Planet Ponzi

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From the November 2015 issue: James Fallows on Al Gore’s green-technology investment strategy and the fight against climate change As workers prepared for the inspection, a DC Solar sales executive named Brian Caffrey noticed that only the first, most visible rows of generators were fully assembled. The generators in the rows behind—some two-thirds of the total—were in various states of incompletion, though you might not notice if you didn’t know what to look for. Carpoff, Miranda learned, was in fact a collector of vintage gas-guzzlers. His showpieces included a Dodge Charger painted like The Dukes of Hazzard ’s General Lee and a 1978 Trans Am once owned by Burt Reynolds, a replica of the one the actor had driven in Smokey and the Bandit. The “T-Mobile” and ISC leases came together as DC Solar courted a whale. The insurance company Geico was owned by Berkshire Hathaway. Warren Buffett’s conglomerate was a seasoned user of tax credits and the fourth-largest company on the Fortune 500. John Miranda, a film and TV producer, joined the company as communications director because he believed in its potential to fight global warming. He began having doubts on his first day at headquarters. He’d driven into the lot to find one of Carpoff’s new muscle cars parked in a handicapped space, with a DC Solar employee changing the oil.

Ponzi Scheme That Hooked Wall Street The Billion-Dollar Ponzi Scheme That Hooked Wall Street

He claimed that he’d never had the brains for a tax-credit deal. He’d trusted the wrong people. He would have quit long ago had buyers cared about anything but their tax credits. “The bigger the deal, the easier they were to close,” Carpoff said. “It was the most bizarre thing.” This article originally misattributed a quote recalling a conversation with Jeff Carpoff about his possible contingency plans. The quote was from Brian Caffrey, not Mimi Morales. Three decades later, the story still resonated enough for him to want to share it with a banquet hall full of investors and employees. During that glorious ride, in that exhilarating stretch before anyone realized how many laws he was breaking, “I said, ‘Man, I got away with this,’ ” he reminisced. “I’m like, ‘Man, look at me.’ ”Artists peddling their work as NFTs may or may not care about this brutal calculus. But it makes particular nonsense of art that claims to spur the viewer to some kind of ecological consciousness. Consider, for example, John Gerrard’s recent announcement of an NFT for his video piece Western Flag – according to Gerrard an artwork that, in “flying the flag of our own self-destruction”, asks us “to consider our role in the warming of the planet and simultaneous desertification of once fertile lands”. By choosing to release a Western Flag NFT, though, it’s as if Gerrard and his gallerists have scrawled this statement across the land in letters of crude oil a mile from tip to tip, and then set them on fire … a thousand times over. Carpoff’s machine—a solar generator on wheels—was a sun-fueled alternative. He called it the Solar Eclipse. The design was so simple that it was a wonder no one seemed to have thought of it before.

Planet Ponzi - Planet Ponzi

One of the professionals in the room, a financial modeler named Gary Knapp, helped introduce Carpoff to the law firm Nixon Peabody, which had a well-known tax-credits practice. It was an arcane legal specialty centered on the special tax perks for industries, such as renewable power, whose growth served broader national interests. Again, Carpoff tried selling drugs. He pitched his weed to a medical-marijuana dispensary in Santa Cruz, but was turned away after lab tests found his cannabis to be extremely low-grade—“full of chemicals and shit,” the dispensary’s founder told me. Impressions mattered more than ever, because within months of the move, DC Solar had all but stopped manufacturing Solar Eclipses—even as it sold record numbers of the devices. If you could fool smart businesspeople with fake leases, how much harder could it be to sell them fake generators? The very thing that had wowed early investors—the generators’ portability—made their absence from any particular location easy to explain away. “Here one day, there the next” had basically been the sales pitch. Berger, Hugo (16 March 2012). "Planet Ponzi: Gloomy economic predictions". The National . Retrieved 28 January 2014.

This article was featured in One Story to Read Today, a newsletter in which our editors recommend a single must-read from The Atlantic , Monday through Friday. Sign up for it here. The lawyer for Milder and Nixon Peabody wrote to me that neither Milder nor the firm were aware of or complicit in any criminal fraud. Nixon Peabody, the lawyer said, served solely as tax counsel, providing opinions based on “an assumed set of facts” that were only later exposed as false or fraudulent. The lawyer added that the investors had access to at least as much information about the company’s performance. Though they deny any wrongdoing, Milder and Nixon Peabody agreed last year to pay the plaintiffs what court filings describe as a “substantial” undisclosed sum, a settlement larger than those paid, to date, by any of DC Solar’s other advisers. Caffrey angrily quit, but Carpoff had bigger problems: Almost no one, it turned out, had any real use for his generators.