SEC v. JEFFREY P. CARPOFF; and PAULETTE CARPOFF, No. 2:20-cv-00180-JAM, Eastern District of California (Jan. 24, 2020) — Complaint

COMPLAINT
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DEAN M. CONWAY
(counsel for service)
SARRA CHO
CHRISTOPHER NEE
Email:  [email protected]
Attorneys for Plaintiff
Securities and Exchange Co
mmission
100 F Street NE
Washington, DC 20549
Telephone: (202) 551-4412
Facsimile: (202) 772-9245
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
JEFFREY P. CARPOFF and
PAULETTE CARPOFF,
Defendants.
    Case    No.
COMPLAINT
JURY  DEMAND
Plaintiff, the United States Securities and Exchange Co
mmission (“SEC” or
“Commission”), for its Complaint alleges as follows:
JURISDICTION AND VENUE
1.The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C.
§§ 77t(b), 77t(d)(1) & 77v(a), and Sections 21(
d)(1), 21(d)(3)(A), 21(e) and 27(a) of
the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a).
2.Defendants have, directly or indirectly, made use of the means or

COMPLAINT
2

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
instrumentalities of interstate commerce, of the mails, or of the facilities of a national
securities exchange in connection with the transactions, acts, practices and courses of
business alleged in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a)
because certain of the transactions, acts, practices and courses of conduct constituting
violations of the federal securities laws occurred within this district.  Defendants
committed many of the acts set forth in this Complaint in this district.  For example,
the Carpoffs maintained offices at DC Solar Solutions, Inc. and initiated wire and
bank transfers and sent emails from their office computers at DC Solar Solutions,
Inc., which is located in this district.
SUMMARY
4. This case involves fraudulent securities offerings and a massive Ponzi
scheme that raked in over $910 million in investor funds.  This Ponzi scheme was
orchestrated by husband and wife Defendants Jeffrey (“Jeff”) and Paulette Carpoff
through companies they controlled, and which they used to enrich themselves at
investors’ expense.
5. The Carpoffs offered and sold investment opportunities through two
solar energy companies in the business of making, leasing, and operating mobile solar
generators (“Generators”).  The Carpoffs and others touted these investment
opportunities would deliver gains in the form of tax benefits, guaranteed lease
payments, and the resulting profits from the operation of the Generators.  In reality,
thousands of the purportedly profitable Generators were never even manufactured, let
alone put into use, and the vast majority of alleged “revenue” sent to investors came
from investor money, not from actual lease payments from end-users of the
Generators.
6. In 2011, the Defendants began selling investment contracts through their
privately held alternative energy companies DC Solar Solutions, Inc. (“DC

COMPLAINT
3

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Solutions”) and DC Solar Distribution, Inc. (“DC Distribution) (collectively with Jeff
and Paulette Carpoff “DC Solar”).  Through December 2018, DC Solar raised around
$910 million from purchasers of the investment contracts.  DC Solar designed the
investments to take advantage of tax credits that were available to certain alternative
energy related projects.  To that end, investors purchased Generators from DC
Solutions and then immediately leased them to DC Distribution.  DC Distribution
was then supposed to sub-lease the Generators to end-users.  DC Solar touted itself as
a major player in its industry, with thousands of Generators in the field, lucrative
contracts with big customers yielding a track record of consistent revenue, and
extensive experience in making and maintaining the Generators and finding
customers for them.
7. That was all a sham.  DC Solar had manufactured and put into service
far fewer Generators than it claimed, and made hardly any of its revenue from leasing
Generators to end-users.  In fact, DC Solutions did not actually manufacture nearly
two-thirds of the Generators that it purportedly sold to investors.  Recent intensive
efforts by investors to locate the Generators have identified less than 6,600 of the
approximately 17,600 Generators for which DC Solar entered into investment
contracts and sold to investors.  Investors paid hundreds of millions of dollars for
Generators that never existed.  And, legitimate lease income from actual end-users of
the Generators represented a tiny fraction -- less than 5% -- of DC Distribution’s
revenue.  The vast majority of DC Distribution’s revenue was comprised of investor
funds transferred from DC Solutions.  In reality, the vast majority of investor funds
was not being used to manufacture, place into service, and maintain the thousands of
Generators that DC Solar was using as the basis for investment contracts, but was
instead being pilfered by Defendants Jeff and Paulette Carpoff for their personal
benefit, such as the purchase of luxury vehicles, private jet services and real estate,
and used to make lease payments and distributions to earlier investors.
8. Defendants’ other claims designed to lure investors were false.  DC

COMPLAINT
4

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Solar was not a major player in the industry.  There were no lucrative contracts with
big customers.  And DC Solar did not have extensive experience finding customers
for its Generators.
9. The Defendant Carpoffs were the architects and the chief beneficiaries
of this fraudulent scheme.  Jeff and Paulette Carpoff each knowingly hid, and
oversaw others in hiding, from investors that DC Solutions had not manufactured
their Generators and that DC Distribution generated minimal amounts of legitimate
lease revenue.  They did so by committing and/or overseeing a variety of deceptive
acts including making false statements in investment contracts with investors,
funneling investor funds through DC Solutions to DC Distribution to pay earlier
investors, causing the creation of bogus commissioning reports for the Generators,
directing that false financial statements be prepared for DC Solutions and DC
Distribution, and creating and touting fraudulent leasing arrangements with end-users
of the Generators.
10. As a result of the conduct alleged herein, Defendants have violated the
antifraud provisions of the Securities Act and the Exchange Act.  The SEC brings this
action and seeks entry of permanent injunctions against Defendants as well as
disgorgement of ill-gotten gains and prejudgment interest thereon and civil money
penalties.
THE DEFENDANTS
11. Jeffrey P. Carpoff was a resident of Martinez, CA during the relevant
time period.  In addition to owning DC Solutions, Jeff Carpoff was the President and
a Director of DC Solutions and the Vice President and a Director of DC Distribution.
12. Paulette Carpoff was a resident of Martinez, CA during the relevant time
period.  In addition to owning DC Distribution, Paulette Carpoff was the President,
Secretary, Treasurer, and a Director of DC Distribution and the Secretary, Treasurer
and a Director of DC Solutions.

COMPLAINT
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
RELATED INDIVIDUALS AND ENTITIES
13. DC Solar Solutions, Inc. is a California corporation headquartered in
Benicia, CA.  It was owned by Jeff Carpoff.  DC Solutions is not registered with the
SEC in any capacity.  It filed for bankruptcy protection in early 2019 and is currently
in Chapter 7 proceedings.
14. DC Solar Distribution, Inc. is a California corporation headquartered in
Benicia, CA.  It was owned by Paulette Carpoff.  DC Distribution is not registered
with the SEC in any capacity.  It filed for bankruptcy protection in early 2019 and is
currently in Chapter 7 proceedings.
15. Joseph W. Bayliss is a resident of Martinez, CA.  Bayliss is the owner of
Bayliss Innovative Services, Inc. through which he is licensed as an electrical and
general building contractor.
16. Robert A. Karmann is a resident of Clayton, CA.  He was the CFO and
prior to that, the Controller, of DC Solutions from late 2014 through 2018.  As DC
Distribution did not have its own CFO and was closely affiliated with DC Solutions,
Karmann performed essentially the same CFO duties for DC Distribution as well.  He
is licensed as a Certified Public Accountant in California.
17. Ronald J. Roach is a resident of Walnut Creek, California.  Roach was a
certified public accountant and the owner of Ronald J. Roach Accountancy
Corporation.  He has held Series 6, 7, 63 and 65 securities licenses and was a
registered investment adviser and a registered representative.
FACTUAL ALLEGATIONS
A. Background on DC Solar
18. Jeff and Paulette Carpoff were the owners and principals of DC
Solutions and DC Distribution.  While DC Solutions and DC Distribution are two
separate legal entities, they operated from the same location and shared the same
management and employees.  DC Solar told investors that it “design[ed],
manufacture[d] and lease[d] renewable energy products to serve the off-grid needs of

COMPLAINT
6

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
a broad and diverse marketplace – while providing investors with access to the
renewable energy asset class.”
B. The DC Solar Securities Offerings
(1) The Solicitation of Investors
19. Since at least 2011 and continuing to December 2018, DC Solar offered
securities to investors.  The securities took the form of two types of investment
contracts: (1) Investment Fund Contracts and (2) Sale-Leaseback Contracts.  Under
both arrangements, the investors paid to purchase Generators from DC Solutions,
while simultaneously leasing them to DC Distribution.  DC Distribution would then
purportedly arrange to sub-lease the Generators to end-users.  The investors expected
to profit from the investments due to tax credits, depreciation on the Generators, and
lease payments.  Investors thus played an entirely passive role:  the success of the
venture, and thus the profits to investors and DC Solar, turned entirely on the efforts
of DC Solar to make, maintain, market, and lease the Generators.
20. Over the course of the offerings, DC Solar raised approximately $910
million in investor money.  These deals had face values of more than $2.7 billion
because investors in the Investment Fund Contracts financed approximately 70
percent of the amount of their investments through promissory notes.
21. DC Solar, directly and indirectly, solicited investors through brokers and
salespeople using various methods, including email, conference calls and in-person
meetings.  DC Solar offered and sold Investment Fund Contracts and Sale-Leaseback
Contracts through interstate commerce to investors throughout the United States.
22. DC Solar marketed itself as having extensive experience and capabilities
in the renewable energy field and in executing successful transactions for investors.
For example, pitch-books for investors, which were prepared by a broker working on
behalf of DC Solar using information provided by DC Solar, emphasized that DC
Solar had thousands of Generators deployed and manufacturing capabilities of 900
Generators per month.  They also highlighted that DC Solar had closed many prior

COMPLAINT
7

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
investment funds with “headline” or “notable” investors, including funds with fair
market values near or over $100 million, and that the “performance of each of the
funds remains in good standing.”  In addition, the materials falsely claimed that DC
Solar had “customer relationships with leading companies in the telecommunications,
entertainment and construction industries” and provided case studies of the
established leasing arrangements with many of those customers.  Finally, certain of
the pitch-books provided a “Summary of Investor Returns” with estimated internal
rates of return ranging from 40 to as high as 50 percent.
(2) The Terms of the Investment Fund Contract Offerings
23. Investment Fund Contract investors executed a standard package of
agreements, including:  (i) a Limited Liability Company Agreement (“LLC
Agreement”); (ii) a Solar Equipment Purchase Agreement (“Purchase Agreement”);
(iii) a Secured Promissory Note (“Promissory Note”); and (iv) a Mobile Solar
Equipment Lease (“Equipment Lease”) (together the “Investment Fund Contracts”).
The documents were executed at or around the same time, with Jeff Carpoff signing
the Purchase Agreements on behalf of DC Solutions and Paulette Carpoff typically
signing the Equipment Leases on behalf of DC Distribution.  While the Investment
Fund Contracts for certain deals had variations, they largely had the same substantive
terms.
24. Under the terms of the LLC Agreement, an investor became the
“Investor Member” of the Investment Fund Limited Liability Company (“Investment
Fund”), an entity created specifically for the purpose of the investment.  This
Investment Fund then purchased Generators from DC Solutions at a price of
$150,000 per Generator under the Solar Equipment Purchase Agreement.  The
Purchase Agreement specified the total number of Generators being purchased as
well as the total purchase price.  An Exhibit to the Purchase Agreement contained a
blank space for the Vehicle Identification Numbers (“VINs”) for the Generators or
stated that “VIN for each Generator to be Supplied at Delivery.”  In exchange for the

