Oh My Fraud

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Caleb Newquist: It doesn't make a ton of sense. A failed auto mechanic and a former drug dealer from a small California town with no college and no experience in green energy, comes up with an idea that's going to help revolutionize green energy. A solar generator on wheels called the solar eclipse. But who cares if it doesn't make sense? Jeff Karpov's company, DC solar, had big name companies lining up for them.

Earmark CPE: If you'd like to earn CPE [00:00:30] credit for listening to this episode, visit earmark Cpcomm. Download the app, take a short quiz, and get your CPE certificate. Continuing education has never been so easy. And now on to the episode.

Caleb Newquist: This is Oh My Fraud, a true crime podcast where our criminals fake it until their making license plates. I'm Caleb Newquist.

Greg Kyte: And I'm Greg Kyte.

Caleb Newquist: Greg. [00:01:00] I know you like a listener review to kick things off, and I have a great one for you.

Greg Kyte: I love listener reviews and I can't wait to hear this one.

Caleb Newquist: All right. This is from Joseph in the earmark app. And he writes the profanity. And taking the Lord's name in vain on this podcast were completely unexpected, unnecessary and unprofessional. I won't be listening to episodes of Oh My Fraud in the future for this reason. Duly noted. Joseph. We're sorry to lose [00:01:30] you as a listener, but we are still very grateful for your five star review.

Greg Kyte: Right. That's that's that's crazy. And that's so cool that he gave us five fucking stars on the on the app. Was that on.

Caleb Newquist: Was that damn Joseph.

Greg Kyte: Was that on Apple? Was that on earmark?

Caleb Newquist: That was on.

Greg Kyte: Earmark. That's awesome. I also think I have to say super Christ like of him, uh, because he rebuked us but still tried to encourage us. So. Absolutely. I like I mean that's he's a, that's [00:02:00] that's how it's supposed to be done.

Caleb Newquist: So intentionally intentionally or not, he was he was he was doing the Lord's work.

Greg Kyte: Right? He really was. And yeah. Joseph. Uh, Technicolor Dreamcoat or not? Uh, we appreciated your one download. Yeah.

Caleb Newquist: All right, let's get right into our story. Jeff Karpov had spent most of his life in Martinez, California. Greg, you've been to Martinez?

Greg Kyte: I have never heard of Martinez, California. Is that northern? That's northern California.

Caleb Newquist: Northern California. It's [00:02:30] it's it's it's in the, like, North Bay. Yeah. Oh, okay. If you look it on the map.

Greg Kyte: So still Bay area. Okay.

Caleb Newquist: Yeah. Yeah, yeah, yeah. But not like, I mean, that drive into San Francisco from Martinez would not be pleasant, but. Okay. But it's it's still. Yeah, it's it's in the ballpark. Anyway, uh, yeah. Jeff Karpov had spent most of his life in Martinez, California. As a kid. He showed plenty of hustle. He was polishing used tires for $0.10 a piece, fixing junk cars, stocking shelves at the [00:03:00] corner Liquor Mart. But post-high school, things weren't working out too well for old Jeff. He tried his hand at owning his own auto shop, and while he was a decent mechanic, he couldn't quite figure out the business side of things. Two of his shops failed and one got shut down for, quote, mishandling hazardous materials. Yeah.

Greg Kyte: You can't just can't just dump that used motor oil down the toilet, Jeff.

Caleb Newquist: No. So when the mechanic stuff didn't work [00:03:30] out, he turned to the one option that everyone turns to when they have no options selling furniture. Very close. Just furniture filled with drugs.

Greg Kyte: Oh, okay. Yeah. So he was selling drugs. He was selling drugs. Drugs? Okay.

Caleb Newquist: Selling drugs? Yeah. Gotcha. And I don't know about you, Greg, but I don't know why people choose to sell drugs, even if they have, like, no options. It's it's I don't know. I think do people think they can get rich doing it. Like it'll be like Scarface or something, you know? [00:04:00] That's how it's going to end up. I, you know, because I just argue that you have to make a lot of money. The only way to make a lot of money is selling drugs. Isn't that different from making a lot of money doing anything else, which is you have to be very good and very lucky in order to, like, get super rich.

Greg Kyte: Yeah. No, I think that that's correct. So, so as listeners may know, if they've listened to every episode of this podcast, my mom's a she was a pharmacist. She's retired now. Yeah. And and I spent I was trying [00:04:30] to do the math. I think I spent like somewhere between 8 to 10 years, starting when I was 14, working at her pharmacy. Wow. Um, and so, so I do have to say that, uh, from that much time in a pharmacy, I do consider myself somewhat of an expert on selling drugs. Yeah. So, um, as you should. And so really, your success as a as a person selling drugs is, uh. Do you accept the junkies insurance? If you do, then I think you can. I mean, as long as you've got a good billing department, you can make that. But but actually, [00:05:00] did you ever read, uh, Freakonomics, the book. Freakonomics?

Caleb Newquist: I did not.

Greg Kyte: You did not. Um, they had a great, uh, chapter in there. Exactly. About the economics of drug dealing. Okay. And it was very, very interesting. But one of the things that they said is that a lot of people will get into drug dealing, kind of like you said, that it's they're going, I can't make any money. And finally, I don't care about going to jail or the risk is worth it or something like that. And also they believe that they can make [00:05:30] tons of money. But the reason why is because everyone who, uh, who is in the drug scene enough knows that there's like a guy selling drugs who seems to have all the money and is very much living a conspicuous consumption type of lifestyle. So since it's it's a very readily available piece of information that here's a guy who is selling drugs, who is making tons of money. Then you get into it assuming that you will also be able to make tons of money. [00:06:00] But also you're a druggie working with criminals and you don't. Yeah. So that's that's the reality of it, right? So I mean, you know, to sum up the the Freakonomics guys, that that's my best. My best attempt.

Caleb Newquist: Keen. Keen analysis.

Greg Kyte: Yeah. Yeah.

Caleb Newquist: Anyway, Jeff, uh, wasn't any good at selling drugs either, because he was also addicted to them.

Greg Kyte: Oh, that's a that's going to be a problem. If my if my mom was addicted to albuterol, she wouldn't [00:06:30] have made quite as much money as a pharmacist. So. Yeah. Yeah.

Caleb Newquist: Jeff was addicted to meth. Okay. So, you know, selling drugs and doing drugs. Ah, that's a that's a bad combo. I think that's yeah, it's been well documented.

Greg Kyte: Yeah. Uh, what is it? Uh, don't. Your own supply. What? Don't get high.

Caleb Newquist: Don't get high on supply.

Greg Kyte: There it is. So that that sort of recall comes from someone who has not done a whole lot of drugs in his life.

Caleb Newquist: That's how that's how well-established the [00:07:00] understanding is.

Greg Kyte: Right, exactly, exactly.

