1 00:00:15,304 --> 00:00:15,824 Speaker 1: Pushkin. 2 00:00:20,344 --> 00:00:23,504 Speaker 2: I'm Ril Sabar, and I wrote the billion dollar ponzi 3 00:00:23,504 --> 00:00:26,424 Speaker 2: scheme that hooked Warren Buffett and the US Treasury for 4 00:00:26,504 --> 00:00:29,184 Speaker 2: the Atlantic magazine, and it's the story of the week. 5 00:00:30,584 --> 00:00:33,304 Speaker 1: Back in two thousand and seven, I invited the actor 6 00:00:33,384 --> 00:00:37,184 Speaker 1: and environmentalist Ed Bagley Junior over to my house because 7 00:00:37,184 --> 00:00:40,384 Speaker 1: while there's tons of information online about making your home 8 00:00:40,464 --> 00:00:44,424 Speaker 1: more environmentally responsible, I can only hear things when a 9 00:00:44,464 --> 00:00:47,744 Speaker 1: celebrity says them to me. After running back to his 10 00:00:47,864 --> 00:00:51,664 Speaker 1: electric car for a compass, Baguley determined that my house's 11 00:00:51,704 --> 00:00:55,704 Speaker 1: south side was too well shaded for solar panels. I 12 00:00:55,784 --> 00:00:59,384 Speaker 1: was super disappointed to find out that a major adult 13 00:00:59,424 --> 00:01:02,824 Speaker 1: celebrity carries a compass in his car. I mean, is 14 00:01:02,824 --> 00:01:04,784 Speaker 1: he telling his agent to meet him at the new 15 00:01:04,864 --> 00:01:09,744 Speaker 1: restaurant at latitude twenty four point seven two six longitude 16 00:01:09,824 --> 00:01:13,624 Speaker 1: negative one eighteen point three six three to two. So 17 00:01:14,264 --> 00:01:16,544 Speaker 1: I got a pass from Bagley on the solar panels, 18 00:01:17,104 --> 00:01:20,304 Speaker 1: But that was actually my last house. A new one 19 00:01:20,344 --> 00:01:24,544 Speaker 1: seems a lot sunnier. But the problem is that everyone 20 00:01:24,584 --> 00:01:28,144 Speaker 1: who sells solar panels seems like they're working a scam. 21 00:01:28,624 --> 00:01:32,704 Speaker 1: I mean, I'm sure they're not. But also they totally are. 22 00:01:39,064 --> 00:01:42,224 Speaker 3: Writing is hard. Who's got that kind of time when 23 00:01:42,264 --> 00:01:45,464 Speaker 3: you're already busy trying to be you all stand So 24 00:01:45,664 --> 00:01:49,064 Speaker 3: it turns on a mic. Maybe the twitles enough because 25 00:01:49,104 --> 00:01:53,064 Speaker 3: a journalist trand has got in that jule jib partitories 26 00:01:53,864 --> 00:01:57,224 Speaker 3: single story. Just listen to smart people speak. 27 00:01:58,984 --> 00:01:59,624 Speaker 1: Conversation. 28 00:02:00,024 --> 00:02:03,584 Speaker 3: Film information is the story of the week. 29 00:02:14,344 --> 00:02:16,824 Speaker 1: Ariol Sabar wrote a profile for The Atlantic about a 30 00:02:16,824 --> 00:02:20,584 Speaker 1: guy named Jeff Karpoff who had no college education, no 31 00:02:20,704 --> 00:02:24,664 Speaker 1: backgrounds in engineering, but was able to create a multi 32 00:02:24,784 --> 00:02:30,664 Speaker 1: billion dollar solar panel company, well sort of, Ariel, Like 33 00:02:30,904 --> 00:02:34,424 Speaker 1: most of the great stories I tell yours is about 34 00:02:34,424 --> 00:02:38,264 Speaker 1: a car mechanic, and this mechanic, Jeff Karpoff, he fell 35 00:02:38,304 --> 00:02:39,904 Speaker 1: on some hard times, right so. 36 00:02:39,904 --> 00:02:42,064 Speaker 2: Around two thousand and seven, you know, he was this 37 00:02:42,184 --> 00:02:46,024 Speaker 2: kind of pawnchey, thirty somethingter car mechanic living in this 38 00:02:46,104 --> 00:02:49,504 Speaker 2: small town of Martinez, California, which is kind of a 39 00:02:49,504 --> 00:02:52,744 Speaker 2: refinery town. And so he goes up there kind of 40 00:02:52,744 --> 00:02:55,184 Speaker 2: this working class household. He loves cars. He gets in 41 00:02:55,224 --> 00:02:57,424 Speaker 2: trouble a lot as a high schooler. He graduates from 42 00:02:57,464 --> 00:03:01,944 Speaker 2: high school and he starts trying to open his own garages. 43 00:03:02,424 --> 00:03:04,704 Speaker 2: It doesn't go particularly well for him, Like he opens one, 44 00:03:05,144 --> 00:03:08,384 Speaker 2: it just doesn't generate enough money. He's out of work. 45 00:03:08,424 --> 00:03:10,464 Speaker 2: He doesn't know what he's going to do with his future. 46 00:03:11,064 --> 00:03:13,384 Speaker 1: But now his business is going under, So what is 47 00:03:13,424 --> 00:03:14,144 Speaker 1: he going to move on to? 48 00:03:14,624 --> 00:03:17,344 Speaker 2: He basically like harvests a bunch of weed and he 49 00:03:17,344 --> 00:03:20,304 Speaker 2: tries to sell it through this marijuana dispensary in San Jose. 50 00:03:21,024 --> 00:03:23,304 Speaker 2: And I interviewed the founder of the dispenser and he's like, yeah, 51 00:03:23,304 --> 00:03:25,744 Speaker 2: I remember Jeff Karpuff. He came down. He tried to 52 00:03:25,744 --> 00:03:27,584 Speaker 2: interest me him in his weed and like we only 53 00:03:27,624 --> 00:03:30,104 Speaker 2: sell like really high grade stuff. And we took this 54 00:03:30,144 --> 00:03:32,864 Speaker 2: to this lab we used and it was like just terrible. 55 00:03:33,144 --> 00:03:35,104 Speaker 2: And he's like, there's no way we're going to carry 56 00:03:35,104 --> 00:03:38,584 Speaker 2: this stuff. And so once again Jeffkarpuff is sort of 57 00:03:39,184 --> 00:03:41,544 Speaker 2: faces another kind of business failure. 58 00:03:41,984 --> 00:03:44,344 Speaker 1: So just so I can get a picture of this guy, 59 00:03:44,504 --> 00:03:46,944 Speaker 1: is he really charismatic? Like what is he like? 60 00:03:47,144 --> 00:03:49,104 Speaker 2: He's unusual, He's he is a charming guy in a 61 00:03:49,184 --> 00:03:51,544 Speaker 2: kind of like a Bubba like way. He's like the 62 00:03:51,544 --> 00:03:54,184 Speaker 2: guy he's gonna throw his arm around your shoulder and say, hey, man, 63 00:03:54,224 --> 00:03:56,104 Speaker 2: you want to come and take a take a spin 64 00:03:56,144 --> 00:03:59,344 Speaker 2: in my like my mid nineteen seventy chevelle. Like he's 65 00:03:59,344 --> 00:04:02,024 Speaker 2: got these awesome muscle cars, but he's gonna feel like 66 00:04:02,064 --> 00:04:04,584 Speaker 2: you're kinda kind of feel cool around him. And you know, 67 00:04:04,664 --> 00:04:06,624 Speaker 2: he has a sort of ruddy face. He has a 68 00:04:06,624 --> 00:04:09,464 Speaker 2: big goatee. What's interesting about him is this kind of 69 00:04:09,504 --> 00:04:12,624 Speaker 2: working class charm. It's not a it's not a like 70 00:04:12,744 --> 00:04:13,944 Speaker 2: Wall Street charm. 71 00:04:14,144 --> 00:04:15,144 Speaker 1: Yeah, it's not slick. 72 00:04:15,344 --> 00:04:17,544 Speaker 2: It's not slick. It's kind of like Bo Duke and 73 00:04:17,584 --> 00:04:19,264 Speaker 2: the DUSA Hazard going yehah. 