COMPLAINT
8

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
payment, DC Solutions agreed to deliver the Generators by a certain date or dates and
warranted “to Buyer that all Equipment shall be in good working order in conformity
with the Specifications for a period” of five or ten years.
25. The delivery dates for tranches of Generators specified in the Purchase
Agreements were often scheduled in stages.  Likewise, the Purchase Agreements
dictated that payments would be due to DC Solutions in stages according to a
schedule in part dictated by capital contributions being made by the investor under
the terms of the LLC Agreement.  Those capital contributions were contingent on the
investor receiving confirmation that the Generators were “Placed in Service” as
evidenced by an “IE [Independent Engineer] Certificate.”
26. Investors generally contributed about thirty percent of the purchase price
in cash and financed the balance pursuant to a Promissory Note or Notes executed by
the Investment Fund in favor of DC Solutions.  The Promissory Note was an exhibit
to the Purchase Agreement.  DC Solar told investors, and arranged for a tax opinion
letter from a law firm confirming, that the Generators qualified for the Energy Credit
under Internal Revenue Code § 48.  That provision allows for a thirty percent tax
credit for certain energy-related investments.  Thus, investors expected to be able to
take a tax credit for roughly the same amount as their cash contribution to the
investment.
27. Under the Investment Fund Contracts, the Generator business was
entirely managed and operated by DC Solar.  At the time the Investment Funds
executed the Purchase Agreement with DC Solutions, the Investment Funds also
executed the Mobile Solar Equipment Lease with DC Distribution for at least the first
batch of Generators being purchased.  Depending on the size of the transaction, as
additional tranches of Generators were manufactured, more Equipment Leases were
executed.  Under the Equipment Leases, the Investment Funds leased their
Generators to DC Distribution for terms ranging up to 120 months.  The Equipment
Leases provided that DC Distribution shall use “the Solar Equipment in a careful and

COMPLAINT
9

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
proper manner” and “shall comply with all laws, regulations and ordinances.”
28. Moreover, the Equipment Leases stated that DC Distribution shall be
“solely responsible for the maintenance and repair of the Solar Equipment” and “shall
ensure the Solar Equipment is operational and capable of producing solar energy at
all times.”  The Equipment Leases required DC Distribution to “obtain, maintain and
keep” insurance coverage on the Generators in the amount of the replacement cost as
well as “liability insurance.”  In addition, the Equipment Leases required DC
Distribution to “promptly pay when due, all license fees, registration fees, sales taxes,
use and property taxes, assessments, charges and other taxes” related to the
Generators.
29. The Equipment Leases further provided for a set amount of “Base Rent”
to be paid to the Investment Fund in advance in monthly installments for the term of
the lease as well as payment to the Investment Fund of “Additional Rent” or
“Variable Rent” to the extent DC Distribution received revenue from subleasing the
Generators in excess of a certain amount.  The amount of additional or variable rent
due to the Investment Fund varied depending on the deal and the calculation was
specified in the Equipment Lease.
30. The Investment Fund Contracts were structured such that there was a
flow of money between the Investment Funds and DC Solar, all of which was
contingent on the Generators generating significant sub-lease revenue from legitimate
end-users.  DC Distribution owed monthly lease payments to the Investment Funds
purportedly to be paid with the sub-lease revenue it received from third-party
customers.  The Investment Funds would then use the lease payments they received
from DC Distribution under the terms of the Equipment Leases to make monthly
payments due to DC Solutions under the terms of the Promissory Notes.  Investors
expected several benefits under the arrangement, including the thirty percent energy
tax credit and the ability to claim significant depreciation on the Generators.
31. In addition, investors expected to receive profits in the form of annual

COMPLAINT
10

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
cash distributions from the Investment Funds.  In general, the LLC Agreements stated
that “Distributable Cash,” defined as the amount of cash from lease revenue
remaining after loan payments and operating expenses, would be paid out to investors
on an annual basis.  Based on financial projections for the Investment Funds that
were provided to investors, investors expected to receive these cash distributions.
32. From December 2011 through December 2018, DC Solar closed 34
Investment Fund Contracts, involving 13 institutional investors, totaling about $2.57
billion in face value.  The investors made roughly $759 million in cash contributions
to their Investment Fund Contracts.
(3) The Terms of the Sale-Leaseback Contract Offerings
33. DC Solar began offering the second type of security, the Sale-Leaseback
Contracts, in around 2017.  Investors in the Sale-Leaseback Contracts typically
executed several agreements including: (i) a Sale Agreement; (ii) an Equipment
Lease Agreement; and (iii) a Schedule (collectively the “Sale-Leaseback Contracts”).
Jeff Carpoff typically signed the Sale Agreement on behalf of DC Solutions, or in one
instance on behalf of another affiliate of DC Solar, and Paulette Carpoff typically
signed the Lease Agreement and the Schedule on behalf of DC Distribution.  While
the Sale-Leaseback Contracts for certain deals had minor variations in wording, they
largely had the same substantive terms.
34. The Sale-Leaseback Contracts differed from the Investment Fund
Contracts in that investors purchased the Generators outright from DC Solutions, or
in one instance another affiliate of DC Solar, without executing a Promissory Note.
Under the Sale Agreement, investors paid $150,000 for each Generator they
purchased.  The Generators were identified by VIN in an exhibit attached to that
Agreement.  In exchange for the purchase price, DC Solutions agreed to convey to
the investors “all right, title and interest in” the Generators.
35. One Sale-Leaseback Contract transaction differed from the others in that
the investor purchased used Generators and paid $82,500 for each.  As the Generators

COMPLAINT
11

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
were used, they did not qualify for the energy tax credit.  However, the investment
worked the same as the other Sale-Leaseback Contracts with the investor
immediately leasing the Generators to DC Distribution and being entirely reliant on
DC Distribution to maintain and sub-lease the Generators.
36. Just as was done in the Investment Fund Contracts, under the Sale-
Leaseback Contracts the investors immediately leased the Generators back to DC
Distribution (or another affiliate of the Company) in return for monthly payments
purportedly to be made from sub-lease payments.  Under the Lease Agreement, DC
Distribution committed to keeping the Generators “in good repair” and operating
condition and to “maintain” insurance coverage on the Generators as well as “liability
insurance.”  The Lease Agreement also required DC Distribution to pay, or reimburse
the investor for, all taxes, fees, and assessments imposed on the Generators.
37. Like the Investment Funds, most investors in the Sale-Leaseback
Contracts received an “IE Certificate,” or “IE Commissioning Report,” for each new
Generator that they purchased.
38. The Schedule to the Lease Agreement set forth the term of the lease and
a set lease payment due to the investors from DC Distribution each month.  An
attachment to the Schedule again identified the Generators by VIN.  In addition to the
monthly lease payments, most Sale-Leaseback Contract investors expected to be able
to take the 30 percent energy tax credit as well as depreciation on the Generators they
purchased.  In fact, the Schedules in certain of the Sale-Leaseback Contracts
specifically referenced the energy tax credit and depreciation and required DC
Distribution to use the Generators so as to remain eligible for those tax benefits.
Based on the combination of tax benefits and lease revenue, the Sale-Leaseback
Contract investors expected to earn a positive return and profit from these
transactions.
39. From 2017 through 2018, DC Solar completed seven Sale-Leaseback
Contracts, involving four institutional investors, in transactions worth nearly $151

COMPLAINT
12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
million.
(4) The Company’s Offerings Are Securities
40. DC Solar offered and sold the Investment Fund Contracts and Sale-
Leaseback Contracts through interstate commerce to investors located in multiple
states.
41. DC Solar’s Investment Fund Contracts and Sale-Leaseback Contracts
are securities in the form of investment contracts.  They represented an investment of
money, in a common enterprise, with the expectation of profits to be derived from the
efforts of a third party.  Investors provided money to DC Solar for investment
purposes.  Because the terms of the Investment Fund Contracts and Sale-Leaseback
Contracts tied the fortunes of the investors to those of DC Solar and its ability to
manufacture the Generators and then sub-lease them to end-users at optimal rates,
investors were investing in a common enterprise.  And, because the terms of the
Investment Fund Contracts and Sale-Leaseback Contracts made investors entirely
dependent on DC Solar to manufacture, operate and maintain their purported
Generators, DC Solar’s efforts were essential to the success or failure of the common
enterprise.  Investors also had an expectation of profits from the tax benefits and
payment stream to be generated from the enterprise.
C. The Carpoffs Orchestrated and Committed Deceptive Acts in Furtherance
of the Fraud
42. Unbeknownst to investors, DC Solar never manufactured the majority of
the Generators that it sold.  And, most of the lease revenue paid to investors consisted
of funds from other investors, rather than lease income from legitimate end-users of
the Generators.  In an effort to fool investors into believing that DC Solutions had
manufactured and delivered all of the Generators that investors purchased and that
DC Distribution was earning substantial lease revenue from legitimate end-users, the
Carpoffs orchestrated and engaged in a series of lies and deceptive acts.

COMPLAINT
13

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
(1) The Carpoffs Sold Non-Existent Generators to Investors
through DC Solutions
43. Investors paid DC Solutions over $910 million in cash and took on
promissory notes to DC Solutions for roughly $1.8 billion for the Generators over the
course of the scheme.  However, because DC Distribution continued to fail in its
attempts to lease the Generators to legitimate end-users in significant numbers, DC
Solutions had virtually ceased production of new Generators on any scale by
sometime in 2016.  In fact, recent efforts by investors to locate their Generators
turned up only about 6,571 of the over 17,600 Generators that they purportedly
purchased.  The overwhelming majority of Generators that DC Solar sold to investors
were not manufactured.  Indeed, for eight of the Investment Funds that closed after
late 2016 with a total transaction size of nearly $1 billion, none of the approximately
6,575 Generators they purchased were found.  For another Investment Fund that
closed in July 2018, just 90 of the approximately 2,280 Generators it purchased were
found.  In total, across all of the Investment Fund Contracts and Sale-Leaseback
Contracts, the inventory located only about 37% of the Generators that were sold by
DC Solutions.  Thus, investors collectively paid more than $1.6 billion through cash
contributions and promissory notes to DC Solutions for non-existent Generators.  The
Carpoffs took numerous steps to hide from investors the fact that the Generators had
not been manufactured.
a. The Carpoffs Made False Statements to Investors
44. After mid to late 2016, when DC Solutions had essentially ceased
production of Generators for new Investment Funds, Defendants Jeff and Paulette
Carpoff still each continued to fraudulently execute agreements with numerous
Investment Funds even though they knew that the terms of the agreements would not
be fulfilled and that investors would be duped out of hundreds of millions of dollars.
Defendant Jeff Carpoff, as President of DC Solutions, signed Purchase Agreements
that falsely promised delivery of Generators by a certain date and falsely warranted