Caleb Newquist: Anyway, very quickly, Jeff was just selling drugs to pay the debts that he owed to other dealers. It got so bad that Jeff's mom, Rosalee, was getting threatening phone calls.

Greg Kyte: Like, from the people that he owed drug money to. Correctamundo. Nice. That's that's a that's a guy in trouble.

Caleb Newquist: Yeah. Putting your mom in mortal danger. So.

Greg Kyte: So he's a winner. He's got multiple failed mechanic shops. He's living in his mom's basement selling drugs. So [00:07:30] good. Good CV at this point. Right.

Caleb Newquist: But then Jeff married his high school sweetheart, Paulette. She helped him get clean. And together they opened a repair shop that specialized in Land Rovers. Nice.

Greg Kyte: Good. So good. Niche.

Caleb Newquist: You bet. Customers came up from the Bay Area to Martinez to get their swanky ass English SUVs fixed on the cheap. But things took a turn for the worse when Jeff tried to get into cut rate auto [00:08:00] parts. Okay. He and a new partner had custom ordered a bunch of parts from Mexico, but according to a story in The Atlantic, they were so poorly built that one of their mechanics refused to use them. Okay, so.

Greg Kyte: He's so he's trying to service, like, top of the line cars, but he's using just like the worst parts to do it. Well, it.

Caleb Newquist: Sounds like he was trying to do both like he was fixing them, which sounds like was going pretty well. But then he wanted to do the parts business too.

Greg Kyte: Oh, so it was a separate business. He was he was in the international import [00:08:30] export business with with car parts. Got it, got it. Okay. Yeah. I'm. I'm following you now.

Caleb Newquist: You got it. According to a story in the Atlantic, they were so poorly built that one of the mechanics refused to use them. That same article reported that, quote, by 2000, Rover Land USA was dead. The Karpov's mortgage was in default and creditors were suing. So what's next? Back to selling drugs. Of course.

Greg Kyte: Nice. Yeah.

Caleb Newquist: Uh, but this also didn't go well because, as one dispensary [00:09:00] owner told The Atlantic, Jeff started trying to sell pot full of chemicals and shit. So with that ringing endorsement, you have Jeff Karpov as a failed mechanic. A failed drug dealer. But he still managed to have some prospects. One of his Rover Land customers asked him if he wanted to sell solar panels. The prospect of solar got Jeff thinking, and eventually he landed on a revolutionary [00:09:30] idea.

Greg Kyte: Portable generators. As anyone in a hurricane zone will likely tell you, are essential in emergencies or when you're in a remote place where hooking up to a source of electricity is neither possible nor practical. Or if you're tailgating at a big football game and you'd rather watch the game on a giant TV in the parking lot than inside the stadium, you got to have a portable generator. Yeah.

Caleb Newquist: Have you seen these people? Have [00:10:00] you seen these people?

Greg Kyte: I haven't, but I can imagine it. Every time I go to a live sports event, I go, these chairs are uncomfortable and I can barely see what's happening on the basketball court. I wish I was on my comfy couch with my big TV, right. So I could see you go there for the party, the tailgate party. But you just have to bring.

Caleb Newquist: Your comfy chair.

Greg Kyte: Along. Yeah. Bring your comfy chair along. Exactly. And your.

Caleb Newquist: Generator. And you plug your big ass TV in?

Greg Kyte: Exactly. Uh, but whatever your situation, portable energy, [00:10:30] uh, is sometimes a necessity. And for the most part, portable energy is powered by fuel. And by fuel, I mean gasoline. And that's why, for those of us who don't live in hurricane zones, we see long lines at gas stations on the news. When a storm is on its way. Because people want to buy fuel so they can get the hell out of the hurricane zone. Uh, they also probably want some extra gas in case they run out of gas on the bumper to bumper freeway full of other people [00:11:00] trying to get the hell out of the hurricane zone. And some people also need that gasoline to power their generator to keep their beer cold while they ride out this category five. Son of a bitch.

Caleb Newquist: Yeah, yeah, yeah. Because, like, how's how's the. How's that stuff going to stay cold? Yeah.

Greg Kyte: You need cold beer if you're going to ride out a category five. It's just I mean, again, everybody knows that. Now, now, I'm not sure, Caleb, if you've heard [00:11:30] about this. Okay? But traditional fuel isn't great for the environment. Gasoline. Just. Yeah.

Caleb Newquist: I have heard about it.

Greg Kyte: I mean, I mean, that's that's probably going to be on the CPE quiz at the end, but. Yeah. So write it down. Listener. Uh, Traditional fuels such as gasoline and diesel. Not good for the environment. And so even if this far from ideal solution of a gas powered generator to keep your beer cold is a necessity. And it is. And as we established [00:12:00] it is, let's say someone were to invent a method of portable energy that was sustainable, you know, wind or geothermal or solar. I can't really imagine a portable geothermal generator, but still, it would be awesome. I'm not trying to constrain anybody's creativity here. Okay, but if you could do it, that would generate some interest. Probably a lot of interest and probably a whole lot of money. So now that Jeff was in the [00:12:30] solar panel business, he on his very own came up with this amazing revolutionary idea. A trailer with solar panels. Boom. What? Mind blown. So in 2008, one of Jeff's Rover Land customers pulled together a few people to see the solar trailer. The Atlantic describes the contraption as two rows of solar panels, five per [00:13:00] row attached to rotating beams. A clever design that lets you lock them upright for aerodynamic transport on the highways, and then tilt them towards the sun once you'd parked. This wasn't some niche anti-theft accessory, it was an all purpose generator towable anywhere for green power on the go. Did I just record a commercial for DC solar? I think you did. I think I did. That's, uh. Yeah. This [00:13:30] small group of investors loaned Karpov a few hundred thousand dollars to market this invention. The entertainment industry, of all things, quickly showed a bunch of interest. Looking for an alternative to the diesel powered generators that often powered the trailers on movie and TV locations. A few major movies, including inception, Valentine's Day, and Bad Words, tried him out. Leo that Leo the Leo you're thinking of. He [00:14:00] even posted a picture of the DC solar uh, generator trailers on his Facebook page.

Caleb Newquist: Fancy.

Greg Kyte: You can't buy that kind of publicity. Like, probably literally. I've never seen Leo DiCaprio Leonardo DiCaprio on a commercial, and I've never seen him in a commercial. No he's.

Caleb Newquist: Not. He doesn't. I don't think he's. I don't think he does commercials.

Greg Kyte: I know, so yeah, you literally can't buy that kind of publicity.

Caleb Newquist: Well said.

Greg Kyte: So with Hollywood calling, [00:14:30] Jeff kept working some angles, going down to Florida to act like he was in the market for a mansion, as one does. As one does. Yeah. Uh, but in reality, he one was broke and two really just wanted to find some more investors for DC solar. But it makes sense that you might, uh, you know, pretend to be buying mansions, because if you're trying to get investors, you want people to think that you can buy a mansion because of your cool [00:15:00] invention. Not that you're not, that you've already blown the couple hundred thousand dollars of seed money and are still living in your mom's basement, but hopefully not selling meth, right?