74 00:04:20,824 --> 00:04:23,384 Speaker 1: All right. So in two thousand and seven, he's lost 75 00:04:23,384 --> 00:04:27,624 Speaker 1: his house, he's declared bankruptcy, he's had mechanic business has failed. 76 00:04:27,944 --> 00:04:31,584 Speaker 1: He apparently can't make decent weed. So what does he 77 00:04:31,624 --> 00:04:32,064 Speaker 1: turned out? 78 00:04:32,264 --> 00:04:36,184 Speaker 2: So he gets this phone call from a former client 79 00:04:36,424 --> 00:04:40,144 Speaker 2: at his garage. His client's like, listen, man, I've got 80 00:04:40,144 --> 00:04:43,024 Speaker 2: some solar panels I've just come into I need someone 81 00:04:43,064 --> 00:04:46,344 Speaker 2: to help me sell them. And he's talking to one 82 00:04:46,384 --> 00:04:49,144 Speaker 2: of his neighbors, and one of his neighbors is like, yeah, 83 00:04:49,144 --> 00:04:51,464 Speaker 2: you know, I've always thought about putting solar panels on 84 00:04:51,464 --> 00:04:53,264 Speaker 2: my roof, but like, I only live here on the 85 00:04:53,264 --> 00:04:55,624 Speaker 2: weekends and I'm worried that these things are going to 86 00:04:55,664 --> 00:04:58,024 Speaker 2: get stolen off the roof of my house. So Jef 87 00:04:58,064 --> 00:05:01,104 Speaker 2: Karpoff being Jeff Karpoff, how's this kind of like aha 88 00:05:01,104 --> 00:05:04,144 Speaker 2: moment where he's like, wait a second, why do solar 89 00:05:04,184 --> 00:05:07,064 Speaker 2: panels have to be on the roof? Like what if 90 00:05:07,104 --> 00:05:09,624 Speaker 2: you put them on a car trailer? You can wheel 91 00:05:09,664 --> 00:05:11,624 Speaker 2: out into the sun when you're at your vacation home 92 00:05:11,704 --> 00:05:13,944 Speaker 2: so that you can power your home. But when you're 93 00:05:13,984 --> 00:05:16,064 Speaker 2: not there, you can put it in the garage, or 94 00:05:16,104 --> 00:05:17,904 Speaker 2: you can just like hitch it to the back of 95 00:05:17,904 --> 00:05:20,504 Speaker 2: your car and take with you wherever else you happen 96 00:05:20,544 --> 00:05:23,704 Speaker 2: to be going. So he goes out, he gets a patent. Oh, 97 00:05:23,744 --> 00:05:26,064 Speaker 2: the patent's title is literally as simple as trailer with 98 00:05:26,224 --> 00:05:28,504 Speaker 2: solar panels. Like it's just there's nothing else to it. 99 00:05:28,664 --> 00:05:29,904 Speaker 1: He can do this because he's a mechanic. 100 00:05:29,984 --> 00:05:33,184 Speaker 2: He's a mechanic, although he has no training in solar engineering. 101 00:05:33,224 --> 00:05:35,664 Speaker 2: And when I talk to his brother in law Bobby, 102 00:05:35,944 --> 00:05:38,304 Speaker 2: he's like, yeah, I didn't know anything about solar I 103 00:05:38,384 --> 00:05:39,984 Speaker 2: just figured it. Eh, It's like good thing they got 104 00:05:39,984 --> 00:05:40,784 Speaker 2: Google and all that. 105 00:05:41,944 --> 00:05:44,064 Speaker 1: This is the Peter Teele argument against. 106 00:05:43,744 --> 00:05:47,824 Speaker 2: College kind of Yeah, and so like these investors who 107 00:05:48,024 --> 00:05:51,144 Speaker 2: live not far from him, they get wind of Jeff 108 00:05:51,184 --> 00:05:56,304 Speaker 2: Karpoff building what sounds like solar on wheels. These entrepreneurs 109 00:05:56,304 --> 00:05:57,944 Speaker 2: sort of have Jeff wheel it out to like an 110 00:05:57,984 --> 00:06:01,064 Speaker 2: empty parking lot, and they're like kind of gobsmack pot. 111 00:06:01,144 --> 00:06:04,104 Speaker 2: It's so simple and it makes so much sense, Like 112 00:06:04,224 --> 00:06:07,384 Speaker 2: why should solar be fixed? Why can't we make something 113 00:06:07,384 --> 00:06:10,064 Speaker 2: that you get you can take on wheel to a 114 00:06:10,104 --> 00:06:14,224 Speaker 2: construction site, to a concert venue, to a movie set, 115 00:06:14,384 --> 00:06:18,424 Speaker 2: that can send renewable, clean power to users who need 116 00:06:18,464 --> 00:06:20,824 Speaker 2: power on the go. And they were thinking, Jeff, no, no, 117 00:06:20,904 --> 00:06:23,544 Speaker 2: this is not an anti theft device. This is mobile 118 00:06:23,584 --> 00:06:26,624 Speaker 2: solar power. This is like a disruptive generator. This is 119 00:06:26,664 --> 00:06:30,224 Speaker 2: disruptive technology. So he goes to Daytona Beach and he 120 00:06:30,304 --> 00:06:34,864 Speaker 2: basically pretends to be this like revolutionary in vendor who's 121 00:06:34,904 --> 00:06:39,104 Speaker 2: on the verge of releasing this like world changing solar product. 122 00:06:39,384 --> 00:06:41,984 Speaker 2: And he sort of calls up this real estate agent 123 00:06:42,024 --> 00:06:43,144 Speaker 2: and he says, I want you to show me a 124 00:06:43,144 --> 00:06:46,104 Speaker 2: bunch of mansions in Daytona Beach. I'm in the market now. 125 00:06:46,184 --> 00:06:48,824 Speaker 2: Of course, while he's doing this, he's basically broke. So 126 00:06:48,864 --> 00:06:51,304 Speaker 2: he goes to this real estate agent and he basically says, look, yeah, 127 00:06:51,304 --> 00:06:53,784 Speaker 2: I'm shopping for mansions. Oh, by the way, you must 128 00:06:53,824 --> 00:06:56,464 Speaker 2: have a lot of really you know, affluent clients. Is 129 00:06:56,464 --> 00:06:59,864 Speaker 2: there anyone in your world who you think might be 130 00:06:59,944 --> 00:07:03,384 Speaker 2: interested in investing in like a revolutionary solar product. And 131 00:07:03,424 --> 00:07:05,264 Speaker 2: this real estate agent is like, yeah, I actually know 132 00:07:05,424 --> 00:07:07,984 Speaker 2: this woman in New York and through her connections in 133 00:07:08,024 --> 00:07:11,104 Speaker 2: the world of New York find ants, Karpoff gets connected 134 00:07:11,104 --> 00:07:14,424 Speaker 2: with some of the top people in this very arcane 135 00:07:14,824 --> 00:07:17,064 Speaker 2: world of tax credit financing. 136 00:07:17,704 --> 00:07:20,344 Speaker 1: So this company it's is it called DC. 137 00:07:20,264 --> 00:07:22,704 Speaker 2: Solar, Yeah, it's called DC Solar. 138 00:07:22,784 --> 00:07:25,664 Speaker 1: And so he finds out about these tax credits, which 139 00:07:26,104 --> 00:07:26,784 Speaker 1: how do those work? 140 00:07:26,944 --> 00:07:30,944 Speaker 2: Yeah? So basically, since like the nineteen seventies oil crisis, 141 00:07:30,984 --> 00:07:32,944 Speaker 2: when you had like long lines of cars waiting at 142 00:07:32,984 --> 00:07:38,064 Speaker 2: gas stations to fill their tanks, Congress has tried to 143 00:07:38,184 --> 00:07:43,504 Speaker 2: encourage investment in alternative energy, and so they created something 144 00:07:43,544 --> 00:07:46,624 Speaker 2: called the Investment Tax Credit. Basically, what it does is 145 00:07:46,664 --> 00:07:51,744 Speaker 2: it gives businesses who buy solar equipment a tax credit. 