COMPLAINT
14

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
that the Generators would “be in working order” and conform to the agreed upon
specifications.  Investors made payments to DC Solar based on these false statements.
45. As the President and the owner of DC Solutions, Jeff Carpoff had access
to all bank accounts for the company and was the primary person at DC Solutions
who dealt with the suppliers and manufacturers of the components for the Generators.
When he signed the Purchase Agreements with the Investment Funds after late 2016,
Jeff Carpoff knew that DC Solutions had stopped manufacturing Generators on the
scale necessary to fulfill its obligations and that the representations he was making to
investors were false.
46. Defendant Paulette Carpoff likewise signed agreements intended to fool
investors into believing that their investments were legitimate.  As President of DC
Distribution, she signed Equipment Leases in which she falsely warranted that the
Generators would be operated  “in a careful and proper manner” and that DC
Distribution would be “solely responsible for the maintenance and repair” of the
Generators.  She also falsely represented that DC Distribution would ensure that the
Generators were “operational and capable of producing solar energy at all times.”
47. As an officer and director of DC Solutions, Paulette Carpoff had access
to the bank records and contracts of the company.  In addition, as the President and
owner of DC Distribution, she was aware of the true number of Generators that DC
Solutions had delivered to DC Distribution to be sub-leased to end-users and which
DC Distribution actually maintained.  By late 2016, Paulette also knew that DC
Solutions had stopped manufacturing Generators on a scale necessary to fulfill its
obligations.  Notwithstanding these facts, Paulette Carpoff still continued to execute
Equipment Leases, which contained false representations concerning how DC
Distribution would deploy non-existent Generators.  These lies were told in order to
fool investors and perpetuate the scheme.
48. Even prior to late 2016, Paulette Carpoff made misleading statements to
investors in the Equipment Leases she signed.  In those Equipment Leases, DC

COMPLAINT
15

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Distribution committed to paying “Base Rent” as well as “Additional Rent” or
“Variable Rent.”  The Equipment Leases misleadingly omitted that any “Base Rent,”
“Additional Rent,” or “Variable Rent” payments due to investors were contingent on
DC Solutions raising money from new investors because DC Distribution was
generating virtually no lease revenue from sub-leases with end-users.  Paulette
Carpoff was aware that DC Distribution was generating minimal amounts of
legitimate lease revenue from end-users because as the President and owner of DC
Distribution she had unfettered access to the bank accounts, financial records, and
sub-lease agreements of the company.
49. Information about the existence of the Generators and the amount of
lease revenue being generated by DC Distribution was critical to investors.  Had
investors known that the Generators they purchased would not be manufactured or
that their lease payments depended on new investors putting money into the scheme,
they would not have invested.
b. Jeff Carpoff Arranged for False Certifications for Investors
50. By design, investors never physically took possession of the Generators
that they purchased because the Generators were immediately leased to DC
Distribution upon purportedly being placed in service.  Pursuant to the terms of the
Purchase Agreements and LLC Agreements, investors in the Investment Funds made
payments to DC Solutions for the Generators in installments after receiving proof that
the Generators had been placed in service as evidenced by the delivery of the “IE
Certificate.”  The LLC Agreements defined “IE Certificate” as “a certificate to be
issued by the Independent Engineer” with respect to the Generators “upon
achievement of Placement in Service.”
51. Beginning in 2014, the LLC Agreements stated that “‘Independent
Engineer’ means Joseph Bayliss of Bayliss Innovative Services.”  Most Sale-
Leaseback Contract investors also received these IE Certificates from Bayliss for the
new Generators they purchased.  Defendant Jeff Carpoff arranged for Bayliss and his

COMPLAINT
16

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
firm to serve as the “Independent Engineer.”  This arrangement deceived investors as
Bayliss was neither independent nor an engineer.  Bayliss holds general contractor
and electrical licenses from the State of California, but he was never a licensed
engineer.  And, Bayliss has known the Carpoffs since high school.  In fact, DC Solar
hired Bayliss to perform various projects for the DC Solar and other businesses
owned by the Carpoffs.
52. Bayliss executed IE Certificates, titled “IE Commissioning Reports,” for
nearly all of the 16,400 Generators that Investment Funds and Sale-Leaseback
Contract investors purchased from 2014 through 2018.  The IE Commissioning
Reports contained a checklist of tests that Bayliss would complete in order to attest
“that the system was installed in accordance with professional engineering practices
and safety requirements; and that the system is ready and able to be used for the
production of electricity.”  For the overwhelming majority of these Generators,
Bayliss signed IE Commissioning Reports without inspecting them, and without any
basis for making the representations contained in the reports.  These representations
were false because DC Solutions only had manufactured a small fraction of the
Generators that it had purportedly sold to investors.  Indeed, of the over 16,400
Generators for which Bayliss provided IE Commissioning Reports, more than 11,400
could not be located.
53. Jeff Carpoff knew that the statements in the IE Commissioning Reports
signed by Bayliss were false because DC Solutions had not manufactured the
thousands of Generators certified by Bayliss.  Even in instances where DC Solutions
had manufactured some of the Generators, Jeff Carpoff knew that Bayliss had not
inspected them because he had convinced Bayliss to simply sign reports by falsely
representing that DC Solar employees would inspect the Generators.  Even after
Bayliss learned that DC Solutions was not actually manufacturing the Generators,
Jeff Carpoff was still able to persuade Bayliss to continue to “rubber stamp” the IE
Commissioning Reports.

COMPLAINT
17

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
54. Jeff Carpoff also knew that the deceptive IE Commissioning Reports
Bayliss signed were being sent to investors and were important to them.  Indeed, Jeff
Carpoff was copied on emails in which false IE Commissioning Reports were sent to
investors and their representatives.  And, on at least one occasion, Jeff Carpoff
himself sent deceptive IE Commissioning Reports containing Bayliss’ deceitful
certifications to a broker to be passed along to an investor.  Jeff Carpoff also knew
that under the terms of the Investment Fund Contracts, including the Purchase
Agreements he signed on behalf of DC Solutions, investors’ capital contributions and
payments to DC Solutions for the Generators were contingent on their receipt of the
IE Commissioning Reports.
55. Likewise, Paulette Carpoff knew that the statements in the IE
Commissioning Reports signed by Bayliss were false.  Paulette Carpoff took part in
conversations with Bayliss and Jeff Carpoff about the fact that DC Solutions had not
manufactured Generators for which he signed reports.
56. Paulette Carpoff also knew that the deceptive IE Commissioning Reports
signed by Bayliss were being provided to investors and were material to them.  She
sent IE Commissioning Reports for certain Investment Funds and at least one Sale-
Leaseback Contract investor by email for Bayliss to sign.
c. Jeff Carpoff Deceived Investors through the Manipulation of
VINs and the Movement of Generators
57. At times, DC Solutions sold the same Generator to different Investment
Funds or Sale-Leaseback Contract investors.  Investors were unaware that their
supposed Generators were being resold, or that they were purchasing used Generators
owned by someone else.   As part of these efforts, on occasions in 2017 and 2018,
Jeff Carpoff participated (and supervised other DC Solar employees and Bayliss) in
removing the VIN stickers from Generators assigned to certain Investment Funds or
Sale-Leaseback Contract investors and replacing them with new VIN stickers
assigned to other Investment Funds or Sale-Leaseback Contract investors.  Jeff

COMPLAINT
18

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Carpoff orchestrated this effort in order to dupe investors during inspections into
believing that the Generators sold to them existed and/or could be found at the
locations DC Solar had asserted.  In certain instances, at Jeff Carpoff’s direction, DC
Solar employees buried GPS devices purportedly attached to Generators at certain
locations to make it appear that the Generators were in use at those locations.
58. In 2018, Jeff Carpoff also deceived inspectors associated with a Sale-
Leaseback Contract investor about the location of Generators that an investor had
purchased.  In preparation for a scheduled inspection of some of the Generators
purportedly owned by that investor, Jeff Carpoff and another DC Solar employee
developed a list of inspection sites and coordinated the delivery of Generators to
those sites before and on the day of the inspection.  This effort was intended to
deceive the inspectors as the Generators were neither leased nor in use at the
locations to which they were delivered.
(2) The Carpoffs Hid the Lack of Legitimate Lease Revenue
59. Lease revenue from end-users of the Generators was critical to the
success of the investments because it was the source of the funds that DC Distribution
needed to make lease payments to the Investment Funds and Sale-Leaseback Contract
investors.  Although DC Distribution purported to be earning millions each month in
legitimate lease revenue from end-users of the Generators, bank records prove that
DC Distribution generated minimal lease revenue from sub-leases to end-users.  In
fact, the vast majority of funds flowing into DC Distribution’s bank accounts
consisted of transfers of investor funds from DC Solutions.
60. For example, during the period of January 2013 through December
2018, a total of about $409,930,000 was deposited into DC Distribution’s bank
accounts.  Of that amount, approximately $383,347,000 -- or 93.5% -- consisted of
transfers from DC Solution’s bank accounts.  And, another $8,268,000 -- or 2.0% --
consisted of transfers from the bank accounts of different Investment Funds.  At
most, $18,316,000 -- or 4.5% -- of the deposits to DC Distribution’s bank accounts

COMPLAINT
19

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
during the time period represented sub-lease payments from legitimate end-users of
the Generators.
61. But, during this period, DC Distribution paid about $347,800,000 to
various Investment Funds and Sale-Leaseback Contract investors, most of which took
the form of “lease payments” owed under the operative Equipment Lease
Agreements.  Accordingly, DC Distribution’s payments were not funded by
legitimate sub-lease revenue, but instead by investor funds cycled through DC
Solutions.
a. Fraudulent Transfers
62. The Carpoffs oversaw this circular movement of funds between the
accounts of the companies they owned and the Investment Funds, which started in the
very early years of DC Solar because DC Distribution never generated enough lease
revenue to satisfy its obligations to the Investment Funds or Sale-Leaseback Contract
investors.  Roach was involved in the early transfers of funds between DC Solutions
and DC Distribution and was part of communications with employees of DC
Solutions, including Jeff and Paulette Carpoff, about the amounts that needed to be
transferred so that DC Distribution could make its lease payments to the Investment
Funds.  During that period, Roach or Paulette Carpoff (or another DC Solar employee
working at her direction) would then execute the necessary transfers.
63. In approximately August 2014, the Carpoffs hired Karmann as the
Controller of DC Solutions and began to use him as the primary employee involved
in the fraudulent transfers.  While Karmann did not have the ability to initiate bank
transfers himself when he first started at DC Solutions, he calculated the amounts that
were owed by DC Distribution to the Investment Funds each month and the amounts
owed by the Investment Funds to DC Solutions under the terms of the Promissory
Notes.  He also calculated the amount that needed to be transferred from DC
Solutions to DC Distribution each month so that DC Distribution could make the
lease payments owed to the Investment Funds and created spreadsheets that specified