Caleb Newquist: Like that. You just blew them all on, like, go karts or something.

Greg Kyte: Right? Although, I don't know, Jeff Karpov kind of has that sort of vibe that he might he might blow a lot of money on go karts. Uh, in September 2010, Jeff Karpov was introduced to the law firm Nixon Peabody. Nixon Peabody [00:15:30] had a well-known tax credits practice, and as luck would have it, there was a big tax credit offered for investments in alternative energy sources. More specifically, there was a 30% investment tax credit available for investments in solar. So, in other words, for every dollar you spent in solar equipment, you could get $0.30 back from the federal government in the form of a tax credit. And as much as people [00:16:00] love an innovative alternative energy company, they love tax credits even more than that.

Caleb Newquist: So how do these tax credits work in the real world? The Atlantic explains it this way. Quote giant corporations could decide how much they wanted to save in taxes, then through an investment fund created just for them, buy exactly the number of generators to achieve that figure. All [00:16:30] they'd have to put down was 30% of the generator's price, the exact amount they could deduct dollar for dollar from their federal tax returns through the investment tax credit. So Greg Kite, let's give a simple example to help illustrate that. I love I love.

Greg Kyte: It yeah yeah story problem. It's story problem time.

Caleb Newquist: Yeah. Story problem. Former former teacher. Yeah. Um, say you're a rich guy who lives in, I don't know, Omaha. And you want to save a lot in taxes? Let's say [00:17:00] 3 million bucks. Okay. Yep. Okay. You divide the amount of money that you want to save 3 million bucks by 30%, right? Because that's that's the credit. Yes. Yes. Because.

Greg Kyte: Yeah. To get to how much. So yeah. Because 3 million divided by 30% equals 10 million. And really what you just did is kind of the backwards way of saying that 30% of 10 million is 3 million. Yeah. Correct. Yes. Exactly.

Caleb Newquist: All right. [00:17:30] Now let's say each mobile solar generator costs $50,000 each. That means you'd have to buy 200 of them to get the 10 million, right?

Greg Kyte: Yep, that checks out. Okay.

Caleb Newquist: According to the explanation, putting down 30% of the generator's price would be. Ta da! 3 million bucks. The amount of tax you want to save. Okay, okay. Yeah, but there's still 70% of the cost out there, right? Right.

Greg Kyte: Right. [00:18:00] Because. Yeah, because I can pay my down payment of 30%. But also, I know there's another 70% waiting for me. Yeah.

Caleb Newquist: Okay. So we'll go back to the Atlantic quote. Dc solar would not only loan buyers the other 70%, it would pay it back for them with the money it made leasing out generators on their behalf. Now, I do not consider myself to be that smart, but that sounds like a pretty good deal for the buyers, right? Yeah, yeah, they put 30% down and [00:18:30] then DC solar loans them the rest and then pays the loan back on their behalf By leasing the generators.

Greg Kyte: Yeah, it it's weird. It makes sense. It's almost like if you pay that, if you pay 30% of a down on a house, and then the bank says, cool, we're going to pay the rest of your loan off by using your house as an Airbnb. Yeah.

Caleb Newquist: Would you be okay with that? Probably not.

Greg Kyte: I [00:19:00] think I'm kind of doing that because no, no, I have a condo in Hawaii that does basically exactly what I'm doing, right? I mean, I'm renting it, not the bank, but that's the only that's the only trick, so. Right. Well, but but also weird because. Yeah, there's yeah, it still feels a little weird, but yeah, I get it.

Caleb Newquist: Well, apparently Jeff Karpov had a ton of confidence in this business because he had, quote, long term leases in the works with major telecom, entertainment and construction companies. So not only would these long term leases satisfy the loan payments [00:19:30] that needed to be made, there'd be money left over for the cash payouts to the owners of the generators. Okay, so and let me just stop for a second here. Greg, you you're in the business world. You're doing the business things, right? Yeah. Have you ever in your illustrious career heard of a financing arrangement like this?

Greg Kyte: No, not at all. Because it's almost, I mean, again, [00:20:00] trying to wrap my brain around it. It's like, if you'll pay your down payment on this generator, then I will then go into the generator rental business on your behalf. Yeah. To not just pay off the rest of the loan that I gave you for those generators, but also to make you a profit on top of that. Which also implies that Karpov is making a profit, too, because he wouldn't do it just right if.

Caleb Newquist: He wasn't making any money. Why would he do it?

Greg Kyte: Exactly. So yeah, [00:20:30] that's I. So so the big the the answer is no. I've never heard anything like that. It's I'm going to say it's objectively weird. I do also want to say that as a lot of our fraud stories go, it would probably fall under the too good to be true, uh, kind of, uh, scenario where it's like your down payment gets written off, gets paid back in a tax credit, and then the rest of it, you just sit back [00:21:00] and make money, right?

Caleb Newquist: It's just a money machine.

Greg Kyte: Yeah, it's it's weird, but but the thing, the thing that's kind of weird for me is just trying to do the accounting, um, because the, the, the tax saving part of it doesn't make a whole lot of sense. Like, like if, if you want to save $3 million on taxes. Yep. The only way in this scenario, the only way that you can save $3 million on taxes is by spending $3 million, which I kind of go. Wouldn't you be in the same position [00:21:30] if you just did absolutely nothing?

Caleb Newquist: Because and I think the answer is no.

Greg Kyte: Well, the answer I think the answer is yes. I mean, despite I mean, I'd say just for that portion of it, I'd say the answer is yes, because I because the idea is I pay DC solar $3 million today, and in a few months the federal government is going to pay me $3 million back. Yep. And I kind of go, that doesn't make a whole lot of business sense. Why would you want to pay $3 million today [00:22:00] just to get $3 million back? And then as I was just going through this in my brain, I realized it's the only thing that would motivate you to do that is just financial statement stuff, because I'm spending that $3 million on an asset, not on an expense. Right. So I'm spending $3 million, but it's not going into my profit and loss and showing like I lost $3 million there. Right. But then I also get to show that my tax expense is reduced as a result of doing that. [00:22:30] So actually, my PNL is going to look $3 million better? Yes. By doing this. So really, I, I'm, I'm making this move to show my to to to do financial statement sleight of hand which I kind of go, uh, that's sort of shitty. Uh, is that that's just that's how I feel about it, but but also, I mean, I guess, I guess legit if it's all disclosed. But also, it seems like I said, like, financial statements, sleight [00:23:00] of hand, which doesn't sit well with me.

Caleb Newquist: The buyers into this investment fund would only have to put down a relatively small amount of money. They get the tax credits they want, but they don't even have to use the generators or maintain them. And then DC solar takes care of the leases so the loan gets paid. What a deal. As you said, Greg, it almost sounds too good to be true.