146 00:07:52,024 --> 00:07:53,664 Speaker 2: And that tax credit, for a long time, used to 147 00:07:53,704 --> 00:07:57,104 Speaker 2: be just ten percent. In two thousand and five, Congress 148 00:07:57,424 --> 00:07:59,424 Speaker 2: tripled the incentive. 149 00:07:59,064 --> 00:08:01,304 Speaker 1: Okay, so that makes it just thirty percent cheaper for 150 00:08:01,344 --> 00:08:02,544 Speaker 1: people to buy these things. 151 00:08:02,544 --> 00:08:06,224 Speaker 2: Correct, the taxpayer is subsidizing the purchase essentially, and so 152 00:08:06,624 --> 00:08:12,024 Speaker 2: the tax credits become really attractive, such that like there 153 00:08:12,024 --> 00:08:15,264 Speaker 2: comes a moment when Karpoff realizes that what people are 154 00:08:15,344 --> 00:08:20,384 Speaker 2: really interested in is less my mobile solar device than 155 00:08:20,784 --> 00:08:24,384 Speaker 2: the tax credits they can get for buying them. 156 00:08:24,784 --> 00:08:26,824 Speaker 1: But why they still have to pay seventy percent for 157 00:08:26,864 --> 00:08:27,704 Speaker 1: this overpriced thing. 158 00:08:27,824 --> 00:08:31,744 Speaker 2: Ah, but they don't. Jeffkarpoff's scheme was. The brilliance of 159 00:08:31,784 --> 00:08:35,424 Speaker 2: his scheme is that he allowed buyers of his generators 160 00:08:35,664 --> 00:08:37,504 Speaker 2: to put just thirty percent. 161 00:08:37,184 --> 00:08:39,504 Speaker 1: Down the full money they're getting back in gover Like. 162 00:08:39,504 --> 00:08:41,824 Speaker 2: All you have to put down, you know, big corporation 163 00:08:41,864 --> 00:08:44,344 Speaker 2: who wants to buy my solar generator, is the thirty 164 00:08:44,384 --> 00:08:46,744 Speaker 2: percent that you're going to get back anyway from the 165 00:08:46,744 --> 00:08:48,664 Speaker 2: government at the end of the year. So it costs 166 00:08:48,704 --> 00:08:51,184 Speaker 2: you nothing. You just put down thirty percent. Now you'll 167 00:08:51,184 --> 00:08:53,104 Speaker 2: get it back at the end of the year. I, 168 00:08:53,264 --> 00:08:57,104 Speaker 2: Jeff Karpoff and DC Solar will loan you the remaining 169 00:08:57,424 --> 00:09:00,864 Speaker 2: seventy percent that you owe me, and you'll gradually pay 170 00:09:00,904 --> 00:09:04,344 Speaker 2: it back because I will be renting your generators for 171 00:09:04,424 --> 00:09:06,384 Speaker 2: you and getting lease money for doing that. 172 00:09:06,464 --> 00:09:08,624 Speaker 1: So there are these other companies that are buying the 173 00:09:08,704 --> 00:09:11,784 Speaker 1: generator for only the thirty percent, which they get back 174 00:09:11,784 --> 00:09:12,544 Speaker 1: in tax credits. 175 00:09:12,584 --> 00:09:12,904 Speaker 2: Correct. 176 00:09:13,104 --> 00:09:16,304 Speaker 1: Jeff is then renting out to other the ones that 177 00:09:16,304 --> 00:09:19,784 Speaker 1: these new companies own. He's renting them out and giving 178 00:09:20,544 --> 00:09:23,944 Speaker 1: the profits on the rentals to this other company. What 179 00:09:24,064 --> 00:09:27,184 Speaker 1: kind of companies are these? They're buying these things that 180 00:09:27,184 --> 00:09:30,424 Speaker 1: they don't even bother physically owning. Jeff's just renting them 181 00:09:30,424 --> 00:09:33,304 Speaker 1: out to other people. What kind of companies make these purchases? 182 00:09:33,664 --> 00:09:35,504 Speaker 2: These are like blue chip companies. These are like some 183 00:09:35,544 --> 00:09:39,264 Speaker 2: of the most stable, most sort of like venerable firms 184 00:09:39,504 --> 00:09:44,864 Speaker 2: in America, like who like Geico, like Progressive Insurance, like 185 00:09:44,904 --> 00:09:47,064 Speaker 2: Sherwin Williams, the bank company, Like. 186 00:09:47,544 --> 00:09:50,424 Speaker 1: Why is the paint company buying generators that they're renting 187 00:09:50,424 --> 00:09:51,304 Speaker 1: out to other people. 188 00:09:51,464 --> 00:09:53,304 Speaker 2: One of the things that all these companies have in 189 00:09:53,344 --> 00:09:56,024 Speaker 2: common is that they're not particularly exciting. They are not 190 00:09:56,104 --> 00:09:59,104 Speaker 2: pritically innovative. But what they do have is a very 191 00:09:59,144 --> 00:10:01,384 Speaker 2: predictable revenue stream every year, so they know that at 192 00:10:01,384 --> 00:10:03,104 Speaker 2: the end of the year, you're going to have like 193 00:10:03,384 --> 00:10:05,384 Speaker 2: this much profit, and they need to do as much 194 00:10:05,424 --> 00:10:07,664 Speaker 2: as they can to reduce their tax burden at the 195 00:10:07,744 --> 00:10:10,024 Speaker 2: end of the year. What a lot of these companies 196 00:10:10,064 --> 00:10:13,424 Speaker 2: do is they invest in these in these tax credit investments. 197 00:10:13,464 --> 00:10:15,624 Speaker 2: They give them tax breaks and a little bit of 198 00:10:15,664 --> 00:10:17,544 Speaker 2: additional income lease income usually. 199 00:10:18,144 --> 00:10:19,704 Speaker 1: And what kind of numbers are we talking about, like 200 00:10:19,704 --> 00:10:22,864 Speaker 1: for Berkshire Hathaway or Sherwan Williams, how many generators are 201 00:10:22,864 --> 00:10:23,864 Speaker 1: they buying, how much they spending. 202 00:10:24,064 --> 00:10:26,264 Speaker 2: Sherwan Williams was their first big buyer, and they bought 203 00:10:26,304 --> 00:10:28,904 Speaker 2: twenty nine million dollars worth, which for a guy who 204 00:10:28,984 --> 00:10:31,464 Speaker 2: was broke wor you know, high school educated mechanic, to 205 00:10:31,544 --> 00:10:34,664 Speaker 2: make that much money overnight was just like he just 206 00:10:34,864 --> 00:10:37,304 Speaker 2: was living large as anybody would. 207 00:10:37,384 --> 00:10:38,464 Speaker 1: How does he react to that? 208 00:10:38,824 --> 00:10:42,024 Speaker 2: Oh, he's he's over the moon. And almost immediately he 209 00:10:42,104 --> 00:10:44,584 Speaker 2: takes out like one point three million dollars cash and 210 00:10:44,584 --> 00:10:47,784 Speaker 2: buys himself a new house on the highest hill in 211 00:10:47,904 --> 00:10:50,024 Speaker 2: Martinez where he can basically look down and all the 212 00:10:50,024 --> 00:10:52,744 Speaker 2: people who thought he'd never amount to much suddenly it's like, 213 00:10:52,784 --> 00:10:54,744 Speaker 2: look at me now, man, look at me. Now, Look 214 00:10:54,784 --> 00:10:55,304 Speaker 2: what I did. 215 00:10:55,704 --> 00:10:58,864 Speaker 1: He closes this huge twenty nine million dollar deal with 216 00:10:58,904 --> 00:11:03,504 Speaker 1: Sherwan Williams. He's getting deals from Geico. These are real companies. 