COMPLAINT
20

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
the exact amounts that needed to be transferred among the various entities and in
what order.  After making these calculations, Karmann provided the information
directly to Paulette Carpoff (and/or other DC Solar employees working at her
direction) who would then make the transfers.
64. In early 2015, the Carpoffs granted Karmann the ability to initiate
transfers between the bank accounts of DC Solutions, DC Distribution, and the
Investment Funds himself.  Karmann continued DC Solar’s practice of making
monthly calculations and then regular transfers between the bank accounts of DC
Solutions, DC Distribution and the Investment Funds from early 2015 through the
end of 2018 with the knowledge and approval of the Carpoffs.
65. The transfers of money were made by the Carpoffs and others working
at their direction in order to perpetuate DC Solar’s fraudulent scheme and to give the
false appearance to investors that DC Distribution was generating sufficient lease
revenue from end-users of the Generators in order for the investments to be
profitable.  As the owners and officers of the companies, Jeff and Paulette Carpoff
each had complete access to the bank accounts and the accounting records maintained
in QuickBooks of both DC Solutions and DC Distribution.  Both Jeff and Paulette
Carpoff knew DC Distribution was earning minimal lease revenue from genuine end-
users of the Generators.  Each of them also knew that DC Solutions was subsidizing
DC Distribution each month, mostly using investor funds, so that DC Distribution
could make the lease payments due to the Investment Funds and Sale-Leaseback
Contract investors.  And, each of them knew that investors were not informed of this
arrangement.  Their actions kept the scheme running as new and existing investors
purchased additional Investment Fund Contracts or Sale-Leaseback Contracts during
the years the Carpoffs orchestrated the cycling of money through the various
accounts.
b. False Financial Statements
66.   Prospective investors routinely requested financial statements from DC

COMPLAINT
21

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Distribution and DC Solutions before investing.  The Carpoffs arranged for and
authorized the preparation of false financial statements in order to cover up the fact
that DC Solutions was subsidizing DC Distribution with investor money.  On or
about June 2012, Jeff Carpoff and Roach, among others, met and discussed falsely
categorizing the transfers from DC Solutions to DC Distribution as cost of goods
sold.  Subsequently, at various points throughout the scheme, Roach issued
“Accountants’ Compilation Reports” accompanying financial statements for DC
Distribution and DC Solutions covering various periods between 2011 through July
2018 and an audit firm issued “Independent Auditor’s Reports” accompanied by
financial statements for DC Solutions for each year from 2012 through 2017.  The
financial statements accompanying these reports contained false and misleading
information.
67. The income statements for DC Distribution accompanying the
compilation reports falsely stated that DC Distribution generated hundreds of millions
of dollars of revenues in “Rental Income.”  In reality, the overwhelming majority of
the purported “Rental Income” consisted of intercompany transfers between DC
Solutions and DC Distribution.  The income statements were intended to mislead
investors and potential investors into believing that DC Distribution earned hundreds
of millions of dollars in “Rental Income” from end-users of the Generators.
68. Similarly, the financial statements in the various compilation reports and
independent auditor’s reports for DC Solutions also contained false information.  The
cash infusions of hundreds of millions of dollars from DC Solutions to DC
Distribution were hidden in the “Direct Costs” category of DC Solution’s income
statements.  In reality, these payments had nothing to do with the costs of
manufacturing the Generators.  DC Solutions categorized the payments in this
manner to conceal from investors the fact that DC Solutions funded DC
Distribution’s “Rental Income.”
69. At various points throughout the scheme, Roach, Karmann and/or other

COMPLAINT
22

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DC Solar employees, or individuals working on behalf of DC Solar, sent certain of
the financial statements and the accompanying reports via email to investors,
prospective investors, or brokers to be passed on to investors or prospective investors.
Jeff Carpoff was regularly copied on such emails.  Paulette Carpoff also was at times
copied on emails sending certain of the financial statements to a bank at which DC
Solar maintained accounts and to brokers to be passed on to prospective investors or
an outside law firm working on transactions.  As the owners and officers of the
companies, the Carpoffs had access to the bank accounts and accounting records for
DC Distribution and DC Solutions, and were fully aware that DC Distribution had
very little actual lease revenue and that DC Solutions infused it with cash.  The
Carpoffs therefore knew that the various compiled and audited financial statements
contained false information.  They also knew that accurate information about DC
Distribution’s revenue was important to investors.
c. Fraudulent Lease Arrangements
70. Jeff Carpoff devised a number of deceptive lease arrangements to fool
investors into believing that DC Distribution was earning sufficient sub-lease revenue
from end-users to support its lease obligations to investors.  In meetings and calls
with brokers and/or prospective investors, Jeff Carpoff falsely claimed that demand
for Generators was huge and touted leasing relationships with various customers,
including Telecom Company A, A Rentals, and Company K.  He also arranged for
copies of the lease agreements with Telecom Company A to be provided to certain
investors.  In addition, pitch-books sent to prospective investors provided case studies
of the established leasing arrangements that DC Distribution purportedly had with
various customers, including Telecom Company A, A Rentals, and Company K.  A
broker working on behalf of DC Solar prepared these misleading pitch-books,
versions of which were reviewed by both Jeff and Paulette Carpoff at various points
in time.
71. In reality, the leasing relationships with those customers resulted in

COMPLAINT
23

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
minimal amounts of legitimate lease revenue.  Jeff Carpoff oversaw the fabrication of
the lease agreements with Telecom Company A and paid individuals to have those
documents fraudulently signed without Telecom Company A’s authorization.  The
actual amount of lease revenue paid by Telecom Company A was a small fraction of
the amount it purportedly contracted to pay under the fraudulent lease agreements.
72.   And, while A Rentals and Company K had contracted to lease
Generators, DC Solar entered into side arrangements with them under which DC
Distribution would send them funds so that each entity could then make the lease
payments it owed.  Paulette Carpoff took steps in furtherance of these fraudulent
lease arrangements by executing or approving external wire transfers from DC
Distribution’s bank accounts to A Rentals and Company K.  These wire transfers
provided A Rentals and Company K with the funds necessary to make their lease
payments and appear as legitimate lessees.
73. If the  investors who had  heard these pitches or received pitch-books
knew the true circumstances surrounding the lease arrangements with Telecom
Company A, A Rentals, and Company K, they would not have purchased investment
contracts from DC Solar.
(3) The Carpoffs Misappropriated Investor Funds
74. Rather than using investor funds to manufacture the Generators that
investors purchased, the Carpoff used a large portion of the money that flowed into
DC Solar to run their Ponzi scheme and support their lavish lifestyle.  From January
2013 through December 2018, the Carpoffs took at least $140 million for their
personal benefit.  They purchased at least 150 cars, dozens of properties, including
business properties, luxury personal properties, and vacation homes, and a share in a
private jet service.  Jeff and Paulette Carpoff also transferred tens of millions of
dollars to their joint and individual bank accounts, as well as the bank accounts of
other companies they owned.
75. On December 18, 2018, federal law enforcement agents executed federal

COMPLAINT
24

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
seizure warrants on nearly all of the bank accounts associated with DC Solar,
including bank accounts of the Investment Funds.  As an additional Investment Fund
had closed around or after the time of the approval of the warrants, a bank account
associated with that latest Investment Fund was not seized.  On December 19, 2018,
Paulette Carpoff, consistent with the Carpoffs’ fraudulent practice of treating investor
funds as their own, exploited this situation and wired $5 million from the bank
account of this Investment Fund to a bank account in South Carolina associated with
a law firm that specializes in asset protection.  Paulette Carpoff did not have the
permission of the investor to take the money, which came from capital contributions
that the investor paid pursuant to the LLC Agreement and was supposed to be used to
pay for Generators under the terms of the Purchase Agreement.
FIRST CLAIM FOR RELIEF
Fraud in Connection With the Sale of Securities
Violations of Section 10(b) of the Exchange Act
and Rule 10b-5 Thereunder
(Against All Defendants)

76. The SEC realleges and incorporates by reference paragraphs 1 through
75 above.
77. Defendants Jeffrey and Paulette Carpoff, by engaging in the conduct
described above, directly or indirectly, in connection with the purchase or sale of a
security, by the use of means or instrumentalities of interstate commerce, of the
mails, or of the facilities of a national securities exchange, with scienter:
a. employed devices, schemes, or artifices to defraud;
b. made untrue statements of a material fact or omitted to state a
material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading; or
c. engaged in acts, practices, or courses of business which operated

COMPLAINT
25

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
or would operate as a fraud or deceit upon other persons.
78. By engaging in the conduct described above, Defendants Jeffrey and
Paulette Carpoff violated, and unless restrained and enjoined will continue to violate,
Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5 thereunder,
17 C.F.R. §§ 240.10b-5.
SECOND CLAIM FOR RELIEF
Fraud in the Offer and Sale of Securities
Violations of Sections 17(a) of the Securities Act
(Against All Defendants)

79. The SEC realleges and incorporates by reference paragraphs 1 through
75 above.
80. Defendants Jeffrey and Paulette Carpoff, by engaging in the conduct
described above, in the offer or sale of securities by the use of means or instruments
of transportation or communication in interstate commerce or by use of the mails,
directly or indirectly:
a. with scienter, employed devices, schemes, or artifices to defraud;
b. obtained money or property by means of untrue statements of a
material fact or by omitting to state a material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading; or
c. engaged in transactions, practices, or courses of business which
operated or would operate as a fraud or deceit upon the purchaser.
81. By engaging in the conduct described above, Defendants Jeffrey and
Paulette Carpoff violated, and unless restrained and enjoined will continue to violate,
Sections 17(a) of the Securities Act, 15 U.S.C. § 77q(a).

COMPLAINT
26

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue judgments, in forms consistent with Fed. R. Civ. P. 65(d), permanently
enjoining Defendants, and their agents, servants, employees, and attorneys, and those
persons in active concert or participation with any of them, who receive actual notice
of the judgment by personal service or otherwise, and each of them, from violating
Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section 10(b) of the
Exchange Act, 15 U.S.C. §§ 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-
5.
II.
Upon motion of the Commission, order Defendants to disgorge all ill-gotten
gains they received, together with prejudgment interest thereon.
III.
Upon motion of the Commission, order Defendants to pay civil penalties under
Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the
Exchange Act, 15 U.S.C. § 78u(d)(3).
IV.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.

COMPLAINT
27

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
           V.
Grant such other and further relief as this Court may determine to be just and
necessary.
Dated:  January 24, 2020

/s/ Dean M. Conway
Dean M. Conway
Sarra Cho
Christopher Nee
Attorneys for Plaintiff
Securities and Exchange Commission

COMPLAINT 1 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DEAN M. CONWAY 
(counsel for service) 
SARRA CHO 
CHRISTOPHER NEE 
Email:  [email protected] 

Attorneys for Plaintiff 
Securities and Exchange Commission 
100 F Street NE 
Washington, DC 20549 
Telephone: (202) 551-4412 
Facsimile: (202) 772-9245 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

JEFFREY P. CARPOFF and 
PAULETTE CARPOFF, 

Defendants. 

 Case No. 

COMPLAINT 

JURY  DEMAND 

Plaintiff, the United States Securities and Exchange Commission (“SEC” or 

“Commission”), for its Complaint alleges as follows: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b),

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. 

§§ 77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of

the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),

78u(d)(3)(A), 78u(e) & 78aa(a).

2. Defendants have, directly or indirectly, made use of the means or

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 1 of 27



 

COMPLAINT 2  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint. 