Greg Kyte: In [00:23:30] March 2011, D.C. solar made its first big sale. Sherwin Williams, the paint company, bought 192 generators for 29 million bucks. And Karpov. Yeah, Karpov was confident he could turn around and lease the generators for more than twice what he initially thought. Man, yeah, things are good. Outlook for D.C. solar, but. But in relatively short order. Cracks are starting [00:24:00] to show in D.C. Solar's business. Oh, no. Yeah. The the fall. After the deal with Sherwin Williams closed, the paint company sent some people to D.C. Solar's facility to check out their investment. When a D.C. solar sales executive noticed something a little bit strange about the solar eclipse generators. Uh. Quote. Only the first most visible rows of the generators were fully assembled. The generators in the rows behind. Uh, some [00:24:30] two thirds of the total generators were in various states of incompletion, though you might not notice if you didn't know what to look for. Jeff, you have rows and rows of unfinished generators you're presenting as finished. The executive recalled telling Karpov. You don't worry about that. Karpov replied, I bet.

Caleb Newquist: I bet, I bet that's what it sounds. That's about what it sounds like.

Greg Kyte: Also classy. Good. That's good, that's good. Business leader. Shut the fuck up and get back [00:25:00] to selling. Selling some damn generators. So mind your. Mind your damn business. On top of that, there were some performance issues. Oh, some examples include power cutting out and plunging into darkness, the makeup trailers for Disney's Alexander and the terrible, horrible, No Good, Very Bad Day.

Caleb Newquist: That is a bad day.

Greg Kyte: At an MTV concert, Pink's trailer went without air conditioning.

Caleb Newquist: Oh, that's a bad day to. [00:25:30]

Greg Kyte: Some entrepreneurs who thought the generators might aid in disaster relief. Were surprised to find that plugging in a single hair dryer tipped the breaker. And if you've ever.

Caleb Newquist: I'm no electrician. I'm no electrician. But that's a bad sign.

Greg Kyte: And I've never been in a hurricane. But I got to assume if you've been in a hurricane, you kind of need a hair dryer. You need. I mean, I don't, but I'd say many people do.

Caleb Newquist: Because of the.

Greg Kyte: Rain [00:26:00] and the hair.

Caleb Newquist: Right.

Greg Kyte: And then if your generator just won't even. I mean, it's like, why even have it?

Caleb Newquist: Yeah, but but please, hopefully you're not standing in floodwaters while you're trying to blow dry your hair.

Greg Kyte: True. Good point. Good point. That's a pro tip right there. Yeah. You can. That will also be on the CPE quiz. But all of these all of these, uh, Performance issues really weren't a problem. [00:26:30] Uh, when malfunctions happened, uh, DC solar had a plan B, and that plan B was just to back up the solar generators with diesel powered generators because, you know, it's a principles based business.

Caleb Newquist: So that's clearly.

Greg Kyte: Yeah, clearly just go, you know, well.

Caleb Newquist: Let's just go get the.

Greg Kyte: Gas, you know, mission vision values just it all just aligns perfectly. Finally. [00:27:00] To make matters even worse, the company had a difficult time getting anyone to commit to their long term leases.

Caleb Newquist: Oh, no.

Greg Kyte: Of the generators. Okay, so remember, the revenue from the leases was supposed to finance the 70% of the generators purchase, and DC solar was going to pay its customer any excess cash that they received from said leases, on top of the 70% that they were repaying on behalf of those customers, and if the company couldn't make that work, then they'd [00:27:30] just have a bunch of generators just sitting around collecting dust. And if those generators were sitting around collecting dust, then DC Solar's customers couldn't claim the tax credits even. And if no one could claim the tax credits, then DC solar might not have very many customers for very much longer. And it turns out it wasn't easy being green for DC solar. They needed a new plan.

Caleb Newquist: In [00:28:00] mid 2012, Jeff Karpov worked with his CPA Ronald Roach and DC Solar's general counsel, Ari Lauer on a new plan. This plan involved using money from new purchasers of solar eclipses, the generators to pay the leases to the earlier purchasers of solar eclipses. Right, because they couldn't lease enough of them?

Greg Kyte: Yeah, that sounds legit. Okay.

Caleb Newquist: Sort of. No, no.

Greg Kyte: Not [00:28:30] at.

Caleb Newquist: All. Now, while you take a minute to think about that, think about this, too. Apparently, inside the company, this clumsy little maneuver was referred to as rent. Quote, many of the hallmarks of a classic Ponzi scheme. The Atlantic piece stated. And to top it all off, because of the generous tax credits, the American taxpayer was subsidizing the whole damn thing.

Greg Kyte: Yeah, I immediately, when [00:29:00] you say using money from new purchasers to pay the leases for early purchasers, it's like.

Caleb Newquist: Yeah, those are the magic words.

Greg Kyte: Ponzi Ponzi scheme. Ponzi scheme. But I but I love rebranding Ponzi schemes as rebranding rent. Brilliant. That marketing department of DC solar. Yeah. Top notch. All you need.

Caleb Newquist: Is a copywriter.

Greg Kyte: Yeah. That's it.

Caleb Newquist: But that's how it goes, right? Lots of start ups. They have to get creative. Yeah. This rerenting stuff was just temporary for DC solar. In the meantime, Jeff [00:29:30] Karpov was enjoying himself a lot, and that's no surprise. But what is kind of surprising is that for a guy running a sustainable energy business, Jeff really liked gas powered things.

Greg Kyte: Now, again, mission vision values.

Caleb Newquist: For example. Jeff loved collecting classic muscle cars, right?

Greg Kyte: That he converted to all electric, right?

Caleb Newquist: As a matter of fact, no.

Greg Kyte: Oh, yeah. Of course. [00:30:00]

Caleb Newquist: A couple of notable models. Uh, he had a replica of the general Lee from The Dukes of Hazzard.

Greg Kyte: Not problematic in any way.

Caleb Newquist: No, no, I can't think of a single thing about that car that could be problematic.

Greg Kyte: Yeah.

Caleb Newquist: Also a 1978 Pontiac Firebird from Smokey and the bandit that was once It's owned by Burt Reynolds.

Greg Kyte: Well that's cool.

Caleb Newquist: That is kind of a cool card. Have you seen it? Do you know. Do you know that car? Can you picture that car in your mind?

Greg Kyte: Yeah, I can, [00:30:30] and Smokey and the bandit was, uh. That was a that was a favorite of mine as a as a child. Yes. Yeah. Yeah. Gotta gotta love. Uh, Jerry Reed played the trucker in Smokey and the bandit. So. Yeah. Nice deep cut. Also, Jerry Reed, he's the he. He had the hit song Amos Moses that no one except me and my brother know about. But it was a wonderful song. Look it up on Spotify.

Caleb Newquist: I, I bet there's a listener out there that knows this song and that's going.

Greg Kyte: Hell [00:31:00] yeah. I didn't think that I would have a reference to Amos Moses while I'm listening to a fraud podcast, but you just did, and it was worth it beyond.