217 00:11:04,064 --> 00:11:06,784 Speaker 1: They must be like, you know, kicking the tires on 218 00:11:06,824 --> 00:11:07,384 Speaker 1: this thing, right. 219 00:11:08,024 --> 00:11:11,824 Speaker 2: They're not, you know, They're just happy to work. Have 220 00:11:12,104 --> 00:11:15,224 Speaker 2: their tax lawyers talk with Jeff Karpoff's tax lawyers, fill 221 00:11:15,264 --> 00:11:18,224 Speaker 2: out some forms, and in some cases there were site visits, 222 00:11:18,304 --> 00:11:21,184 Speaker 2: not many. They were really just interested in making sure 223 00:11:21,184 --> 00:11:24,504 Speaker 2: that they were following kind of the letter of the law. 224 00:11:24,904 --> 00:11:26,304 Speaker 1: Did those site visits go okay? 225 00:11:26,704 --> 00:11:29,224 Speaker 2: Yeah? I mean, Jef Karpoff was really good at making 226 00:11:29,744 --> 00:11:33,344 Speaker 2: investors believe that the generators they were looking at belong 227 00:11:33,424 --> 00:11:36,144 Speaker 2: to them. But what he'd actually do was he basically 228 00:11:36,984 --> 00:11:40,024 Speaker 2: sell the same generators over and over again to multiple buyers. 229 00:11:40,504 --> 00:11:43,624 Speaker 2: And I talked to one of Jeff Karpoff's salesmen at 230 00:11:43,664 --> 00:11:45,104 Speaker 2: the time, and he said, you know, I went in 231 00:11:45,144 --> 00:11:48,464 Speaker 2: there but right, you know, shortly before the Sherwood Williams inspection, 232 00:11:49,344 --> 00:11:53,224 Speaker 2: and I noticed that like the first row of generators 233 00:11:53,304 --> 00:11:57,144 Speaker 2: was fully assembled. They looked fine, but like the rows 234 00:11:57,144 --> 00:11:59,384 Speaker 2: behind them were not. And if you actually knew what 235 00:11:59,384 --> 00:12:01,864 Speaker 2: you were looking at, you realized that these things were 236 00:12:01,904 --> 00:12:05,024 Speaker 2: only like half built, and he'd hidden all the sort 237 00:12:05,064 --> 00:12:07,984 Speaker 2: of half assembled ones behind them fully assembled ones, and 238 00:12:08,024 --> 00:12:11,984 Speaker 2: apparently this was enough to fool the inspectors for Sherwin Williams. 239 00:12:12,024 --> 00:12:15,624 Speaker 1: That's a pink company. They're detail oriented. You think, yeah, 240 00:12:15,704 --> 00:12:17,984 Speaker 1: hell me is he actually making versus what he's selling. 241 00:12:18,424 --> 00:12:20,784 Speaker 2: So in the end, over a period of seven years, 242 00:12:20,944 --> 00:12:25,464 Speaker 2: he sells about seventeen thousand of these mobile solar generators. 243 00:12:26,424 --> 00:12:32,144 Speaker 2: In actuality, only six thousand have been manufactured, and investors 244 00:12:32,144 --> 00:12:34,344 Speaker 2: have no idea that they're basically all co owning the 245 00:12:34,344 --> 00:12:37,984 Speaker 2: same generator, yet receiving independent tax credits for the purchase 246 00:12:38,024 --> 00:12:39,184 Speaker 2: of all of them. 247 00:12:40,184 --> 00:12:43,544 Speaker 1: When we come back, Jeff Karpoff's scheme runs into a 248 00:12:43,744 --> 00:12:48,384 Speaker 1: big problem. But first, our advertisers are going to tell 249 00:12:48,384 --> 00:12:51,424 Speaker 1: you about a great opportunity. All you have to do 250 00:12:51,504 --> 00:12:54,104 Speaker 1: is start a podcast and get three of your friends 251 00:12:54,104 --> 00:12:56,784 Speaker 1: who start a podcast, and get them to get three 252 00:12:56,824 --> 00:12:59,664 Speaker 1: of their friends to start a podcast. You can't lose. 253 00:13:10,144 --> 00:13:13,704 Speaker 1: Jeff Karpoff has gone from car mechanic to this solar 254 00:13:13,864 --> 00:13:17,824 Speaker 1: panel entrepreneur. How are the panels he's making if he 255 00:13:17,864 --> 00:13:19,544 Speaker 1: has no real engineering skill? 256 00:13:20,064 --> 00:13:22,064 Speaker 2: When they work, they work, okay. The trouble is that 257 00:13:22,184 --> 00:13:24,904 Speaker 2: they weren't particularly reliable. They go back in some pretty 258 00:13:24,904 --> 00:13:29,504 Speaker 2: awful places fairly early on. So the power cut off 259 00:13:29,904 --> 00:13:32,544 Speaker 2: during the filming of Disney's Alexander and the Terrible, horrible, 260 00:13:32,624 --> 00:13:33,344 Speaker 2: no good, very. 261 00:13:33,424 --> 00:13:36,384 Speaker 1: Good, Bad Day, although all too appropriate for that movie, all. 262 00:13:36,264 --> 00:13:38,824 Speaker 2: Appropriate, it was definitely not a great day for Carpoff either. 263 00:13:39,184 --> 00:13:42,464 Speaker 2: There's another story we heard where Pink's trailer lost air 264 00:13:42,464 --> 00:13:43,904 Speaker 2: conditioning an MTV concert. 265 00:13:44,344 --> 00:13:46,024 Speaker 1: Oh, I don't want that. You don't want an angry 266 00:13:46,064 --> 00:13:49,584 Speaker 1: Pink No, and I think with two exclamation points. Yeah. 267 00:13:49,624 --> 00:13:53,184 Speaker 2: And so what Jeff Karpoff started doing was attaching one 268 00:13:53,264 --> 00:13:57,864 Speaker 2: hundred gallon diesel generators to the solar generator as a backup, 269 00:13:57,904 --> 00:13:59,824 Speaker 2: so that, I like, there was a breakdown or if 270 00:13:59,864 --> 00:14:02,304 Speaker 2: there was a string of cloudy days, you'd have a 271 00:14:02,304 --> 00:14:05,424 Speaker 2: diesel generator kick in, okay, And so they were. There 272 00:14:05,464 --> 00:14:07,944 Speaker 2: were some technical difficulties and the expanse the fact that 273 00:14:07,944 --> 00:14:10,464 Speaker 2: they were charging one hundred and fifty some dollar for these things, 274 00:14:10,544 --> 00:14:12,904 Speaker 2: or claimed to be able to get that much, meant 275 00:14:12,904 --> 00:14:16,344 Speaker 2: that there was no one really interested in buying them, 276 00:14:16,344 --> 00:14:18,984 Speaker 2: and also very very few people interested in leasing them 277 00:14:19,024 --> 00:14:21,224 Speaker 2: for the long term short term lease is sure, So 278 00:14:21,344 --> 00:14:24,264 Speaker 2: Jeff could not lock in those long term leases, and 279 00:14:24,304 --> 00:14:28,184 Speaker 2: those long term leases were what underpinned his business model. 280 00:14:28,784 --> 00:14:31,224 Speaker 2: So he can't find these leases, and that puts them 281 00:14:31,424 --> 00:14:34,304 Speaker 2: in a pickle because if he can't, if he can't 282 00:14:34,384 --> 00:14:36,104 Speaker 2: raise money for the leases, he can't pay back the 283 00:14:36,144 --> 00:14:39,504 Speaker 2: seventy percent. So he's in a pickle, and he has 284 00:14:39,504 --> 00:14:41,424 Speaker 2: a few options. At that point. He can either shut 285 00:14:41,464 --> 00:14:42,144 Speaker 2: down the business. 