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a) 

because certain of the transactions, acts, practices and courses of conduct constituting 

violations of the federal securities laws occurred within this district.  Defendants 

committed many of the acts set forth in this Complaint in this district.  For example, 

the Carpoffs maintained offices at DC Solar Solutions, Inc. and initiated wire and 

bank transfers and sent emails from their office computers at DC Solar Solutions, 

Inc., which is located in this district.     

SUMMARY 

4. This case involves fraudulent securities offerings and a massive Ponzi 

scheme that raked in over $910 million in investor funds.  This Ponzi scheme was 

orchestrated by husband and wife Defendants Jeffrey (“Jeff”) and Paulette Carpoff 

through companies they controlled, and which they used to enrich themselves at 

investors’ expense.   

5. The Carpoffs offered and sold investment opportunities through two 

solar energy companies in the business of making, leasing, and operating mobile solar 

generators (“Generators”).  The Carpoffs and others touted these investment 

opportunities would deliver gains in the form of tax benefits, guaranteed lease 

payments, and the resulting profits from the operation of the Generators.  In reality, 

thousands of the purportedly profitable Generators were never even manufactured, let 

alone put into use, and the vast majority of alleged “revenue” sent to investors came 

from investor money, not from actual lease payments from end-users of the 

Generators.   

6. In 2011, the Defendants began selling investment contracts through their 

privately held alternative energy companies DC Solar Solutions, Inc. (“DC 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 2 of 27



 

COMPLAINT 3  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Solutions”) and DC Solar Distribution, Inc. (“DC Distribution) (collectively with Jeff 

and Paulette Carpoff “DC Solar”).  Through December 2018, DC Solar raised around 

$910 million from purchasers of the investment contracts.  DC Solar designed the 

investments to take advantage of tax credits that were available to certain alternative 

energy related projects.  To that end, investors purchased Generators from DC 

Solutions and then immediately leased them to DC Distribution.  DC Distribution 

was then supposed to sub-lease the Generators to end-users.  DC Solar touted itself as 

a major player in its industry, with thousands of Generators in the field, lucrative 

contracts with big customers yielding a track record of consistent revenue, and 

extensive experience in making and maintaining the Generators and finding 

customers for them.   

7. That was all a sham.  DC Solar had manufactured and put into service 

far fewer Generators than it claimed, and made hardly any of its revenue from leasing 

Generators to end-users.  In fact, DC Solutions did not actually manufacture nearly 

two-thirds of the Generators that it purportedly sold to investors.  Recent intensive 

efforts by investors to locate the Generators have identified less than 6,600 of the 

approximately 17,600 Generators for which DC Solar entered into investment 

contracts and sold to investors.  Investors paid hundreds of millions of dollars for 

Generators that never existed.  And, legitimate lease income from actual end-users of 

the Generators represented a tiny fraction -- less than 5% -- of DC Distribution’s 

revenue.  The vast majority of DC Distribution’s revenue was comprised of investor 

funds transferred from DC Solutions.  In reality, the vast majority of investor funds 

was not being used to manufacture, place into service, and maintain the thousands of 

Generators that DC Solar was using as the basis for investment contracts, but was 

instead being pilfered by Defendants Jeff and Paulette Carpoff for their personal 

benefit, such as the purchase of luxury vehicles, private jet services and real estate, 

and used to make lease payments and distributions to earlier investors.   

8. Defendants’ other claims designed to lure investors were false.  DC 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 3 of 27



 

COMPLAINT 4  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Solar was not a major player in the industry.  There were no lucrative contracts with 

big customers.  And DC Solar did not have extensive experience finding customers 

for its Generators. 

9. The Defendant Carpoffs were the architects and the chief beneficiaries 

of this fraudulent scheme.  Jeff and Paulette Carpoff each knowingly hid, and 

oversaw others in hiding, from investors that DC Solutions had not manufactured 

their Generators and that DC Distribution generated minimal amounts of legitimate 

lease revenue.  They did so by committing and/or overseeing a variety of deceptive 

acts including making false statements in investment contracts with investors, 

funneling investor funds through DC Solutions to DC Distribution to pay earlier 

investors, causing the creation of bogus commissioning reports for the Generators, 

directing that false financial statements be prepared for DC Solutions and DC 

Distribution, and creating and touting fraudulent leasing arrangements with end-users 

of the Generators. 

10. As a result of the conduct alleged herein, Defendants have violated the 

antifraud provisions of the Securities Act and the Exchange Act.  The SEC brings this 

action and seeks entry of permanent injunctions against Defendants as well as 

disgorgement of ill-gotten gains and prejudgment interest thereon and civil money 

penalties.   

THE DEFENDANTS 

11. Jeffrey P. Carpoff was a resident of Martinez, CA during the relevant 

time period.  In addition to owning DC Solutions, Jeff Carpoff was the President and 

a Director of DC Solutions and the Vice President and a Director of DC Distribution. 

12. Paulette Carpoff was a resident of Martinez, CA during the relevant time 

period.  In addition to owning DC Distribution, Paulette Carpoff was the President, 

Secretary, Treasurer, and a Director of DC Distribution and the Secretary, Treasurer 

and a Director of DC Solutions. 

 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 4 of 27



 

COMPLAINT 5  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

RELATED INDIVIDUALS AND ENTITIES 

13. DC Solar Solutions, Inc. is a California corporation headquartered in 

Benicia, CA.  It was owned by Jeff Carpoff.  DC Solutions is not registered with the 

SEC in any capacity.  It filed for bankruptcy protection in early 2019 and is currently 

in Chapter 7 proceedings. 

14. DC Solar Distribution, Inc. is a California corporation headquartered in 

Benicia, CA.  It was owned by Paulette Carpoff.  DC Distribution is not registered 

with the SEC in any capacity.  It filed for bankruptcy protection in early 2019 and is 

currently in Chapter 7 proceedings. 

15. Joseph W. Bayliss is a resident of Martinez, CA.  Bayliss is the owner of 

Bayliss Innovative Services, Inc. through which he is licensed as an electrical and 

general building contractor. 

16. Robert A. Karmann is a resident of Clayton, CA.  He was the CFO and 

prior to that, the Controller, of DC Solutions from late 2014 through 2018.  As DC 

Distribution did not have its own CFO and was closely affiliated with DC Solutions, 

Karmann performed essentially the same CFO duties for DC Distribution as well.  He 

is licensed as a Certified Public Accountant in California. 

17. Ronald J. Roach is a resident of Walnut Creek, California.  Roach was a 

certified public accountant and the owner of Ronald J. Roach Accountancy 

Corporation.  He has held Series 6, 7, 63 and 65 securities licenses and was a 

registered investment adviser and a registered representative. 

FACTUAL ALLEGATIONS 

A. Background on DC Solar 

18. Jeff and Paulette Carpoff were the owners and principals of DC 

Solutions and DC Distribution.  While DC Solutions and DC Distribution are two 

separate legal entities, they operated from the same location and shared the same 

management and employees.  DC Solar told investors that it “design[ed], 

manufacture[d] and lease[d] renewable energy products to serve the off-grid needs of 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 5 of 27



 

COMPLAINT 6  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

a broad and diverse marketplace – while providing investors with access to the 

renewable energy asset class.”     

B. The DC Solar Securities Offerings 

(1) The Solicitation of Investors 

19. Since at least 2011 and continuing to December 2018, DC Solar offered 

securities to investors.  The securities took the form of two types of investment 

contracts: (1) Investment Fund Contracts and (2) Sale-Leaseback Contracts.  Under 

both arrangements, the investors paid to purchase Generators from DC Solutions, 

while simultaneously leasing them to DC Distribution.  DC Distribution would then 

purportedly arrange to sub-lease the Generators to end-users.  The investors expected 

to profit from the investments due to tax credits, depreciation on the Generators, and 

lease payments.  Investors thus played an entirely passive role:  the success of the 

venture, and thus the profits to investors and DC Solar, turned entirely on the efforts 

of DC Solar to make, maintain, market, and lease the Generators.    

20. Over the course of the offerings, DC Solar raised approximately $910 

million in investor money.  These deals had face values of more than $2.7 billion 

because investors in the Investment Fund Contracts financed approximately 70 

percent of the amount of their investments through promissory notes.   

21. DC Solar, directly and indirectly, solicited investors through brokers and 

salespeople using various methods, including email, conference calls and in-person 

meetings.  DC Solar offered and sold Investment Fund Contracts and Sale-Leaseback 

Contracts through interstate commerce to investors throughout the United States.   

22. DC Solar marketed itself as having extensive experience and capabilities 

in the renewable energy field and in executing successful transactions for investors.  

For example, pitch-books for investors, which were prepared by a broker working on 

behalf of DC Solar using information provided by DC Solar, emphasized that DC 

Solar had thousands of Generators deployed and manufacturing capabilities of 900 

Generators per month.  They also highlighted that DC Solar had closed many prior 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 6 of 27



 

COMPLAINT 7  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

investment funds with “headline” or “notable” investors, including funds with fair 

market values near or over $100 million, and that the “performance of each of the 

funds remains in good standing.”  In addition, the materials falsely claimed that DC 

Solar had “customer relationships with leading companies in the telecommunications, 

entertainment and construction industries” and provided case studies of the 

established leasing arrangements with many of those customers.  Finally, certain of 

the pitch-books provided a “Summary of Investor Returns” with estimated internal 

rates of return ranging from 40 to as high as 50 percent.   

(2) The Terms of the Investment Fund Contract Offerings 

23. Investment Fund Contract investors executed a standard package of 

agreements, including:  (i) a Limited Liability Company Agreement (“LLC 

Agreement”); (ii) a Solar Equipment Purchase Agreement (“Purchase Agreement”); 

(iii) a Secured Promissory Note (“Promissory Note”); and (iv) a Mobile Solar 

Equipment Lease (“Equipment Lease”) (together the “Investment Fund Contracts”).  

The documents were executed at or around the same time, with Jeff Carpoff signing 

the Purchase Agreements on behalf of DC Solutions and Paulette Carpoff typically 

signing the Equipment Leases on behalf of DC Distribution.  While the Investment 

Fund Contracts for certain deals had variations, they largely had the same substantive 

terms. 

24. Under the terms of the LLC Agreement, an investor became the 

“Investor Member” of the Investment Fund Limited Liability Company (“Investment 

Fund”), an entity created specifically for the purpose of the investment.  This 

Investment Fund then purchased Generators from DC Solutions at a price of 

$150,000 per Generator under the Solar Equipment Purchase Agreement.  The 

Purchase Agreement specified the total number of Generators being purchased as 

well as the total purchase price.  An Exhibit to the Purchase Agreement contained a 

blank space for the Vehicle Identification Numbers (“VINs”) for the Generators or 

stated that “VIN for each Generator to be Supplied at Delivery.”  In exchange for the 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 7 of 27



 

COMPLAINT 8  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

payment, DC Solutions agreed to deliver the Generators by a certain date or dates and 

warranted “to Buyer that all Equipment shall be in good working order in conformity 

with the Specifications for a period” of five or ten years.   

25. The delivery dates for tranches of Generators specified in the Purchase 

Agreements were often scheduled in stages.  Likewise, the Purchase Agreements 

dictated that payments would be due to DC Solutions in stages according to a 

schedule in part dictated by capital contributions being made by the investor under 

the terms of the LLC Agreement.  Those capital contributions were contingent on the 

investor receiving confirmation that the Generators were “Placed in Service” as 

evidenced by an “IE [Independent Engineer] Certificate.” 