Caleb Newquist: Just buying up lots of cars that use lots of gas. Dc Solar's largest marketing partner was none other than NASCAR. And if you are not familiar with NASCAR I don't know where you've been, but let's just give you a brief explanation of what that consists of. It's a bunch [00:31:30] of cars driving fast in circles for four hours. Gas powered cars.

Greg Kyte: We can't state this enough. Mission vision values.

Caleb Newquist: The company sponsored the cars of drivers like Ross Chastain and Kyle Larson, and it was even the lead sponsor of an Xfinity Series race, the DC solar 300, in 2018. Among the other amazing details of this story, many of which come from this Atlantic article that we've mentioned a few times, it's in the show notes and it was written by Ariel [00:32:00] Sabar. One of my favorites is the sign that marked Jeff Karpov's parking spot at DC Solar's headquarters. The sign all it said was JM FC. Now, Greg. Huh? Any ideas what that might stand for.

Greg Kyte: I have I have money that I'm willing to place on what that stands for. Okay. Yeah. Go ahead.

Caleb Newquist: It's your best guess.

Greg Kyte: Jeff motherfucking [00:32:30] Karpov.

Caleb Newquist: Correct.

Greg Kyte: Yeah.

Caleb Newquist: Apparently that was the acronym for the nickname that he had given himself.

Greg Kyte: Oh, he'd given himself that.

Caleb Newquist: He gave himself that nickname again.

Greg Kyte: Classy.

Caleb Newquist: Yeah. What are the mission values? Vision? Whatever. Yeah, you do it so much better. Yeah. Anyway. He also bestowed the motherfucking honorific to his wife, Paulette, the company's COO. And to their kids, [00:33:00] Lauren and Matt. So just keep everybody straight. Their parking spaces were marked PMF, C, LM, FC, and MFK respectively. Now, maybe I'm wrong, but I don't think you give yourself and your whole family those nicknames Names unless you are ludicrously overconfident.

Greg Kyte: Right. There's definitely a Talladega. Talladega Nights, Ricky Bobby, uh, sort of feel to that whole thing.

Caleb Newquist: Yeah, yeah. [00:33:30] Well, yeah. No, that's that's that's exactly right. Yeah. But listen, I, I honestly, I honestly can't blame the guy. In less than three years, DC solar had sold nearly 1200 generators for $174 million. But in July 2013, just over two years since Jeff Karpov had closed his first big deal with Sherwin Williams, he had a problem, a problem nobody wants the IRS. [00:34:00]

Greg Kyte: A partner at Nixon Peabody expressed surprise to Jeff Karpov in an email that the IRS had decided to review DC Solar's deal with Sherwin Williams. He said, is this even old enough to be audited. And while DC solar was fending off that, an investment advisor named James Howard Jr, who was helping a bank purchase over $70 million [00:34:30] in generators, wanted proof that 80% to 90% of the company's generators had been leased, as Jeff Karpov had claimed. This was a problem, of course, because it was not true.

Caleb Newquist: I hate it when that happens. Right.

Greg Kyte: Well, listen, the truth is that only about 5% of their generators had been leased, a far cry from 80 to 90%.

Caleb Newquist: Yes.

Greg Kyte: So [00:35:00] DC solar tried to blow off Howard, but he wasn't having it. So Karpov's CPA, Ronald Roach leaned on the company's CFO, Rob Carmen. Roach had gotten Carmen the job at DC solar when Carmen was down on his luck and Carmen became a big shot at DC solar, pulling down nearly half $1 million a year in salary. This was enough for Carmen to pull together bogus reports that showed how generators were being leased, and [00:35:30] for how much. But the bullshit didn't stop there. In September of 2015, Karpov asked his VP of operations, Ryan Guidry, to find someone, anyone who would just sign some phony leases. These leases were supposed to be to T-Mobile for 1000 generators and worth $13 million a year. Jeff Karpov told Guidry that he would pay him and whoever signed the bogus leases $1 [00:36:00] million each. Caleb, that's a lot of money. That's a lot of money for some autographs. Yeah.

Caleb Newquist: I have to say, can you imagine being that guy where, you know, you have this job, you're a VP of operations. Get into the office that day and you're making your little to do list and be like. And that the top of that list, it says find a guy to sign fake leases. Right. That's that's your that's your whole list. Hire [00:36:30] patsy hire to yes. Hire patsy to forge things.

Greg Kyte: Yeah. Exactly. Exactly the very the very first line item collect.

Caleb Newquist: Collect $1 million. Number two.

Greg Kyte: Exactly, exactly. Uh, and around the same time, DC solar had a couple of other big deals brewing, one with the International Speedway Corporation, which runs [00:37:00] Daytona International Speedway and other race tracks, uh, to lease them 1500 generators for ten years, which was a deal worth $150 million. That's a big deal. That's a big damn deal. And the second was with Geico, the insurance company owned by Warren Buffett's Berkshire Hathaway. Geico agreed to buy nearly 8000 generators for a whopping $1.2 billion. [00:37:30] Forget what I said.

Caleb Newquist: Earlier, that is actually a big deal.

Greg Kyte: That is. Yeah, that's a monster.

Caleb Newquist: That's a monster deal, right?

Greg Kyte: That's that's huge. Well, because, I mean, just a second ago, Jeff was excited that he'd made $174 million. And now Geico is coming along giving him almost ten times that. Yeah. Right. Amazing. Yeah. The tax credit on that deal alone was worth $377 million. It was this massive deal with Geico that [00:38:00] allowed DC solar to move its headquarters to Benicia from Concord in 2016. And come on, everybody knows how much better Benicia is than Concord. Geez, am I, am I right, am I right? But there was one small problem. Okay? Dc solar had pretty much stopped manufacturing the solar eclipse generator.

Caleb Newquist: Oh, no.

Greg Kyte: That seems like kind of a crucial thing for a [00:38:30] generator manufacturing company.

Caleb Newquist: The thing that you're supposed to be selling to people you aren't making anymore.

Greg Kyte: Yeah, it's kind of. It's one of those you had one job sort of situations and they didn't do it. Oh, also, did I say there was a problem? Actually, there wasn't a problem because if you recall, these are portable generators, which means they can be anywhere.

Caleb Newquist: Oh, okay.

Greg Kyte: So helpful in a situation like [00:39:00] this. So helpful. As the Atlantic article explained quote here one day there the next had basically been the sales pitch, but they had to prove that the generators were somewhere. Right?

Caleb Newquist: Right.