286 00:14:42,424 --> 00:14:44,664 Speaker 1: I know enough about Jeff Karpoff now to know that 287 00:14:44,664 --> 00:14:46,064 Speaker 1: that's not even a consideration. 288 00:14:46,224 --> 00:14:48,624 Speaker 2: Not a consideration. He wants to keep this great thing going. 289 00:14:48,704 --> 00:14:51,704 Speaker 2: He wants to keep this snowball rolling until it's larger 290 00:14:51,744 --> 00:14:54,864 Speaker 2: than life, and that's what he decides to do. He 291 00:14:54,904 --> 00:14:57,904 Speaker 2: and some of his associates have a meeting in twenty 292 00:14:57,944 --> 00:15:00,264 Speaker 2: twelve in which they decided, like, well, wait a second, 293 00:15:00,424 --> 00:15:02,464 Speaker 2: we were still able to convince a lot of these 294 00:15:02,504 --> 00:15:06,984 Speaker 2: blue chip companies to buy our solar devices as a 295 00:15:07,024 --> 00:15:09,704 Speaker 2: tax credit investment. So I think we can close like 296 00:15:10,264 --> 00:15:13,064 Speaker 2: a number of additional deals worth hundreds of hundreds of 297 00:15:13,064 --> 00:15:15,544 Speaker 2: million dollars. Now, what we're gonna do is we're gonna 298 00:15:15,544 --> 00:15:18,464 Speaker 2: take that money from new sales and not use them 299 00:15:18,464 --> 00:15:21,304 Speaker 2: to build new generators. But we're gonna give most of 300 00:15:21,344 --> 00:15:22,784 Speaker 2: that money, not all of it because we want some 301 00:15:22,824 --> 00:15:25,904 Speaker 2: for ourselves, but give most of that money to earlier investors. 302 00:15:26,304 --> 00:15:28,424 Speaker 2: And mate, we're gonna make them think that that money 303 00:15:28,464 --> 00:15:32,584 Speaker 2: is coming from the leases of their generators when it's not. 304 00:15:32,824 --> 00:15:34,984 Speaker 1: Oh, that's just pure Ponzi scheme, right, pure ponzi. 305 00:15:35,064 --> 00:15:37,384 Speaker 2: Yeah, okay, pure Ponzi with a twist, because in most 306 00:15:37,464 --> 00:15:39,784 Speaker 2: Ponzi schemes, you have to raise all of that money, 307 00:15:39,824 --> 00:15:41,824 Speaker 2: oh right, that you need to give to the to 308 00:15:41,864 --> 00:15:45,304 Speaker 2: the last guy. What's awesome about this or terrible is 309 00:15:45,304 --> 00:15:48,384 Speaker 2: that in this case, Jeff's load is lightened by the 310 00:15:48,384 --> 00:15:51,144 Speaker 2: fact that the American taxpayer is subsidizing it through the 311 00:15:51,184 --> 00:15:53,344 Speaker 2: tax credits, right, so he doesn't have to come up. 312 00:15:53,224 --> 00:15:56,824 Speaker 1: With So it's a Ponzi scheme with a thirty percent discount, Yeah, exactly. 313 00:15:56,944 --> 00:15:58,704 Speaker 2: So he gets a thirty percent right off on his 314 00:15:58,784 --> 00:16:00,104 Speaker 2: Ponzi on the amountain. 315 00:16:00,144 --> 00:16:04,504 Speaker 1: That's not enough. You're still screwed eventually. 316 00:16:03,504 --> 00:16:04,464 Speaker 2: But it buys you time. 317 00:16:05,104 --> 00:16:08,984 Speaker 1: So he's taking in all this money through this Ponzi scheme. 318 00:16:09,464 --> 00:16:11,104 Speaker 1: Is he spending it? Like, what's he doing with all 319 00:16:11,104 --> 00:16:11,544 Speaker 1: this money? 320 00:16:11,824 --> 00:16:15,944 Speaker 2: He's definitely spending it, you know, on on on muscle cars, 321 00:16:15,344 --> 00:16:19,864 Speaker 2: on luxury seats at the new NFL Stadium in Las 322 00:16:19,944 --> 00:16:24,224 Speaker 2: Vegas on a pro private jet service. But he's also 323 00:16:24,384 --> 00:16:26,504 Speaker 2: using it to kind of tell a story, which is interesting. 324 00:16:26,544 --> 00:16:29,904 Speaker 2: You know, he's basically surrounding himself with this sort of 325 00:16:30,064 --> 00:16:34,704 Speaker 2: like mythology that he is this embodiment of the American dream, right, 326 00:16:35,344 --> 00:16:37,264 Speaker 2: and so like when he would pull into too work 327 00:16:37,304 --> 00:16:39,744 Speaker 2: in the morning, like a hard rock version of the 328 00:16:39,744 --> 00:16:42,384 Speaker 2: Star Spangled banner would like thunder from the speakers of 329 00:16:42,384 --> 00:16:45,504 Speaker 2: his rent pickup Roman. He later installed this like giant, 330 00:16:45,504 --> 00:16:48,544 Speaker 2: like six panel photograph for the American flag on his 331 00:16:48,624 --> 00:16:51,624 Speaker 2: factory walls and claimed that his family said the Pledge 332 00:16:51,624 --> 00:16:55,264 Speaker 2: of Allegiance instead of grace at holiday meals. That's awesome 333 00:16:55,384 --> 00:16:58,464 Speaker 2: and one of my favorite moments was actually found in 334 00:16:58,504 --> 00:17:01,224 Speaker 2: an old episode of Counting Cars, which is a reality 335 00:17:01,264 --> 00:17:03,944 Speaker 2: TV show. Oh, he goes into like a custom car 336 00:17:03,944 --> 00:17:07,224 Speaker 2: place in Vegas and he says, I want a motorcycle 337 00:17:07,824 --> 00:17:10,304 Speaker 2: with an America theme. Paine job. He wants like the 338 00:17:10,304 --> 00:17:12,744 Speaker 2: statue of Liberty on the side of the tanks, like 339 00:17:12,784 --> 00:17:16,064 Speaker 2: waving the American flag, and he wants like like a 340 00:17:16,144 --> 00:17:18,744 Speaker 2: kind of an image of the Constitution on the back 341 00:17:18,784 --> 00:17:20,544 Speaker 2: of the bike that says, we the people. 342 00:17:21,664 --> 00:17:24,984 Speaker 1: And you wrote this thing that blew me away about 343 00:17:25,184 --> 00:17:27,344 Speaker 1: him and cash at his meetings. 344 00:17:27,744 --> 00:17:30,264 Speaker 2: Oh yeah, he loves cash. He loves cash. So he 345 00:17:30,304 --> 00:17:32,744 Speaker 2: would like come into the office like randomly with like 346 00:17:32,824 --> 00:17:36,304 Speaker 2: shopping bags full of cash. Like he just of no 347 00:17:36,904 --> 00:17:40,784 Speaker 2: discernible provenance, but he'd come in with like bags of cash, 348 00:17:40,904 --> 00:17:43,424 Speaker 2: walk through the accounting department, and you can imagine their orror, 349 00:17:43,584 --> 00:17:46,784 Speaker 2: like unaccounted for cash if you're a professional accounting department. 350 00:17:46,904 --> 00:17:48,424 Speaker 2: He's like, hey, guys, sid what I got. He'd open 351 00:17:48,504 --> 00:17:50,384 Speaker 2: up his plastic bag. He's like, there's two hundred and 352 00:17:50,384 --> 00:17:52,864 Speaker 2: fifty thousand dollars of cash in this bag, and I 353 00:17:52,864 --> 00:17:54,864 Speaker 2: got another guy who had spoke to you. He remembered 354 00:17:54,864 --> 00:17:57,504 Speaker 2: walking past his office one day and noticing that Jeff 355 00:17:57,544 --> 00:18:01,344 Speaker 2: had his like giant cash safe open and he had 356 00:18:01,424 --> 00:18:04,944 Speaker 2: just this huge pile of cash on his desk. It 357 00:18:05,024 --> 00:18:07,144 Speaker 2: was like a pile so large that if two people 358 00:18:07,144 --> 00:18:09,824 Speaker 2: were sitting on opposite sides of the desk, they wouldn't 359 00:18:09,824 --> 00:18:11,904 Speaker 2: have been able to see each other. And he would 360 00:18:11,904 --> 00:18:13,824 Speaker 2: do things too to make people just feel like super 361 00:18:13,904 --> 00:18:15,944 Speaker 2: lucky to work for him. So at the end of 362 00:18:15,984 --> 00:18:19,704 Speaker 2: like all hands business meetings, which were held once a month. 