26. Investors generally contributed about thirty percent of the purchase price 

in cash and financed the balance pursuant to a Promissory Note or Notes executed by 

the Investment Fund in favor of DC Solutions.  The Promissory Note was an exhibit 

to the Purchase Agreement.  DC Solar told investors, and arranged for a tax opinion 

letter from a law firm confirming, that the Generators qualified for the Energy Credit 

under Internal Revenue Code § 48.  That provision allows for a thirty percent tax 

credit for certain energy-related investments.  Thus, investors expected to be able to 

take a tax credit for roughly the same amount as their cash contribution to the 

investment. 

27. Under the Investment Fund Contracts, the Generator business was 

entirely managed and operated by DC Solar.  At the time the Investment Funds 

executed the Purchase Agreement with DC Solutions, the Investment Funds also 

executed the Mobile Solar Equipment Lease with DC Distribution for at least the first 

batch of Generators being purchased.  Depending on the size of the transaction, as 

additional tranches of Generators were manufactured, more Equipment Leases were 

executed.  Under the Equipment Leases, the Investment Funds leased their 

Generators to DC Distribution for terms ranging up to 120 months.  The Equipment 

Leases provided that DC Distribution shall use “the Solar Equipment in a careful and 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 8 of 27



 

COMPLAINT 9  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

proper manner” and “shall comply with all laws, regulations and ordinances.”   

28. Moreover, the Equipment Leases stated that DC Distribution shall be 

“solely responsible for the maintenance and repair of the Solar Equipment” and “shall 

ensure the Solar Equipment is operational and capable of producing solar energy at 

all times.”  The Equipment Leases required DC Distribution to “obtain, maintain and 

keep” insurance coverage on the Generators in the amount of the replacement cost as 

well as “liability insurance.”  In addition, the Equipment Leases required DC 

Distribution to “promptly pay when due, all license fees, registration fees, sales taxes, 

use and property taxes, assessments, charges and other taxes” related to the 

Generators.   

29. The Equipment Leases further provided for a set amount of “Base Rent” 

to be paid to the Investment Fund in advance in monthly installments for the term of 

the lease as well as payment to the Investment Fund of “Additional Rent” or 

“Variable Rent” to the extent DC Distribution received revenue from subleasing the 

Generators in excess of a certain amount.  The amount of additional or variable rent 

due to the Investment Fund varied depending on the deal and the calculation was 

specified in the Equipment Lease. 

30. The Investment Fund Contracts were structured such that there was a 

flow of money between the Investment Funds and DC Solar, all of which was 

contingent on the Generators generating significant sub-lease revenue from legitimate 

end-users.  DC Distribution owed monthly lease payments to the Investment Funds 

purportedly to be paid with the sub-lease revenue it received from third-party 

customers.  The Investment Funds would then use the lease payments they received 

from DC Distribution under the terms of the Equipment Leases to make monthly 

payments due to DC Solutions under the terms of the Promissory Notes.  Investors 

expected several benefits under the arrangement, including the thirty percent energy 

tax credit and the ability to claim significant depreciation on the Generators.   

31. In addition, investors expected to receive profits in the form of annual 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 9 of 27



 

COMPLAINT 10  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

cash distributions from the Investment Funds.  In general, the LLC Agreements stated 

that “Distributable Cash,” defined as the amount of cash from lease revenue 

remaining after loan payments and operating expenses, would be paid out to investors 

on an annual basis.  Based on financial projections for the Investment Funds that 

were provided to investors, investors expected to receive these cash distributions.   

32. From December 2011 through December 2018, DC Solar closed 34 

Investment Fund Contracts, involving 13 institutional investors, totaling about $2.57 

billion in face value.  The investors made roughly $759 million in cash contributions 

to their Investment Fund Contracts. 

(3) The Terms of the Sale-Leaseback Contract Offerings 

33. DC Solar began offering the second type of security, the Sale-Leaseback 

Contracts, in around 2017.  Investors in the Sale-Leaseback Contracts typically 

executed several agreements including: (i) a Sale Agreement; (ii) an Equipment 

Lease Agreement; and (iii) a Schedule (collectively the “Sale-Leaseback Contracts”).  

Jeff Carpoff typically signed the Sale Agreement on behalf of DC Solutions, or in one 

instance on behalf of another affiliate of DC Solar, and Paulette Carpoff typically 

signed the Lease Agreement and the Schedule on behalf of DC Distribution.  While 

the Sale-Leaseback Contracts for certain deals had minor variations in wording, they 

largely had the same substantive terms. 

34. The Sale-Leaseback Contracts differed from the Investment Fund 

Contracts in that investors purchased the Generators outright from DC Solutions, or 

in one instance another affiliate of DC Solar, without executing a Promissory Note.  

Under the Sale Agreement, investors paid $150,000 for each Generator they 

purchased.  The Generators were identified by VIN in an exhibit attached to that 

Agreement.  In exchange for the purchase price, DC Solutions agreed to convey to 

the investors “all right, title and interest in” the Generators. 

35. One Sale-Leaseback Contract transaction differed from the others in that 

the investor purchased used Generators and paid $82,500 for each.  As the Generators 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 10 of 27



 

COMPLAINT 11  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

were used, they did not qualify for the energy tax credit.  However, the investment 

worked the same as the other Sale-Leaseback Contracts with the investor 

immediately leasing the Generators to DC Distribution and being entirely reliant on 

DC Distribution to maintain and sub-lease the Generators. 

36. Just as was done in the Investment Fund Contracts, under the Sale-

Leaseback Contracts the investors immediately leased the Generators back to DC 

Distribution (or another affiliate of the Company) in return for monthly payments 

purportedly to be made from sub-lease payments.  Under the Lease Agreement, DC 

Distribution committed to keeping the Generators “in good repair” and operating 

condition and to “maintain” insurance coverage on the Generators as well as “liability 

insurance.”  The Lease Agreement also required DC Distribution to pay, or reimburse 

the investor for, all taxes, fees, and assessments imposed on the Generators.   

37. Like the Investment Funds, most investors in the Sale-Leaseback 

Contracts received an “IE Certificate,” or “IE Commissioning Report,” for each new 

Generator that they purchased. 

38. The Schedule to the Lease Agreement set forth the term of the lease and 

a set lease payment due to the investors from DC Distribution each month.  An 

attachment to the Schedule again identified the Generators by VIN.  In addition to the 

monthly lease payments, most Sale-Leaseback Contract investors expected to be able 

to take the 30 percent energy tax credit as well as depreciation on the Generators they 

purchased.  In fact, the Schedules in certain of the Sale-Leaseback Contracts 

specifically referenced the energy tax credit and depreciation and required DC 

Distribution to use the Generators so as to remain eligible for those tax benefits.  

Based on the combination of tax benefits and lease revenue, the Sale-Leaseback 

Contract investors expected to earn a positive return and profit from these 

transactions.   

39. From 2017 through 2018, DC Solar completed seven Sale-Leaseback 

Contracts, involving four institutional investors, in transactions worth nearly $151 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 11 of 27



 

COMPLAINT 12  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

million.   

(4) The Company’s Offerings Are Securities 

40. DC Solar offered and sold the Investment Fund Contracts and Sale-

Leaseback Contracts through interstate commerce to investors located in multiple 

states. 

41. DC Solar’s Investment Fund Contracts and Sale-Leaseback Contracts 

are securities in the form of investment contracts.  They represented an investment of 

money, in a common enterprise, with the expectation of profits to be derived from the 

efforts of a third party.  Investors provided money to DC Solar for investment 

purposes.  Because the terms of the Investment Fund Contracts and Sale-Leaseback 

Contracts tied the fortunes of the investors to those of DC Solar and its ability to 

manufacture the Generators and then sub-lease them to end-users at optimal rates, 

investors were investing in a common enterprise.  And, because the terms of the 

Investment Fund Contracts and Sale-Leaseback Contracts made investors entirely 

dependent on DC Solar to manufacture, operate and maintain their purported 

Generators, DC Solar’s efforts were essential to the success or failure of the common 

enterprise.  Investors also had an expectation of profits from the tax benefits and 

payment stream to be generated from the enterprise.   

C. The Carpoffs Orchestrated and Committed Deceptive Acts in Furtherance 

of the Fraud 

42. Unbeknownst to investors, DC Solar never manufactured the majority of 

the Generators that it sold.  And, most of the lease revenue paid to investors consisted 

of funds from other investors, rather than lease income from legitimate end-users of 

the Generators.  In an effort to fool investors into believing that DC Solutions had 

manufactured and delivered all of the Generators that investors purchased and that 

DC Distribution was earning substantial lease revenue from legitimate end-users, the 

Carpoffs orchestrated and engaged in a series of lies and deceptive acts.  

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 12 of 27



 

COMPLAINT 13  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(1) The Carpoffs Sold Non-Existent Generators to Investors 

through DC Solutions 

43. Investors paid DC Solutions over $910 million in cash and took on 

promissory notes to DC Solutions for roughly $1.8 billion for the Generators over the 

course of the scheme.  However, because DC Distribution continued to fail in its 

attempts to lease the Generators to legitimate end-users in significant numbers, DC 

Solutions had virtually ceased production of new Generators on any scale by 

sometime in 2016.  In fact, recent efforts by investors to locate their Generators 

turned up only about 6,571 of the over 17,600 Generators that they purportedly 

purchased.  The overwhelming majority of Generators that DC Solar sold to investors 

were not manufactured.  Indeed, for eight of the Investment Funds that closed after 

late 2016 with a total transaction size of nearly $1 billion, none of the approximately 

6,575 Generators they purchased were found.  For another Investment Fund that 

closed in July 2018, just 90 of the approximately 2,280 Generators it purchased were 

found.  In total, across all of the Investment Fund Contracts and Sale-Leaseback 

Contracts, the inventory located only about 37% of the Generators that were sold by 

DC Solutions.  Thus, investors collectively paid more than $1.6 billion through cash 

contributions and promissory notes to DC Solutions for non-existent Generators.  The 

Carpoffs took numerous steps to hide from investors the fact that the Generators had 

not been manufactured. 

a. The Carpoffs Made False Statements to Investors 

44. After mid to late 2016, when DC Solutions had essentially ceased 

production of Generators for new Investment Funds, Defendants Jeff and Paulette 

Carpoff still each continued to fraudulently execute agreements with numerous 

Investment Funds even though they knew that the terms of the agreements would not 

be fulfilled and that investors would be duped out of hundreds of millions of dollars.  

Defendant Jeff Carpoff, as President of DC Solutions, signed Purchase Agreements 

that falsely promised delivery of Generators by a certain date and falsely warranted 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 13 of 27



 

COMPLAINT 14  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

that the Generators would “be in working order” and conform to the agreed upon 

specifications.  Investors made payments to DC Solar based on these false statements.   

45. As the President and the owner of DC Solutions, Jeff Carpoff had access 

to all bank accounts for the company and was the primary person at DC Solutions 

who dealt with the suppliers and manufacturers of the components for the Generators.  