Greg Kyte: Yeah. Yeah. To accomplish this, the company had a, quote, independent engineer create, quote, commissioning reports that had a Vin and a 20 point physical inspection for each unit. But [00:39:30] that independent engineer was one of Jeff Karpov's high school buddies named Joseph Bayless. Not exactly independent. And as it turns out, not exactly an engineer either. Uh, because he was not an engineer. Nevertheless, these bogus commissioning reports satisfied some of DC Solar's customers, but not all of them. Some of those customers wanted to actually see their solar eclipse generators up [00:40:00] close. So what about those pesky buyers who wanted to see their generators in person? Again, no problem with that Karpov. This is a quote from The Atlantic, says Karpov and his workers used putty, knives, acetone and mineral spirits to remove Vin stickers from generators belonging to earlier buyers, then applied to those same units. The Vin numbers of whatever buyer just [00:40:30] happened to be visiting, to dupe buyers who wanted real time data on their units whereabouts. Workers buried GPS transponders in out of the way locations minus the generators. They were billed as being attached to. Inspectors willing to drive hours to see their solar eclipses in the field were the hardest to misdirect. Karpov had employees work overnight, delivering generators in the nick of time to make it look like they'd been there all along. Dc [00:41:00] solar sold 17,000 generators from 2011 to 2018, but only about 6000 would be found to actually exist at all.

Caleb Newquist: In 2016, two things happened that help illustrate just how weird DC Solar's situation was. Thing one the IRS had examined two of the company's early deals, the one with Sherwin Williams [00:41:30] that we mentioned and another with another company called Aaron Burr LLC, who obviously, you know, is owned by someone who obviously had something against Hamilton. Right.

Greg Kyte: Well, they they the only.

Caleb Newquist: Explanation here.

Greg Kyte: They acquired the Alexander Hamilton LLC and then did away with it.

Caleb Newquist: Yes. Yeah. Yeah. In both cases, the IRS did not like what it saw. It determined that the fair market value of each generator was about $13,000. Dc solar had been selling [00:42:00] them for over ten times that amount, $150,000. Now, if you remember how the tax credits work, the buyers were putting down 30% of the purchase price, right? At 150 K, that would be about $45,000. That's what the credit would be worth. But by the IRS's count, the tax credit should only be worth about $3,900.

Greg Kyte: Uh, that's a problem.

Caleb Newquist: That's a problem.

Greg Kyte: But but it's a problem on both [00:42:30] sides. And I think that because again, uh, like, you can buy you can buy a Honda Civic or you can buy a Range Rover and and you got to go. Okay. How how are you determining the market value of a Honda Civic versus Range Rover? They're both just cars that get you from point A to point B.

Caleb Newquist: They both have four wheels, but at.

Greg Kyte: The same time the IRS can go yeah. No it's not like they I think they have pretty broad latitude to just [00:43:00] make reality conform to what they want it to be. Right. But also clearly calling a lot of bullshit on Jeff Karpov and DC solar.

Caleb Newquist: Yeah, the IRS said that, quote, DC Solar's transaction structure was a sham involving a mere circular movement of money to prop up a vastly overstated purchase price in order to impermissibly maximize the energy credit. Okay. And thing two. Remember I said there were two things. The other weird thing going on was [00:43:30] that DC solar had been chosen to be a partner in the Obama administration's Smart City Challenge, which recognized city's efforts to use climate friendly technology. Dc solar was one of the corporate partners that provided money and resources it pledged to, quote, offer the winning city $1.5 million worth of electric vehicle chargers and mobile solar generators. Dc solar was in good company, with some prominent names including Alphabet's Sidewalk Labs, [00:44:00] Paul Allen's Vulcan Incorporated, and Amazon Web Services.

Greg Kyte: All of this attention for DC solar essentially made Jeff Karpov a living legend to those around him. One employee called him Willy Wonka. Another said he was the Thomas Edison of the West Coast. Then there was the flashy stuff. Jeff and his wife, Paulette were great at being nouveau rich. Did [00:44:30] you did you put French in the script just to piss me off? Caleb?

Caleb Newquist: I did.

Greg Kyte: Mission accomplished. Mission. Vision. Values. Anyways, here's a non-exhaustive list of all the tacky ways that Jeff and Paulette were throwing their money around.

Caleb Newquist: I love this part of the I love this part of the episode.

Greg Kyte: It's it's.

Caleb Newquist: Every episode.

Greg Kyte: Every episode. Seeing how people who stole money use the stolen proceeds is typically wonderful. One. Jeff and Paulette had homes [00:45:00] in Cabo and in Las Vegas. Well, that.

Caleb Newquist: Kind of seems basic, but okay.

Greg Kyte: Yeah. Well, again, sarcastically I say classy. Uh, we told we told you about the NASCAR sponsorship stuff. Yeah, but the Karpov's also bought the city of Martinez, a professional independent league baseball team. The Martinez Clippers.

Caleb Newquist: Now that that goes beyond conspicuous consumption. Greg. Right.

Greg Kyte: Right, right. That. Well, [00:45:30] it also, it almost seems, makes him seem like a civic minded man who's trying to give back to the community that he took so much from. Is that how you say that?

Caleb Newquist: I think that's how you would say it.

Greg Kyte: Yeah. Nice. Uh, and then remember those muscle cars we mentioned earlier, the general Lee and Burt Reynolds Firebird? Uh, well, Jeff and Paulette had more. A lot more cars. Uh, a total of 149 cars, to be precise. And as far as we can [00:46:00] tell, the vast majority of them, uh, used gasoline. Yeah. Again, sort of weird for a guy with a green energy fortune. Uh, he also owned a stake in a Napa Valley winery company. Christmas parties that featured performances by sugar Ray, Pitbull and Big and Rich. And the most cringe worthy thing we found. I'm quoting the Atlantic article here. Quote at the end of all hands meetings, he would [00:46:30] pull hundreds of dollars from his pocket and give it to whichever employee best guessed the sum.

Caleb Newquist: On the morning of December 18th, 2018, 175 federal agents from the FBI, the IRS, criminal investigation, and the US marshals raided both DC solar headquarters and the Karpov's Martinez home. 175 agents and.

Greg Kyte: Three different agencies. That's. You're in trouble. [00:47:00]

Caleb Newquist: You're in trouble if.

Greg Kyte: That happens, you're in trouble.

Caleb Newquist: Yeah. It's not looking good. Yeah. The agents located the giant collection of cars and the. And $1.7 million in cash in a safe at the Karpov's house.

Greg Kyte: Because, you know, you just need to have 101.7 million. Just just in case. Just in walking around money. Yeah. Yeah. You know, you never know.

Caleb Newquist: A statement from the Karpov's attorney a couple days later said that they were, quote, surprised and disappointed with the actions taken by the government earlier this week, which appeared to relate to an ongoing [00:47:30] tax dispute. Dc solar filed for chapter 11 bankruptcy protection less than two months later. So much for a tax dispute, right? In early February 2019, that filing showed that DC solar owed more than $4 million to the NASCAR racing team it sponsored. Another million to the International Speedway Corp.. Remember them? And $750,000 to four other racetracks. Oh, and there was like 475,000 to Netjets, which, you know, because that's something [00:48:00] that you do because.

