What kind of person can create a scam that will fool Warren Buffett? An audacious auto mechanic in California, USA.
50-year-old Jeffrey Kapov was a car mechanic and later founded the DC Solar Company. He has neither received a systematic financial education, nor has he worked deeply in politics and business circles, but he has defrauded more than 1 billion U.S. dollars (approximately 64 yuan) from 35 investment funds and at least 17 investors. Among them, Buffett’s Berkshire Hathaway was defrauded of 340 million US dollars (about 2.2 billion yuan).
On November 10, the Federal Court for the Eastern District of California sentenced Kapov to 30 years in prison for money laundering and criminal fraud, and sentenced his wife, Polite, to 15 years in prison. But people are still curious, how did Kapov deceive legendary investors like Buffett all the way to create this rare scam in California history?
Auto repairer becomes the boss of the solar company
Before being investigated, Kapov had been one of the most famous grassroots entrepreneurs in California.
He was born in an ordinary family in Los Angeles. He did not go to college. After graduating from high school, he received auto repair training and became an auto mechanic. After more than 10 years of hard work, he had his own auto repair shop.
There are many wealthy people in Los Angeles. Kapov’s target customers are British car owners with wealthy backgrounds. They have earned the first pot of gold in their lives by representing car companies such as Jaguar and Land Rover in Los Angeles maintenance services. Career flourishes, and love comes quietly. His wife Polaroid is not only his lover, but also his right-hand man in future work.
In the eyes of many Los Angeles people, Kapov at this time seems to have been a winner in life. But he is not satisfied with this. He found a new business opportunity-in order to obtain the government’s new energy subsidies and tax cuts, many companies and public departments began to install solar panels. In 2005, he established the DC Solar Energy Company, formally “breaking” into the solar energy industry from the auto repair industry, and wanted to get a share of the pie. With his three-inch tongue, he has won many big clients like Disney and Coachella Music Festival and made a lot of money.
In 2011, Kapov introduced a solar generator that can be installed on a trailer, claiming to be able to supply power to cell phone towers and lighting equipment in emergency situations. This is particularly attractive to organizers of large-scale events such as sports events, but more importantly, this product can get large new energy tax rebates and subsidies provided by the US federal government. As a result, not only related companies and various institutions that need generators for emergency backup began to place a large number of orders with him, but his company was also regarded as an investment target with optimistic profit prospects.
The DC Solar Company, which is in the limelight, soon attracted a large number of investors. Many big-name investors such as Buffett’s Berkshire Hathaway and the American Advance Insurance Company came in droves. The US federal government was also eager to find a “model innovative enterprise”, so it actively endorsed DC Solar. In 2016, the U.S. Department of Transportation named it “the most innovative company in the United States.” Among the award-winning technology giants such as Amazon and AT&T (American Telephone and Telegraph), DC Solar’s identity as a “startup company” is particularly dazzling. By the time the Dongchuang incident occurred, his company’s total business volume had reached 2.5 billion U.S. dollars in seven years.
In December 2018, Kapov, who seemed to have embarked on the “peak of life”, held a luxurious party at the most luxurious Fairmont Hotel in San Francisco to welcome Christmas and New Year in advance. In the strong aroma of cocktails and the sound of DJ brushing, the party racer Carl Larson wrote on Twitter: “This is the best holiday party I have ever attended!”
No one thought it was DC. The last holiday party of the solar company.
Warren Buffett, an American investor known as the “stock god”.
The “empty glove white wolf” scam
Kapov failed to “Celebrate Christmas”. On December 22 of that year, his mansion in Martinez, California was raided by the Federal Bureau of Investigation (hereinafter referred to as FBI). The headquarters of the DC Solar Company in Benicia City was also unable to escape, and a large number of documents, computers and vehicles were seized by the FBI.
On the day of the accident, Kapov also pretended to be calm and issued a statement saying that the raid was due to a “tax dispute” between the company and the government, and that he believed that the government would resolve the issue fairly. But soon people realized that his problem was by no means as simple as a “tax dispute”.
