred $152.7 million to DC Solar for related transactions for purchasing and leasing generators, prosecutors said. The transactions purportedly involved 17,000 generators worth about $2.5 billion.
“Ari Lauer intentionally used his position as an attorney to provide the illusion of legitimacy to DC Solar’s fraudulent scheme. He hid uncomfortable truths behind claims of confidentiality while profiting from the arrangement and mistakenly assumed that law enforcement would not catch on,” said FBI Sacramento Special Agent in Charge Sid Patel.
Along with Lauer and the Carpoffs, five other defendants have been convicted and sentenced in connection with the DC Solar case.
Jeff Carpoff is currently serving a 30-year prison sentence had has been ordered to pay $790.6 million in restitution, while Paulette Carpoff is serving a sentence of 11 years and three months, prosecutors said.
