A couple pleaded guilty to scamming Warren Buffett as part of a $1 billion Ponzi scheme
The couple accused of scamming Warren Buffett and other investors pleaded guilty in connection with a $1 billion Ponzi scheme on Friday, court filings show.
Jeff and Paulette Carpoff siphoned at least $140 million in investor money, splurging it on dozens of properties including a Las Vegas mansion and a pair of condos on Lake Tahoe, more than 150 cars including a $1 million dollar Mustang, and other big-ticket purchases. A federal raid of their home found nearly $80,000 in cash stashed on the premises.
Almost all of the vehicles — including a 1978 Pontiac Trans Am owned by actor Burt Reynolds — were put up for auction in October, raising more than $8 million.
Buffett's Berkshire Hathaway conglomerate plowed $340 million into mobile solar generators built by the couple's DC Solar business, in order to claim alternative energy tax credits and tax deductions on the devices' depreciation. Insurance giant Progressive, independent bank East West Bancorp, and paintmaker Sherwin-Williams also invested.
However, prosecutors allege the California-based business only made a fraction of the 17,000 generators it claimed to have built, and paid back old investors with new investors' money. After news of the fraud broke last year, Berkshire took a $377 million charge.
Jeff Carpoff pleaded guilty on Friday to laundering money and conspiring to commit wire fraud, while his wife pleaded guilty to money-laundering and conspiracy charges, according to court filings.
"This billion-dollar Ponzi scheme hurt investors and took money from the United States Treasury," US attorney McGregor Scott said on Friday, according to the Financial Times. "Today's guilty pleas send a strong message that fraudsters will get caught and will pay for their crimes. You can run, but you cannot hide."