363 00:18:20,224 --> 00:18:22,264 Speaker 2: He would reach into his pocket pull out like a 364 00:18:22,344 --> 00:18:24,864 Speaker 2: giant wat of cash, and he'd go around the room 365 00:18:24,944 --> 00:18:27,384 Speaker 2: asking each of his employees to guess how much cash 366 00:18:27,424 --> 00:18:31,104 Speaker 2: was in his fist, and whatever employee came closest to 367 00:18:31,104 --> 00:18:34,824 Speaker 2: guessing it, some would get the cash. And it was fun. 368 00:18:34,824 --> 00:18:36,344 Speaker 2: It was like you were in a casino, like you might. 369 00:18:36,704 --> 00:18:39,024 Speaker 2: You might be this working class guy putting together generators 370 00:18:39,024 --> 00:18:41,544 Speaker 2: all day. But guess what if you guess that he 371 00:18:41,584 --> 00:18:43,624 Speaker 2: had three thousand dollars in his hand, That money was 372 00:18:43,664 --> 00:18:46,664 Speaker 2: yours to take home and do what you wanted. And 373 00:18:46,704 --> 00:18:48,624 Speaker 2: the other thing he spent his money on a really 374 00:18:48,664 --> 00:18:51,824 Speaker 2: really big parties. Now d C Solar at its largest 375 00:18:51,864 --> 00:18:54,504 Speaker 2: had like maybe one hundred employees, but he would show 376 00:18:54,624 --> 00:18:58,744 Speaker 2: throw these lavish Christmas parties at the Fairmount Hotel, which 377 00:18:58,784 --> 00:19:01,384 Speaker 2: one of the nicest hotels in San Francisco. And he's 378 00:19:01,424 --> 00:19:06,304 Speaker 2: paying for live private performances by like the pop band 379 00:19:06,384 --> 00:19:09,024 Speaker 2: Sugar Ray, by the rapper Pitbull, by the country band 380 00:19:09,144 --> 00:19:12,504 Speaker 2: Big and Rich, just for his employees, with like elaborate 381 00:19:12,544 --> 00:19:16,064 Speaker 2: light shows, go go dancers, full video production for one 382 00:19:16,104 --> 00:19:17,024 Speaker 2: hundred employees. 383 00:19:17,544 --> 00:19:19,624 Speaker 1: How does he show off in front of his employees. 384 00:19:19,984 --> 00:19:22,264 Speaker 2: At some point I wasn't deftly sure when he comes 385 00:19:22,344 --> 00:19:24,424 Speaker 2: up with this nickname for himself, which is that he's 386 00:19:24,424 --> 00:19:28,544 Speaker 2: now he's no longer just Jeff Karpoff, He's Jeff motherfucking Carpoff. 387 00:19:29,024 --> 00:19:32,344 Speaker 2: Becomes such a well known acronym, he's just basically abbreviates 388 00:19:32,344 --> 00:19:36,104 Speaker 2: it to JMFC. So like he would have like JMFC 389 00:19:36,424 --> 00:19:39,144 Speaker 2: emblazoned on I don't know hats, and also on his 390 00:19:39,184 --> 00:19:42,104 Speaker 2: parking space outside of work would say JMFC. He would 391 00:19:42,184 --> 00:19:45,344 Speaker 2: openly refer to himself at these holiday parties as Jeff 392 00:19:45,384 --> 00:19:48,824 Speaker 2: motherfucking Karpoff. So he loved like sort of like basking 393 00:19:48,784 --> 00:19:51,584 Speaker 2: in the limelight of his success. But he also, I 394 00:19:51,624 --> 00:19:53,544 Speaker 2: think was smart about it, because if you're running a 395 00:19:53,584 --> 00:19:56,464 Speaker 2: criminal scheme, your employees should probably have having some doubts 396 00:19:56,504 --> 00:19:58,624 Speaker 2: and some questions, but you didn't need to make them 397 00:19:58,664 --> 00:20:00,864 Speaker 2: have such a great time that they're like, you know what, 398 00:20:01,704 --> 00:20:04,184 Speaker 2: I don't need to look too closely at whether these 399 00:20:04,224 --> 00:20:06,504 Speaker 2: generators work. So he's given them a great time. 400 00:20:07,064 --> 00:20:10,184 Speaker 1: No, it's the opposite. He's got cash everywhere. It's like scarface. 401 00:20:10,264 --> 00:20:13,544 Speaker 1: I would definitely question this, Okay, are investors at all 402 00:20:13,664 --> 00:20:14,664 Speaker 1: starting to catch on. 403 00:20:15,304 --> 00:20:18,784 Speaker 2: They are eventually starting to develop some suspicions, and I 404 00:20:18,864 --> 00:20:21,664 Speaker 2: think you know there is word does start to leak 405 00:20:21,704 --> 00:20:26,024 Speaker 2: that the IRS has begun audits because the numbers don't 406 00:20:26,024 --> 00:20:28,464 Speaker 2: really work. The IRS has to be sure if you're 407 00:20:28,464 --> 00:20:33,064 Speaker 2: claiming a forty five thousand dollars tax credit on one 408 00:20:33,144 --> 00:20:35,864 Speaker 2: hundred and fifty thousand dollars purchase, the RS wants to 409 00:20:35,864 --> 00:20:37,544 Speaker 2: be sure that the thing you're selling is actually worth 410 00:20:37,584 --> 00:20:40,184 Speaker 2: one hundred and fifty thousand dollars. So the IRS starts 411 00:20:40,224 --> 00:20:42,144 Speaker 2: looking at, well, how much are these things actually worth? 412 00:20:42,544 --> 00:20:45,304 Speaker 2: And once they actually do an audit, they decide that 413 00:20:45,344 --> 00:20:47,624 Speaker 2: these devices aren't worth one hundred and fifty thousand dollars. 414 00:20:47,624 --> 00:20:48,704 Speaker 2: They're worth thirteen. 415 00:20:48,384 --> 00:20:51,624 Speaker 1: Thousand oh so not even close, not even close. 416 00:20:51,824 --> 00:20:52,104 Speaker 2: Yeah. 417 00:20:52,384 --> 00:20:56,224 Speaker 1: So, even while the IRS is investigating, is the Obama 418 00:20:56,224 --> 00:20:59,504 Speaker 1: administration still into this company and giving them all these 419 00:20:59,544 --> 00:21:00,144 Speaker 1: tax breaks. 420 00:21:00,184 --> 00:21:03,704 Speaker 2: THEBOMA administration is certainly interested interested in combating climate change 421 00:21:04,024 --> 00:21:06,624 Speaker 2: and one of the initiatives that they that they launch 422 00:21:07,064 --> 00:21:10,184 Speaker 2: is this program called the Smarts City Challenge, And so 423 00:21:10,304 --> 00:21:13,464 Speaker 2: amazingly like DC Solar gets chosen to be among the 424 00:21:13,464 --> 00:21:17,024 Speaker 2: companies that are part of this smart city challenge, and so. 425 00:21:16,904 --> 00:21:19,784 Speaker 1: Shouldn't the irs have warned them not to put them on. 426 00:21:19,864 --> 00:21:22,584 Speaker 2: I'm not really sure how those kinds of communications happen. 