When he signed the Purchase Agreements with the Investment Funds after late 2016, 

Jeff Carpoff knew that DC Solutions had stopped manufacturing Generators on the 

scale necessary to fulfill its obligations and that the representations he was making to 

investors were false.   

46. Defendant Paulette Carpoff likewise signed agreements intended to fool 

investors into believing that their investments were legitimate.  As President of DC 

Distribution, she signed Equipment Leases in which she falsely warranted that the 

Generators would be operated  “in a careful and proper manner” and that DC 

Distribution would be “solely responsible for the maintenance and repair” of the 

Generators.  She also falsely represented that DC Distribution would ensure that the 

Generators were “operational and capable of producing solar energy at all times.”   

47. As an officer and director of DC Solutions, Paulette Carpoff had access 

to the bank records and contracts of the company.  In addition, as the President and 

owner of DC Distribution, she was aware of the true number of Generators that DC 

Solutions had delivered to DC Distribution to be sub-leased to end-users and which 

DC Distribution actually maintained.  By late 2016, Paulette also knew that DC 

Solutions had stopped manufacturing Generators on a scale necessary to fulfill its 

obligations.  Notwithstanding these facts, Paulette Carpoff still continued to execute 

Equipment Leases, which contained false representations concerning how DC 

Distribution would deploy non-existent Generators.  These lies were told in order to 

fool investors and perpetuate the scheme.   

48. Even prior to late 2016, Paulette Carpoff made misleading statements to 

investors in the Equipment Leases she signed.  In those Equipment Leases, DC 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 14 of 27



 

COMPLAINT 15  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Distribution committed to paying “Base Rent” as well as “Additional Rent” or 

“Variable Rent.”  The Equipment Leases misleadingly omitted that any “Base Rent,” 

“Additional Rent,” or “Variable Rent” payments due to investors were contingent on 

DC Solutions raising money from new investors because DC Distribution was 

generating virtually no lease revenue from sub-leases with end-users.  Paulette 

Carpoff was aware that DC Distribution was generating minimal amounts of 

legitimate lease revenue from end-users because as the President and owner of DC 

Distribution she had unfettered access to the bank accounts, financial records, and 

sub-lease agreements of the company. 

49. Information about the existence of the Generators and the amount of 

lease revenue being generated by DC Distribution was critical to investors.  Had 

investors known that the Generators they purchased would not be manufactured or 

that their lease payments depended on new investors putting money into the scheme, 

they would not have invested. 

b. Jeff Carpoff Arranged for False Certifications for Investors 

50. By design, investors never physically took possession of the Generators 

that they purchased because the Generators were immediately leased to DC 

Distribution upon purportedly being placed in service.  Pursuant to the terms of the 

Purchase Agreements and LLC Agreements, investors in the Investment Funds made 

payments to DC Solutions for the Generators in installments after receiving proof that 

the Generators had been placed in service as evidenced by the delivery of the “IE 

Certificate.”  The LLC Agreements defined “IE Certificate” as “a certificate to be 

issued by the Independent Engineer” with respect to the Generators “upon 

achievement of Placement in Service.”   

51. Beginning in 2014, the LLC Agreements stated that “‘Independent 

Engineer’ means Joseph Bayliss of Bayliss Innovative Services.”  Most Sale-

Leaseback Contract investors also received these IE Certificates from Bayliss for the 

new Generators they purchased.  Defendant Jeff Carpoff arranged for Bayliss and his 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 15 of 27



 

COMPLAINT 16  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

firm to serve as the “Independent Engineer.”  This arrangement deceived investors as 

Bayliss was neither independent nor an engineer.  Bayliss holds general contractor 

and electrical licenses from the State of California, but he was never a licensed 

engineer.  And, Bayliss has known the Carpoffs since high school.  In fact, DC Solar 

hired Bayliss to perform various projects for the DC Solar and other businesses 

owned by the Carpoffs. 

52. Bayliss executed IE Certificates, titled “IE Commissioning Reports,” for 

nearly all of the 16,400 Generators that Investment Funds and Sale-Leaseback 

Contract investors purchased from 2014 through 2018.  The IE Commissioning 

Reports contained a checklist of tests that Bayliss would complete in order to attest 

“that the system was installed in accordance with professional engineering practices 

and safety requirements; and that the system is ready and able to be used for the 

production of electricity.”  For the overwhelming majority of these Generators, 

Bayliss signed IE Commissioning Reports without inspecting them, and without any 

basis for making the representations contained in the reports.  These representations 

were false because DC Solutions only had manufactured a small fraction of the 

Generators that it had purportedly sold to investors.  Indeed, of the over 16,400 

Generators for which Bayliss provided IE Commissioning Reports, more than 11,400 

could not be located. 

53. Jeff Carpoff knew that the statements in the IE Commissioning Reports 

signed by Bayliss were false because DC Solutions had not manufactured the 

thousands of Generators certified by Bayliss.  Even in instances where DC Solutions 

had manufactured some of the Generators, Jeff Carpoff knew that Bayliss had not 

inspected them because he had convinced Bayliss to simply sign reports by falsely 

representing that DC Solar employees would inspect the Generators.  Even after 

Bayliss learned that DC Solutions was not actually manufacturing the Generators, 

Jeff Carpoff was still able to persuade Bayliss to continue to “rubber stamp” the IE 

Commissioning Reports.  

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 16 of 27



 

COMPLAINT 17  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

54. Jeff Carpoff also knew that the deceptive IE Commissioning Reports 

Bayliss signed were being sent to investors and were important to them.  Indeed, Jeff 

Carpoff was copied on emails in which false IE Commissioning Reports were sent to 

investors and their representatives.  And, on at least one occasion, Jeff Carpoff 

himself sent deceptive IE Commissioning Reports containing Bayliss’ deceitful 

certifications to a broker to be passed along to an investor.  Jeff Carpoff also knew 

that under the terms of the Investment Fund Contracts, including the Purchase 

Agreements he signed on behalf of DC Solutions, investors’ capital contributions and 

payments to DC Solutions for the Generators were contingent on their receipt of the 

IE Commissioning Reports. 

55. Likewise, Paulette Carpoff knew that the statements in the IE 

Commissioning Reports signed by Bayliss were false.  Paulette Carpoff took part in 

conversations with Bayliss and Jeff Carpoff about the fact that DC Solutions had not 

manufactured Generators for which he signed reports.   

56. Paulette Carpoff also knew that the deceptive IE Commissioning Reports 

signed by Bayliss were being provided to investors and were material to them.  She 

sent IE Commissioning Reports for certain Investment Funds and at least one Sale-

Leaseback Contract investor by email for Bayliss to sign.   

c. Jeff Carpoff Deceived Investors through the Manipulation of 

VINs and the Movement of Generators 

57. At times, DC Solutions sold the same Generator to different Investment 

Funds or Sale-Leaseback Contract investors.  Investors were unaware that their 

supposed Generators were being resold, or that they were purchasing used Generators 

owned by someone else.   As part of these efforts, on occasions in 2017 and 2018, 

Jeff Carpoff participated (and supervised other DC Solar employees and Bayliss) in 

removing the VIN stickers from Generators assigned to certain Investment Funds or 

Sale-Leaseback Contract investors and replacing them with new VIN stickers 

assigned to other Investment Funds or Sale-Leaseback Contract investors.  Jeff 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 17 of 27



 

COMPLAINT 18  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Carpoff orchestrated this effort in order to dupe investors during inspections into 

believing that the Generators sold to them existed and/or could be found at the 

locations DC Solar had asserted.  In certain instances, at Jeff Carpoff’s direction, DC 

Solar employees buried GPS devices purportedly attached to Generators at certain 

locations to make it appear that the Generators were in use at those locations. 

58. In 2018, Jeff Carpoff also deceived inspectors associated with a Sale-

Leaseback Contract investor about the location of Generators that an investor had 

purchased.  In preparation for a scheduled inspection of some of the Generators 

purportedly owned by that investor, Jeff Carpoff and another DC Solar employee 

developed a list of inspection sites and coordinated the delivery of Generators to 

those sites before and on the day of the inspection.  This effort was intended to 

deceive the inspectors as the Generators were neither leased nor in use at the 

locations to which they were delivered. 

(2) The Carpoffs Hid the Lack of Legitimate Lease Revenue 

59. Lease revenue from end-users of the Generators was critical to the 

success of the investments because it was the source of the funds that DC Distribution 

needed to make lease payments to the Investment Funds and Sale-Leaseback Contract 

investors.  Although DC Distribution purported to be earning millions each month in 

legitimate lease revenue from end-users of the Generators, bank records prove that 

DC Distribution generated minimal lease revenue from sub-leases to end-users.  In 

fact, the vast majority of funds flowing into DC Distribution’s bank accounts 

consisted of transfers of investor funds from DC Solutions.   

60. For example, during the period of January 2013 through December 

2018, a total of about $409,930,000 was deposited into DC Distribution’s bank 

accounts.  Of that amount, approximately $383,347,000 -- or 93.5% -- consisted of 

transfers from DC Solution’s bank accounts.  And, another $8,268,000 -- or 2.0% -- 

consisted of transfers from the bank accounts of different Investment Funds.  At 

most, $18,316,000 -- or 4.5% -- of the deposits to DC Distribution’s bank accounts 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 18 of 27



 

COMPLAINT 19  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

during the time period represented sub-lease payments from legitimate end-users of 

the Generators. 

61. But, during this period, DC Distribution paid about $347,800,000 to 

various Investment Funds and Sale-Leaseback Contract investors, most of which took 

the form of “lease payments” owed under the operative Equipment Lease 

Agreements.  Accordingly, DC Distribution’s payments were not funded by 

legitimate sub-lease revenue, but instead by investor funds cycled through DC 

Solutions. 

a. Fraudulent Transfers 

62. The Carpoffs oversaw this circular movement of funds between the 

accounts of the companies they owned and the Investment Funds, which started in the 

very early years of DC Solar because DC Distribution never generated enough lease 

revenue to satisfy its obligations to the Investment Funds or Sale-Leaseback Contract 

investors.  Roach was involved in the early transfers of funds between DC Solutions 

and DC Distribution and was part of communications with employees of DC 

Solutions, including Jeff and Paulette Carpoff, about the amounts that needed to be 

transferred so that DC Distribution could make its lease payments to the Investment 

Funds.  During that period, Roach or Paulette Carpoff (or another DC Solar employee 

working at her direction) would then execute the necessary transfers. 

63. In approximately August 2014, the Carpoffs hired Karmann as the 

Controller of DC Solutions and began to use him as the primary employee involved 

in the fraudulent transfers.  While Karmann did not have the ability to initiate bank 

transfers himself when he first started at DC Solutions, he calculated the amounts that 

were owed by DC Distribution to the Investment Funds each month and the amounts 

owed by the Investment Funds to DC Solutions under the terms of the Promissory 

Notes.  He also calculated the amount that needed to be transferred from DC 

Solutions to DC Distribution each month so that DC Distribution could make the 

lease payments owed to the Investment Funds and created spreadsheets that specified 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 19 of 27



 

COMPLAINT 20  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the exact amounts that needed to be transferred among the various entities and in 

what order.  After making these calculations, Karmann provided the information 

directly to Paulette Carpoff (and/or other DC Solar employees working at her 

direction) who would then make the transfers.   