Greg Kyte: That's a necessity. Yeah. Private jet rental. I mean, that's you. You can't not do that. Uber for.

Caleb Newquist: The air.

Greg Kyte: Right. Who's who? Who what kind of what kind of low class CEO is gonna fly? Commercial?

Caleb Newquist: No one. All right. Jeff and Paulette agreed to step down as CEO and CEO. And so you might be wondering at this point, how did they get found out?

Greg Kyte: I'm wondering how did they not get found out, but also please. [00:48:30]

Caleb Newquist: Yeah. Yeah, it was actually no surprise. A whistleblower, according to The Atlantic, an employee, Sebastian Giuliano, had discovered the whole circular sales leasing scheme thing, and he actually confronted Jeff Karpov and the company's general counsel about it when they tried to explain the method to the madness. He quit, and he filed a whistleblower. He filed a whistleblower report with the Securities and Exchange Commission, who then told the US attorney for the Eastern District [00:49:00] of California who contacted the FBI.

Greg Kyte: That's how they all got involved.

Caleb Newquist: That's how that's how things go. Yeah. Another thing that happened involved Karpov's old high school buddy turned fake independent engineer who created fake commissions, reports Jeff Joseph Bayless. Did I say Jeff Bayless? Joseph Bayless, Jeff Bezos.

Greg Kyte: Jeff.

Caleb Newquist: Soon after the raid, Karpov asked Bayless to go to Las Vegas and destroy a bunch of phony Vin stickers that were stored there. The [00:49:30] best.

Greg Kyte: Yeah, that's because that's what innocent people do.

Caleb Newquist: That's exactly right. And apparently, uh, Joseph Bayless did this. But once the feds got Ahold of him in July 2019, he figured the jig was up and he started to cooperate.

Greg Kyte: So he was singing like a bird, too. Oh, yeah.

Caleb Newquist: The Department of Justice issued a press release in October 2019 announcing that Bayless and Ronald Roach, that's Karpov's CPA, pleaded guilty. According to the release quote, Roach and his coconspirators [00:50:00] used fraudulent financial statements to hide from investors the company's use of later investor payments to pay financial obligations the company made to earlier investors. That's the classic Ponzi scheme stuff, man.

Greg Kyte: Yep. Textbook.

Caleb Newquist: And as for Bayless, quote, he admitted to preparing thousands of false reports certifying the existence and operating specifications of thousands of mobile solar generators sold to investors. Bayless knew that the generators didn't exist, and he knew investors would rely [00:50:30] on his reports saying that they did exist. Oh, and he also confessed to destroying all of those phony Vin numbers. Bayless got three years in prison. Quickly, more of Karpov's inner circle started to go down. Robert Carmen, the CFO, pleaded guilty in December 2019 and was eventually sentenced to six years in prison. Ryan Guidry, the guy who had to find a patsy to sign the phony T-Mobile leases. He pleaded guilty on January 14th, 2020, and [00:51:00] was eventually sentenced to six and a half years. The patsy. A guy by the name of Alan Hansen who ended up getting a do nothing job in addition to that million bucks, he pleaded guilty and got eight years.

Greg Kyte: That's insane.

Caleb Newquist: That's a stiff sentence.

Greg Kyte: The patsy got a year and a half longer than the guy who found the patsy. Yeah, yeah. But, you know, legal. The legal. We still don't. We still don't understand. We still don't understand sentencing.

Caleb Newquist: Yeah. We still don't understand sentencing. Um, [00:51:30] and on January 24th, 2020, both Jeff and Paulette Karpov pleaded guilty to charges related to the fraud. For Jeff, it was conspiracy to commit wire fraud and money laundering. For Paulette, it was conspiracy to commit an offense against the United States and money laundering. Paulette was sentenced to 11 years, while Jeff was sentenced to 30 years.

Greg Kyte: That's a lot of time. It's a lot of time.

Caleb Newquist: Whew!

Greg Kyte: But fortunately for them, that was the only thing that would be bad. That would happen [00:52:00] in the year 2020.

Caleb Newquist: Yeah, that's that's that's quite a way to start your year.

Greg Kyte: To just.

Caleb Newquist: That's the way that was a quite, quite a way to start your 2020.

Greg Kyte: Yeah. You're just just rolling up on a pandemic with a 30 year sentence. Yeah. No big deal. Yeah. Yeah.

Caleb Newquist: Um, there are a few loose ends that I think we can tie up. Um, among them, the Martinez Clippers. Remember the baseball team? Yeah. They were quickly no longer a baseball team.

Greg Kyte: What? Yeah. [00:52:30]

Caleb Newquist: The city of Martinez ended its licensing agreement with the team for nonpayment of fees. Mm. Shocker. Yeah, they the Karpov's. They forfeited their stake in the winery. Uh, Nixon. Peabody. Remember the the the law firm that helped push the tax credit portion? Yeah. They settled a big lawsuit with DC solar investors. Warren Buffett's Berkshire Hathaway admitted that they got duped. Writing in a quarterly filing that their $377 million in tax credits were probably invalid. [00:53:00] Oh, and I suppose you're wondering about the cars. Were you wondering about the cars?

Greg Kyte: I'm so wanting to know what happened with all those sweet, sweet cars. Sweet rides.

Caleb Newquist: Okay. The US Marshal Service held an auction in October 2019. They sold 148 cars, raising about 8 million bucks. Burt Reynolds old Firebird went for $181,000.

Greg Kyte: But wait a second, Caleb. Yes. There was 149 cars. What happened with the other car?

Caleb Newquist: Which one didn't sell? It was probably a Tesla. [00:53:30]

Greg Kyte: It probably was. Probably. Probably one of those cyber trucks. Yeah, it's fucking cyber trucks.

Caleb Newquist: Oh, man. All told, DC solar was the biggest fraud in the history of the Eastern District of California. Okay, Greg Kite. Did we learn anything?

Greg Kyte: Yes. Caleb Newquist, we always learn something on [00:54:00] this show. Okay. Uh, one of the things, one of the things that stuck out to me was, you know, we've said this on so many shows that the best fraudsters are are super smart and they're great at what they do. And this case very clearly contradicts all of that. So every now and then. But wait a minute.

Caleb Newquist: Wait a minute, wait a minute. Didn't. Yeah, but Jeff invented a thing. He.

Greg Kyte: Yeah he did. He did, but it didn't work. But he [00:54:30] also I mean, I don't know, I don't know the guy. Maybe he's a he's an evil genius. He he didn't really come across as that way. Yeah. Uh, to me in the research. Okay. Uh, so while while I would say that a lot of the best fraudsters are super smart and are great at what they do, uh, some fraudsters, as we saw in this case, are just dumb and greedy and and weirdly lucky. Yeah. And so that so sometimes that's the case as well. [00:55:00] Yeah. Um, another thing that that it's, it's actually learning from this case and from the case about the polygamist who, uh, used all the biodiesel tax credits. Yep. Um, that green technology and green tax credits, uh, seem to be somewhat of a breeding ground for fraud, wouldn't you say? I mean.