427 00:21:22,744 --> 00:21:25,224 Speaker 1: So now that the walls are kind of closing again, 428 00:21:25,224 --> 00:21:27,864 Speaker 1: they're running out of time, how do they react? 429 00:21:28,184 --> 00:21:30,984 Speaker 2: So Jeff and his wife have kind of really different reactions. 430 00:21:31,024 --> 00:21:33,664 Speaker 2: Like Jeff Karpoff's still like outwardly seems to be having 431 00:21:33,744 --> 00:21:36,304 Speaker 2: the time of his life. But Paulette, who's kind of 432 00:21:36,304 --> 00:21:39,784 Speaker 2: behind the scenes, who's helping run the company, she has 433 00:21:39,824 --> 00:21:42,224 Speaker 2: to do kind of all the dirty work in the 434 00:21:42,264 --> 00:21:45,624 Speaker 2: sense of like making sure that everybody stays in line. 435 00:21:46,424 --> 00:21:50,344 Speaker 2: The Carpoffs actually installed dozens of these surveillance cameras around 436 00:21:50,384 --> 00:21:54,744 Speaker 2: their office and shop floor, and Paullette would like look 437 00:21:54,784 --> 00:21:57,024 Speaker 2: at all the feeds from these cameras, which played on 438 00:21:57,064 --> 00:22:00,104 Speaker 2: like a really big TV screen in her office, So 439 00:22:00,184 --> 00:22:02,944 Speaker 2: like she was constantly looking at like who's going into 440 00:22:02,944 --> 00:22:05,464 Speaker 2: what office? Like why is that person spending so much 441 00:22:05,504 --> 00:22:08,664 Speaker 2: time in the bathroom? That's that's suspicious. She was sort 442 00:22:08,664 --> 00:22:11,544 Speaker 2: of short women, but she was very sort of powerful 443 00:22:11,584 --> 00:22:13,864 Speaker 2: within the company, and the employees lived in fear of her. 444 00:22:14,224 --> 00:22:16,344 Speaker 2: And she also apparently had this plaque on her desk 445 00:22:16,664 --> 00:22:19,704 Speaker 2: that said, I'll be nicer if you'll be smarter, and 446 00:22:19,704 --> 00:22:24,024 Speaker 2: that persona was amplified by these two large dogs Belgian mellanoise, 447 00:22:24,664 --> 00:22:27,824 Speaker 2: one named Diesel interesting, the other food which I think 448 00:22:28,064 --> 00:22:30,984 Speaker 2: means crazy in French. That one of them was trained 449 00:22:30,984 --> 00:22:33,864 Speaker 2: to attack. There's like a level three attack dog. I 450 00:22:33,904 --> 00:22:36,344 Speaker 2: forget what the terminology is. So you have this really 451 00:22:36,344 --> 00:22:39,264 Speaker 2: like good cop bad cop thing happening between Jeff, who's 452 00:22:39,304 --> 00:22:41,664 Speaker 2: like the fun guy I always joke in handing out 453 00:22:41,704 --> 00:22:44,904 Speaker 2: cash to Paullette, who's like really anxiously trying to hold 454 00:22:44,944 --> 00:22:46,344 Speaker 2: everything together behind the scenes. 455 00:22:46,664 --> 00:22:49,584 Speaker 1: So the Carbovs know that they are on a limited 456 00:22:49,584 --> 00:22:51,864 Speaker 1: amount of time with this Ponzi scheme, or how are 457 00:22:51,864 --> 00:22:52,544 Speaker 1: they going to deal with this? 458 00:22:53,064 --> 00:22:57,624 Speaker 2: They start moving money overseas into offshore accounts. They also 459 00:22:57,824 --> 00:23:01,744 Speaker 2: buy kind of a mansion on the Caribbean island nation, 460 00:23:01,824 --> 00:23:05,104 Speaker 2: at the Caribbean nation of Saint Kitts and Nevis. One 461 00:23:05,104 --> 00:23:08,304 Speaker 2: of the contingency plans that he claimed to have made 462 00:23:09,624 --> 00:23:11,344 Speaker 2: was that he claimed to have buried a half a 463 00:23:11,344 --> 00:23:15,144 Speaker 2: million dollars worth of math at a cemetery, and Martinez. 464 00:23:14,664 --> 00:23:15,344 Speaker 1: Of course he did. 465 00:23:15,704 --> 00:23:17,344 Speaker 2: Whether that story is true or not. I don't know, 466 00:23:17,384 --> 00:23:19,984 Speaker 2: but he told he told someone about it. He said, 467 00:23:19,984 --> 00:23:23,064 Speaker 2: don't worry if anything goes south. I've got money stashed 468 00:23:23,064 --> 00:23:24,984 Speaker 2: away in different places, including a bunch of myth in 469 00:23:25,024 --> 00:23:27,944 Speaker 2: a cemetery. I'm not sure the FBI knew about that 470 00:23:27,984 --> 00:23:29,704 Speaker 2: before my story, but they do now. I'm not sure 471 00:23:29,704 --> 00:23:32,424 Speaker 2: if there's been any exhumations since then. 472 00:23:32,784 --> 00:23:37,024 Speaker 1: So listeners, hurry before the FBI takes this up. There's 473 00:23:37,024 --> 00:23:38,744 Speaker 1: a half a million dollars worth of math in the 474 00:23:38,784 --> 00:23:39,384 Speaker 1: desert somewhere. 475 00:23:39,584 --> 00:23:40,224 Speaker 2: It's pretty wild. 476 00:23:40,344 --> 00:23:41,264 Speaker 1: So how does he get busted? 477 00:23:41,544 --> 00:23:45,344 Speaker 2: Yeah, so like after you know, a fairly long, intensive investigation, 478 00:23:46,184 --> 00:23:49,704 Speaker 2: like one hundred and seventy vehicles stream out towards DC 479 00:23:49,824 --> 00:23:50,744 Speaker 2: Solar headquarters. 480 00:23:51,104 --> 00:23:52,984 Speaker 1: One hundred and seventy's a lot. 481 00:23:53,104 --> 00:23:55,944 Speaker 2: Yeah, And you know, they go to his house and 482 00:23:55,984 --> 00:23:58,864 Speaker 2: they go to DC Solar headquarters. They do have to 483 00:23:58,944 --> 00:24:03,504 Speaker 2: knock down the door at Jeff Karpov's house. I think 484 00:24:03,544 --> 00:24:05,344 Speaker 2: they had to had to be a bit of a surprise. 485 00:24:05,664 --> 00:24:07,224 Speaker 2: There were some precautions they had to take. There was 486 00:24:07,224 --> 00:24:07,864 Speaker 2: a swat team. 487 00:24:08,224 --> 00:24:09,024 Speaker 1: And what do they find that. 488 00:24:09,464 --> 00:24:12,984 Speaker 2: They find a lot of cash, like how much cash? 489 00:24:13,064 --> 00:24:14,864 Speaker 2: Like I think in Jeff's safe they found like one 490 00:24:14,904 --> 00:24:16,184 Speaker 2: point seven million dollars. 491 00:24:16,624 --> 00:24:19,064 Speaker 1: What does it look like? I can't picture like how 492 00:24:19,064 --> 00:24:20,224 Speaker 1: big a pile that is. 493 00:24:20,584 --> 00:24:24,584 Speaker 2: I think it's like a Scrooge mcdoug level of cash. 494 00:24:24,704 --> 00:24:27,864 Speaker 1: And that's his emergency running away to Saint KITT's money. 495 00:24:27,984 --> 00:24:29,904 Speaker 2: Yeah, I think it's part of his go bag of like, okay, 496 00:24:29,944 --> 00:24:31,064 Speaker 2: if I need to get out of here. And the 497 00:24:31,104 --> 00:24:33,464 Speaker 2: irony is that, like he could have left earlier. He 498 00:24:33,464 --> 00:24:36,344 Speaker 2: probably could have fled the country earlier, but he doesn't 499 00:24:36,344 --> 00:24:40,104 Speaker 2: do it. And just three days before the raid, he's 500 00:24:40,104 --> 00:24:43,984 Speaker 2: wearing like a black sequin tuxedo of course, and partying 501 00:24:44,064 --> 00:24:47,744 Speaker 2: with Pitbull at the Fairmont Hotel at a holiday party. 