The co-owners of DC Solar Solutions, Inc. plead guilty on Friday to charges associated with running a one billion dollar Ponzi scheme. Jeff and Paulette Carpoff (along with five others who have/will plead guilty) acknowledged that between 2011 and 2018 they sold investors mobile solar generator units (MSGs) that did not exist and manipulated documentation (think: financial statements, lease contracts) to make it appear as if the units had been leased out and were in use. New funds were used to pay the scam’s earliest investors and to make several sports related purchases including; NASCAR sponsorships, an independent league baseball team and a luxury box at Raiders games. When the the criminal fraud scheme – the largest in the history of California’s Eastern District – went bust in December 2018, it forced Chip Ganassi Racing (CGR) to shutter its Xfinity series team for the 2019 season and resulted in Martinez, California’s baseball club closing operations after just a single season.
Howie Long-Short: It’s unclear if DC Solar pursued NASCAR sponsorships because of the sport’s need for their products (since most tracks only host 1-2 large scale events/year, permanent lighting fixtures aren’t worth the investment) or because the Carpoffs were auto enthusiasts (148 classic cars were seized), but their entree to the sport came in 2015 through a relationship with CGR. Initially, DC Solar sponsored Ganassi’s Xfinity series team. In recent seasons, the company expanded on that partnership to include CGR teams and drivers in both the Cup and Truck series. They also sponsored Xfinity series races at Phoenix Raceway and Las Vegas Motor Speedway during the 2018 season and the infield ‘fangrounds’ at Richmond Raceway that same season.
To be clear, DC Solar did manufacture MSGs for use at concerts and live sporting events (and on cell phone towers), just not nearly as many as the 17,000 they had claimed. FOX Sports’ Bob Pockrass said “[DC Solar generators] were being used at Daytona International Speedway and at a lot of other NASCAR tracks to power portable lights in the parking areas when they had night races.”
It would be easy to point the finger at Chip Ganassi Racing and say that the team should have done a better job vetting their sponsor, but even IRS Special Agent Kareem Carter acknowledged that “by all outer appearances this was a legitimate and successful company.” In fact, DC Solar did such a good job of projecting promise that sophisticated corporate investors – including Berkshire Hathaway, Progressive Corp. and Sherwin-Williams (perhaps blinded by the generous federal tax credits received for investing in renewable energy) – poured money into the venture. Pockrass said “the fact that these generators were being seen in use at race tracks had just about everyone believing that it was a legitimate company. There was not a lot of reason to question it.”
CGR isn’t the first team to have a sponsor relationship turn sour – “there have been many teams over the years that have [been burned] by a partner who went belly up” – so, it’s worth wondering if NASCAR should take a more proactive approach to the sponsorship approval process. Pockrass doesn’t believe so. He said that at some level teams are competing with NASCAR for sponsors and thus don’t want the governing body engaging with their partners. He also suggested that it’s the teams – who rely on sponsors for between 65% to 75% of their overall budgets – who are most incentivized to perform due diligence on potential partners because “they have the most to lose. Teams can’t exist without sponsors and they don’t want to end up in a situation where they’re short on funding (as CGR was, which is why they folded their Xfinity series team last season).”
It seems unlikely that CGR’s affiliation with DC Solar will leave a lasting stain on the sport (though every photo of Carpoff seemingly has a NASCAR related logo on the backdrop). Pockrass says that this isn’t a Mets/Madoff situation, the fans and media “perceive Chip [Ganassi] to be a victim. No one feels as if he or the team benefited from the scam.” To the contrary, according to the DC Solar bankruptcy filing CGR is the company’s largest unsecured creditor ($4.3 million) and there’s little hope that the team will ever see that money. To date, the District has recovered just $120 million in forfeited assets for the victims (+ $500M for the U.S. Treasury).
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