According to the Federal Attorney’s Office for the Eastern District of California, the FBI received a letter from within DC Solar that year, stating that the company fraudulently falsified the number of installed solar generators and provided investors with false financial statements and lease contracts. The police immediately investigated the company and were surprised to find that it had already stopped the production of solar generators. At least half of the 17,000 solar generators promised did not exist. There are reports that his company actually only has 6,000 generators at most.
Left: Kapov, who is congratulating his sponsored NASCAR driver for winning the championship. Top right: The No. 42 NASCAR car sponsored by Kapov. Bottom right: Mobile solar generator produced by DC Solar.
In the ensuing investigation, DC Solar’s “empty glove white wolf” method was finally revealed.
According to the U.S. police, after the Karpovs discovered the federal government’s huge solar subsidy policy, they began to contact investors to “paint a pie”: If you invest in our DC solar company, you can immediately get federal government tax subsidies; we get it After investing in the production of solar generators for you, you can lease the generators back to us. In this way, you can get a stable investment income, and we lease these generators to a third party.
This transaction sounds “reasonable” and “stable profit without losing”, which attracted a group of investors, including Buffett, to “bite.” However, after getting the investor’s money, DC Solar did not spend the money on “business.” The US police investigation found that after becoming famous in 2011, the company seldom engaged in the production and research of solar energy products, and only had a few model solar power generation areas under its name to confuse investors…
In order to avoid scam exposure, the Kapovs faked A large number of financial records and solar generator lease contracts were also planned, and a “Ponzi scheme” was planned to use the funds of new investors to make investment returns for old investors. The Kapovs became billionaires by this trick.
Sentenced to 30 years in prison
Like all “Ponzi schemes”, the bubble will burst eventually. Kapov was caught by the police before he could “close the door and run away.”
Less than two months after being raided by the FBI, DC Solar filed for bankruptcy. At this time, Kapov is still lying to the public, claiming that the company has received support from employees and investors and is capable of repaying debts.
But not long after, the US government began to liquidate the Kapovs. According to the survey, since 2012, Kapov has purchased more than 100 luxury cars of various types, including expensive limited-edition models. As a car fan, Kapov studied auto repair when he was young. After he got rich, he not only bought luxury cars, but also spent huge sums of money to sponsor the NASCAR modified car competition, which is as famous as F1 in the United States. Podium. In addition, Kapov also spent a lot of money, buying a large number of luxury villas in Nevada, California and the Caribbean, and paid more than 5 million US dollars in cash to buy part of the property rights of a winery.
In a statement issued by the U.S. Department of Justice, the prosecutor who sponsored the case emphasized: “Kapov single-handedly planned the largest criminal fraud case handled by the Eastern District of California.” He accused Kapov of “packaging himself into a new energy field Innovators are actually cheating hundreds of millions of dollars from investors and the government to provide themselves with an extravagant life.” According to attorneys for the Eastern District of California, after confiscating Kapov’s property, they auctioned off some of the ill-gotten wealth, including his luxury car sold for more than $8 million. The prosecutors have already confiscated US$120 million in assets, which will be “refunded to the victims”, and the company’s US$500 million in fraudulent taxes have been “returned to the U.S. Department of the Treasury.” The US Federal Revenue Service’s investigators said that Kapov’s pyramid scheme caused the bureau to “loss at least US$900 million in taxes.”
Before being sentenced, the Kapovs had pleaded guilty. In a written statement issued by his lawyer, Kapov stated that he was disturbed that he had “damaged the interests of investors and caused great harm to family members and colleagues”. But in the eyes of investors, such empty statements are worthless. The US government can reduce losses somewhat, but a large amount of money has been squandered by the Kapovs, and investors including Buffett are facing heavy losses.
In the end, Berkshire Hathaway could only express sadly in the financial report that the investment return and tax incentives promised by DC Solar are an impossible promise. Buffett has a famous saying that is regarded as a standard by many investors: “Others are greedy and I am cowardly, and others are cowardly and greedy.” However, in the face of Kapov’s elaborate scam, the “stock god” has also become a captive of greed.
Jeffrey Kapov is
50 years old, an American scammer . He was a car mechanic and later founded DC Solar Company to defraud more than 1 billion US dollars by illegal means. The victims included investor Warren Buffett. Sentenced to 30 years in prison in 2021.