502 00:24:48,184 --> 00:24:51,424 Speaker 2: He's having one more glorious day as Jeff motherfucking Carpoff 503 00:24:51,704 --> 00:24:53,144 Speaker 2: before it all comes crashing down. 504 00:24:53,504 --> 00:24:55,264 Speaker 1: So does he wind up going to trial? 505 00:24:55,464 --> 00:24:58,544 Speaker 2: No, he does not wind up going to trial. The 506 00:24:58,664 --> 00:25:02,424 Speaker 2: US Attorney's Office in the Eastern District of California basically 507 00:25:02,464 --> 00:25:04,304 Speaker 2: gets all of his underlings to flip on him. They 508 00:25:04,344 --> 00:25:07,744 Speaker 2: all basically make plea agreements. That's gonna land in prison time, 509 00:25:07,784 --> 00:25:09,664 Speaker 2: but less prison time than they than they get if 510 00:25:09,664 --> 00:25:10,304 Speaker 2: they went to trial. 511 00:25:10,464 --> 00:25:11,624 Speaker 1: So a lot of people got to a lot of 512 00:25:11,664 --> 00:25:12,344 Speaker 1: people go to prison. 513 00:25:12,464 --> 00:25:14,184 Speaker 2: Yeah, a lot of people say this is you can't 514 00:25:14,224 --> 00:25:16,264 Speaker 2: pull off a Ponzi scheme like this without a lot 515 00:25:16,304 --> 00:25:19,024 Speaker 2: of help. And they're basically corner. They have no where, 516 00:25:19,064 --> 00:25:22,344 Speaker 2: nowhere else to go, and they agree to plead guilty 517 00:25:22,584 --> 00:25:24,744 Speaker 2: to a number of felonies. 518 00:25:24,984 --> 00:25:25,944 Speaker 1: How much time does he get? 519 00:25:26,104 --> 00:25:29,064 Speaker 2: He gets some thirty years, which is a long time, 520 00:25:30,504 --> 00:25:33,584 Speaker 2: and his wife, paul ed she gets about eleven years 521 00:25:33,744 --> 00:25:34,224 Speaker 2: in total. 522 00:25:34,264 --> 00:25:36,384 Speaker 1: How much did these people scam the government out of? 523 00:25:36,624 --> 00:25:40,824 Speaker 2: They wind up scamming these companies and by extension, the 524 00:25:40,944 --> 00:25:42,984 Speaker 2: US taxpayer out of about a billion dollars. 525 00:25:43,264 --> 00:25:47,064 Speaker 1: How does Jeff Karpoff compare to the other great scammers 526 00:25:47,104 --> 00:25:50,144 Speaker 1: of our time? The Bernie made Offs, the Elizabeth Holmes. 527 00:25:50,464 --> 00:25:52,904 Speaker 2: What I like about Jeff Karpov is that he inverts 528 00:25:52,944 --> 00:25:56,824 Speaker 2: the traditional Ponzi story. A lot of times Ponzi schemes, 529 00:25:56,864 --> 00:26:00,024 Speaker 2: especially those involving like mom and pop investors, are due 530 00:26:00,104 --> 00:26:02,504 Speaker 2: by like a financial whiz kid who went to way 531 00:26:02,504 --> 00:26:05,664 Speaker 2: better schools, who has way better connections. This inverts that 532 00:26:05,744 --> 00:26:09,784 Speaker 2: by making the small town, high school educated little guy 533 00:26:09,824 --> 00:26:14,464 Speaker 2: who everyone's written off out maneuver. The likes of Warren Buffett, 534 00:26:14,824 --> 00:26:18,624 Speaker 2: the executives of US Bank Progressive Insurance. So it's a 535 00:26:18,704 --> 00:26:21,584 Speaker 2: kind of like it's a revenge of the little guy 536 00:26:21,984 --> 00:26:24,904 Speaker 2: against all these big companies who've been screwing the little 537 00:26:24,944 --> 00:26:27,584 Speaker 2: guy forever. And that's part of what attracted me to 538 00:26:27,624 --> 00:26:27,984 Speaker 2: the piece. 539 00:26:28,864 --> 00:26:32,384 Speaker 1: Ario El Sabar, you wrote the billion dollar ponzi scheme 540 00:26:32,424 --> 00:26:35,464 Speaker 1: that hooked Warren Buffett and the US Treasury for the Atlantic, 541 00:26:35,784 --> 00:26:38,544 Speaker 1: and it's the story of the week and possibly also 542 00:26:38,544 --> 00:26:40,424 Speaker 1: the longest headline we've had on the show. 543 00:26:40,584 --> 00:26:41,864 Speaker 2: Thanks so much for having Rachel. 544 00:26:43,504 --> 00:26:46,944 Speaker 1: As we learned in episode thirty six, titled The Never 545 00:26:47,144 --> 00:26:50,944 Speaker 1: Ending Treasure Hunt, people love to look for bury treasure. 546 00:26:51,704 --> 00:26:55,024 Speaker 1: Ario revealed in his story that there is possibly five 547 00:26:55,304 --> 00:26:59,544 Speaker 1: hundred thousand dollars worth of methamphetamine under the ground in 548 00:26:59,584 --> 00:27:05,944 Speaker 1: a cemetery in Martinez, California. Listeners, the Martinez meth Treasure 549 00:27:06,024 --> 00:27:10,024 Speaker 1: Hunt is on. Whoever finds this chat will not only 550 00:27:10,064 --> 00:27:14,024 Speaker 1: have a lifetime supply of stimulants, but a special mention 551 00:27:14,184 --> 00:27:17,384 Speaker 1: at the end of a future episode, good luck and 552 00:27:17,504 --> 00:27:20,704 Speaker 1: made the best grave digger win. Pushkin Industry is not 553 00:27:20,744 --> 00:27:22,624 Speaker 1: responsible for any of all laws broken on the Martinez 554 00:27:22,664 --> 00:27:23,424 Speaker 1: Metz Treasure Hunt. 555 00:27:26,024 --> 00:27:27,424 Speaker 3: At the end of the show. 556 00:27:27,664 --> 00:27:29,224 Speaker 1: What's next for Joel Stein? 557 00:27:29,424 --> 00:27:32,824 Speaker 3: Maybe he'll take a naper poker round online. 558 00:27:33,304 --> 00:27:36,944 Speaker 1: Our show today was produced by Kate mccauliffe and Nishavenka. 559 00:27:37,264 --> 00:27:40,504 Speaker 1: It was edited by Lydia Jane Kott. Our engineer is 560 00:27:40,744 --> 00:27:45,664 Speaker 1: Amanda kay Way and our executive producer is Catherine Shiradah. 561 00:27:46,304 --> 00:27:48,944 Speaker 1: And our theme song was written and performed by Jonathan 562 00:27:48,944 --> 00:27:51,944 Speaker 1: Colton and a special thanks to my voice coach Vicky 563 00:27:52,024 --> 00:27:55,944 Speaker 1: Merrick and my consulting producer Laurence Alasnik. To find more 564 00:27:55,984 --> 00:28:00,744 Speaker 1: Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts, or 565 00:28:00,744 --> 00:28:04,344 Speaker 1: wherever you listen to your podcasts. I'm Joel Stein and 566 00:28:04,424 --> 00:28:05,384 Speaker 1: this is the story of the week. 567 00:28:07,784 --> 00:28:11,344 Speaker 2: There's a very very obscure You're an exotic financial instrument. 568 00:28:11,664 --> 00:28:12,864 Speaker 1: Uh oh, I like this. 569 00:28:13,264 --> 00:28:15,344 Speaker 2: Yeah, I know it's scary. I'll try to make it 570 00:28:15,384 --> 00:28:19,024 Speaker 2: really simple, please. And it's called a tax equity fund. 571 00:28:19,064 --> 00:28:20,064 Speaker 2: And what a tax equity 572 00:28:20,104 --> 00:28:20,904 Speaker 1: You've already lost me