64. In early 2015, the Carpoffs granted Karmann the ability to initiate 

transfers between the bank accounts of DC Solutions, DC Distribution, and the 

Investment Funds himself.  Karmann continued DC Solar’s practice of making 

monthly calculations and then regular transfers between the bank accounts of DC 

Solutions, DC Distribution and the Investment Funds from early 2015 through the 

end of 2018 with the knowledge and approval of the Carpoffs.     

65. The transfers of money were made by the Carpoffs and others working 

at their direction in order to perpetuate DC Solar’s fraudulent scheme and to give the 

false appearance to investors that DC Distribution was generating sufficient lease 

revenue from end-users of the Generators in order for the investments to be 

profitable.  As the owners and officers of the companies, Jeff and Paulette Carpoff 

each had complete access to the bank accounts and the accounting records maintained 

in QuickBooks of both DC Solutions and DC Distribution.  Both Jeff and Paulette 

Carpoff knew DC Distribution was earning minimal lease revenue from genuine end-

users of the Generators.  Each of them also knew that DC Solutions was subsidizing 

DC Distribution each month, mostly using investor funds, so that DC Distribution 

could make the lease payments due to the Investment Funds and Sale-Leaseback 

Contract investors.  And, each of them knew that investors were not informed of this 

arrangement.  Their actions kept the scheme running as new and existing investors 

purchased additional Investment Fund Contracts or Sale-Leaseback Contracts during 

the years the Carpoffs orchestrated the cycling of money through the various 

accounts. 

b. False Financial Statements 

66.   Prospective investors routinely requested financial statements from DC 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 20 of 27COMPLAINT 21  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Distribution and DC Solutions before investing.  The Carpoffs arranged for and 

authorized the preparation of false financial statements in order to cover up the fact 

that DC Solutions was subsidizing DC Distribution with investor money.  On or 

about June 2012, Jeff Carpoff and Roach, among others, met and discussed falsely 

categorizing the transfers from DC Solutions to DC Distribution as cost of goods 

sold.  Subsequently, at various points throughout the scheme, Roach issued 

“Accountants’ Compilation Reports” accompanying financial statements for DC 

Distribution and DC Solutions covering various periods between 2011 through July 

2018 and an audit firm issued “Independent Auditor’s Reports” accompanied by 

financial statements for DC Solutions for each year from 2012 through 2017.  The 

financial statements accompanying these reports contained false and misleading 

information.   

67. The income statements for DC Distribution accompanying the 

compilation reports falsely stated that DC Distribution generated hundreds of millions 

of dollars of revenues in “Rental Income.”  In reality, the overwhelming majority of 

the purported “Rental Income” consisted of intercompany transfers between DC 

Solutions and DC Distribution.  The income statements were intended to mislead 

investors and potential investors into believing that DC Distribution earned hundreds 

of millions of dollars in “Rental Income” from end-users of the Generators.   

68. Similarly, the financial statements in the various compilation reports and 

independent auditor’s reports for DC Solutions also contained false information.  The 

cash infusions of hundreds of millions of dollars from DC Solutions to DC 

Distribution were hidden in the “Direct Costs” category of DC Solution’s income 

statements.  In reality, these payments had nothing to do with the costs of 

manufacturing the Generators.  DC Solutions categorized the payments in this 

manner to conceal from investors the fact that DC Solutions funded DC 

Distribution’s “Rental Income.” 

69. At various points throughout the scheme, Roach, Karmann and/or other 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 21 of 27



 

COMPLAINT 22  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DC Solar employees, or individuals working on behalf of DC Solar, sent certain of 

the financial statements and the accompanying reports via email to investors, 

prospective investors, or brokers to be passed on to investors or prospective investors.  

Jeff Carpoff was regularly copied on such emails.  Paulette Carpoff also was at times 

copied on emails sending certain of the financial statements to a bank at which DC 

Solar maintained accounts and to brokers to be passed on to prospective investors or 

an outside law firm working on transactions.  As the owners and officers of the 

companies, the Carpoffs had access to the bank accounts and accounting records for 

DC Distribution and DC Solutions, and were fully aware that DC Distribution had 

very little actual lease revenue and that DC Solutions infused it with cash.  The 

Carpoffs therefore knew that the various compiled and audited financial statements 

contained false information.  They also knew that accurate information about DC 

Distribution’s revenue was important to investors.   

c. Fraudulent Lease Arrangements 

70. Jeff Carpoff devised a number of deceptive lease arrangements to fool 

investors into believing that DC Distribution was earning sufficient sub-lease revenue 

from end-users to support its lease obligations to investors.  In meetings and calls 

with brokers and/or prospective investors, Jeff Carpoff falsely claimed that demand 

for Generators was huge and touted leasing relationships with various customers, 

including Telecom Company A, A Rentals, and Company K.  He also arranged for 

copies of the lease agreements with Telecom Company A to be provided to certain 

investors.  In addition, pitch-books sent to prospective investors provided case studies 

of the established leasing arrangements that DC Distribution purportedly had with 

various customers, including Telecom Company A, A Rentals, and Company K.  A 

broker working on behalf of DC Solar prepared these misleading pitch-books, 

versions of which were reviewed by both Jeff and Paulette Carpoff at various points 

in time. 

71. In reality, the leasing relationships with those customers resulted in 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 22 of 27



 

COMPLAINT 23  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

minimal amounts of legitimate lease revenue.  Jeff Carpoff oversaw the fabrication of 

the lease agreements with Telecom Company A and paid individuals to have those 

documents fraudulently signed without Telecom Company A’s authorization.  The 

actual amount of lease revenue paid by Telecom Company A was a small fraction of 

the amount it purportedly contracted to pay under the fraudulent lease agreements. 

72.   And, while A Rentals and Company K had contracted to lease 

Generators, DC Solar entered into side arrangements with them under which DC 

Distribution would send them funds so that each entity could then make the lease 

payments it owed.  Paulette Carpoff took steps in furtherance of these fraudulent 

lease arrangements by executing or approving external wire transfers from DC 

Distribution’s bank accounts to A Rentals and Company K.  These wire transfers 

provided A Rentals and Company K with the funds necessary to make their lease 

payments and appear as legitimate lessees.   

73. If the  investors who had  heard these pitches or received pitch-books 

knew the true circumstances surrounding the lease arrangements with Telecom 

Company A, A Rentals, and Company K, they would not have purchased investment 

contracts from DC Solar. 

(3) The Carpoffs Misappropriated Investor Funds 

74. Rather than using investor funds to manufacture the Generators that 

investors purchased, the Carpoff used a large portion of the money that flowed into 

DC Solar to run their Ponzi scheme and support their lavish lifestyle.  From January 

2013 through December 2018, the Carpoffs took at least $140 million for their 

personal benefit.  They purchased at least 150 cars, dozens of properties, including 

business properties, luxury personal properties, and vacation homes, and a share in a 

private jet service.  Jeff and Paulette Carpoff also transferred tens of millions of 

dollars to their joint and individual bank accounts, as well as the bank accounts of 

other companies they owned. 

75. On December 18, 2018, federal law enforcement agents executed federal 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 23 of 27



 

COMPLAINT 24  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

seizure warrants on nearly all of the bank accounts associated with DC Solar, 

including bank accounts of the Investment Funds.  As an additional Investment Fund 

had closed around or after the time of the approval of the warrants, a bank account 

associated with that latest Investment Fund was not seized.  On December 19, 2018, 

Paulette Carpoff, consistent with the Carpoffs’ fraudulent practice of treating investor 

funds as their own, exploited this situation and wired $5 million from the bank 

account of this Investment Fund to a bank account in South Carolina associated with 

a law firm that specializes in asset protection.  Paulette Carpoff did not have the 

permission of the investor to take the money, which came from capital contributions 

that the investor paid pursuant to the LLC Agreement and was supposed to be used to 

pay for Generators under the terms of the Purchase Agreement.   

FIRST CLAIM FOR RELIEF 

Fraud in Connection With the Sale of Securities  
Violations of Section 10(b) of the Exchange Act  

and Rule 10b-5 Thereunder 
(Against All Defendants) 

 

76. The SEC realleges and incorporates by reference paragraphs 1 through 

75 above. 

77. Defendants Jeffrey and Paulette Carpoff, by engaging in the conduct 

described above, directly or indirectly, in connection with the purchase or sale of a 

security, by the use of means or instrumentalities of interstate commerce, of the 

mails, or of the facilities of a national securities exchange, with scienter: 

a. employed devices, schemes, or artifices to defraud;  

b. made untrue statements of a material fact or omitted to state a 

material fact necessary in order to make the statements made, in 

light of the circumstances under which they were made, not 

misleading; or 

c. engaged in acts, practices, or courses of business which operated 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 24 of 27



 

COMPLAINT 25  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

or would operate as a fraud or deceit upon other persons. 

78. By engaging in the conduct described above, Defendants Jeffrey and 

Paulette Carpoff violated, and unless restrained and enjoined will continue to violate, 

Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5 thereunder, 

17 C.F.R. §§ 240.10b-5. 

SECOND CLAIM FOR RELIEF 

Fraud in the Offer and Sale of Securities 
Violations of Sections 17(a) of the Securities Act 

(Against All Defendants) 
 

79. The SEC realleges and incorporates by reference paragraphs 1 through 

75 above. 

80. Defendants Jeffrey and Paulette Carpoff, by engaging in the conduct 

described above, in the offer or sale of securities by the use of means or instruments 

of transportation or communication in interstate commerce or by use of the mails, 

directly or indirectly: 

a. with scienter, employed devices, schemes, or artifices to defraud; 

b. obtained money or property by means of untrue statements of a 

material fact or by omitting to state a material fact necessary in 

order to make the statements made, in light of the circumstances 

under which they were made, not misleading; or 

c. engaged in transactions, practices, or courses of business which 

operated or would operate as a fraud or deceit upon the purchaser. 

81. By engaging in the conduct described above, Defendants Jeffrey and 

Paulette Carpoff violated, and unless restrained and enjoined will continue to violate, 

Sections 17(a) of the Securities Act, 15 U.S.C. § 77q(a). 

  

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 25 of 27



 

COMPLAINT 26  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue judgments, in forms consistent with Fed. R. Civ. P. 65(d), permanently 

enjoining Defendants, and their agents, servants, employees, and attorneys, and those 

persons in active concert or participation with any of them, who receive actual notice 

of the judgment by personal service or otherwise, and each of them, from violating 

Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section 10(b) of the 

Exchange Act, 15 U.S.C. §§ 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-

5.  

II. 

Upon motion of the Commission, order Defendants to disgorge all ill-gotten 

gains they received, together with prejudgment interest thereon. 

III. 

Upon motion of the Commission, order Defendants to pay civil penalties under 

Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the 

Exchange Act, 15 U.S.C. § 78u(d)(3). 

IV. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court.  

  

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 26 of 27



 

COMPLAINT 27  

 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

           V. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

Dated:  January 24, 2020  

 /s/ Dean M. Conway 
Dean M. Conway  
Sarra Cho 
Christopher Nee 
Attorneys for Plaintiff 
Securities and Exchange Commission 

 

Case 2:20-cv-00180-JAM-AC   Document 1   Filed 01/24/20   Page 27 of 27