Caleb Newquist: The credits are very generous.

Greg Kyte: Yeah.

Caleb Newquist: And so if you can somehow, [00:55:30] you know, uh, ham fist that into your scheme. Right. You are going to find, uh, some willing victims. Right. Yeah.

Greg Kyte: Right. Well, and I think. Yeah. And I think because of the generosity, that's why they're probably targeted for fraud. And also, I think on top of that, I mean My sense is that there's a lot of businesses out there that just for kind of a PR move, want to associate themselves [00:56:00] with green technology. Absolutely. So there's the so there's demand for green technology. There's a big reward for green tax credits. And so with both the demand and the reward, I think that people, whether they're very smart or dumb and lucky, they're going to find fraud in this area. So, so for all of all of you federal regulators listening to the show, and I know there's maybe one, uh, that's something to keep in mind.

Caleb Newquist: I would [00:56:30] say. One thing I would note, though, however, is that despite the generosity of these, uh, of these sustainable energy credits and similar credits like them, the audit rate for for companies that use them is very, very high. Right. And so if I M a enterprising fraudster. I would be avoiding those for that reason. And this is not legal advice, but I would I [00:57:00] would avoid them for that very reason because of such a high audit rate related to those transactions like, you know, find a, you know, find a more, you know, below the radar kind of scam, you know, that the authorities are not really looking for in their everyday, you know, in their day to day stuff. Right.

Greg Kyte: Well, and that and that, even that, that relates to actually that one certain vignette that we talked about in the case where the IRS started looking at the Sherwin-Williams tax credit [00:57:30] specifically, and the who was it? Was it the lawyer? It was the lawyer. Yeah. The lawyer was like, can is this is too soon. How can we just filed this tax, this tax return and they're already auditing us. It's like yeah. That you know to your point right. That's how that's how seriously that and and again it's probably one of those things where the bigger green tax credit you take, the more likely you are going to get scrutinized for that tax credit. Yep. Um, the last thing, and this is more of [00:58:00] a clarification question, um, because I, the because the meth was part of the story pretty early on. But then like we said, Paulette came around and he cleaned up. Was any indication in what you saw that meth was still around later on in the story? No.

Caleb Newquist: Because what came up like, there was some anecdotes in that Atlantic article about how like when, when Jeff would try to shoot, like, videos, [00:58:30] uh, he would he would really have a hard time talking about green energy and like, uh, you know, talking about muscle cars. He had no problems, but, like, he'd be shooting green energy videos and he would screw them up. And like, sometimes he would shoot tequila and that would help, but okay. And, um, but no, I didn't see anything that suggested that the drugs were still in the picture. Okay, well, but there was there was one more anecdote that, um, uh, so we didn't we didn't talk about it in [00:59:00] kind of the body of the story, but Jeff and Paulette had kind of they were they were planning to, uh, disappear. They were trying to they're going to try to leave the country.

Greg Kyte: Oh, they were going to they're going to run for it.

Caleb Newquist: They were going to make a run for it because it felt like things were coming in. And, um, well, there's a couple of reasons that it didn't happen. Uh, number one was during the raid, their, their, uh, their passports were seized. And there's kind of this funny moment where, where Karpov calls the [00:59:30] office and he says, uh, hey, uh, our our our our my our passports should be on my desk. Are they are they still there? And somebody goes, uh, no, the feds took them. And Jeff says, oh, fuck. And he hangs up the phone.

Greg Kyte: Damn it. Yeah, another, another should have, should have kept those with my $1.7 million in my safe, right? Yeah.

Caleb Newquist: Probably should. So that's that's why they didn't get away. But Jeff [01:00:00] also was he he was he had said to some people that he had I am not kidding. He he told some people that he had half $1 million worth of meth buried in a cemetery. And that was his, like, insurance policy, essentially. Oh my gosh. And that's fantastic. Yeah. So like that was still like, you know, whether I don't get the sense that he was using drugs, I just don't think he would have been able to do all the things that he was doing, even though he was running a fraud and not [01:00:30] a legitimate business. I still don't think you would be able to do meth and be able to run that kind of a fraud.

Greg Kyte: See, and I disagree with. Okay. Yeah. Because because we clearly stated that Jeff himself was using putty knives and acetone to scratch off like a bazillion Vin numbers and then replace a billion Vin numbers. It didn't say that he he delegated that. It said he helped do that. And I mean, again, not speaking from [01:01:00] experience here, but I'm pretty sure if you need to remove a bunch of Vin numbers and replace a bunch of Vin numbers, one of the ways you can facilitate that is with meth. And also you make a fine.

Caleb Newquist: Point, Craig.

Greg Kyte: I think you would also possibly enjoy it if you were doing that on meth. So just I mean, you're saying there's no evidence. I'd say there's at least possibly an indication. Yeah, that that meth was still a factor in [01:01:30] the whole situation.

Caleb Newquist: Great.

Greg Kyte: Well, that's it for this episode. Remember, don't give yourself motherfucking as a middle name or a nickname, and don't give your wife motherfucking as a middle name or a nickname. And please don't give your children motherfucking as a middle name or as a nickname.

Caleb Newquist: And also remember, 15 minutes could save you 15% on car insurance, but 8000 nonexistent solar generators will not save you $377 [01:02:00] million.

Greg Kyte: If you want to drop us a line, send us an email at omnifrog@earmarks.com. Caleb, if people want to get Ahold of you, how can they do that?

Caleb Newquist: You can find me on LinkedIn slash Caleb Norquist. Greg, where can people find you on the internet?

Greg Kyte: Uh, let's do the same. Linkedin. Uh, backslash. Greg Kite uh, also, uh, I just got married, uh, about about a thank you about a week and a half ago. I have not been on LinkedIn [01:02:30] for, uh, probably a couple of months. I actually, I went on there today. I'm lying. I went on there today simply to repost a thing that someone said. Please go on and repost this, but I didn't do anything other than what I was requested to do. So if you didn't know all that to say, be patient if you are trying to.

Caleb Newquist: What if somebody wants to send you a wedding gift? Greg.

Greg Kyte: Uh, yeah. My Venmo is Greg Kyte. Uh, so. Yeah. Bingo. There you go.

Caleb Newquist: All right. Oh my [01:03:00] God. Is written by Greg, Kate and myself. Our producer is Zach Frank. Rate. Review and subscribe to the show wherever you listen to podcasts. If you listen on earmark, you can earn free CPE for listening. That's a good thing if you need that.

Greg Kyte: Such a good thing.

Caleb Newquist: If you don't need it, you're the best.

Greg Kyte: Yeah, you're our favorite.

Caleb Newquist: You're our favorites.

Greg Kyte: If you're just just the pure. Just the purest.

Caleb Newquist: Yeah, totally. Join us next time for more average swindlers and scams from stories that will make you say, oh my fry fraud.