Environment & Energy
Related: About this forumHow An American Dream Solar Generator Business Became A Ponzi Scheme That Scammed Buffett, US Bank
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Dave Watson, a software consultant and an off-roading enthusiast whod serviced his vehicles at Roverland, had stayed in touch with its former owner. After hearing Carpoff muse about solar on wheels, Watson gathered a group of local entrepreneurs in a parking lot to see Carpoffs odd-looking trailer. It had potential, they thought. Its two rows of solar panelsfive per rowwere attached to rotating beams, a clever design that let you lock them upright for aerodynamic transport on highways, then tilt them sunward once youd parked. This wasnt some niche anti-theft accessory; it was an all-purpose generator, towable anywhere for green power on the go. Sales of portable generators were headed toward $3 billion a year globally, and growing fast. If you converted even some of that to solarparticularly if you were first to marketyou could become very rich.
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One of the professionals in the room, a financial modeler named Gary Knapp, helped introduce Carpoff to the law firm Nixon Peabody, which had a well-known tax-credits practice. It was an arcane legal specialty centered on the special tax perks for industries, such as renewable power, whose growth served broader national interests. In 2005, Congress had tripled the value of a green-energy incentive called the investment tax credit. Businesses could reduce the federal income taxes they owed by an amount equal to 30 percent of their spending on solar equipment: a 30-cent public refund for every private dollar spent. The enlarged credit led to an explosion of new solar businesses, many of which could never have started, or survived, without it. Lawyers could help companies max out the credits without running afoul of byzantine IRS rules.
Carpoff spoke with a Nixon Peabody partner named Forrest Milder, who worked in the firms Boston office, had degrees from Harvard and MIT, and billed nearly $900 an hour. Carpoff may have been a bit different from Milders usual callers, but the freewheeling car mechanic and wonky tax lawyer met at an opportune time. In 2010, with law firms struggling after the Great Recession, the head of Nixon Peabodys tax-credits practice had begun pressing partners to think more creatively about their business, according to a 2012 report in The Washington Post. Tax-credits partners were urged to invent new products, ideas, and fee structures, including free legal advice aimed at hooking potential clients on their services. Partners ability to innovate factored into their pay and was the first question they had to answer in annual evaluations. Its like investing in a start-up, one of the firms tax-credits partners said of this push to lead clients, rather than to follow them. One in 10 hits, but if it hits, its a big deal. (A lawyer for Milder and Nixon Peabody said that Milders decision to represent DC Solar was unrelated to the innovation initiative, and that Milders pay was not materially impacted by his work for the company.)
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One reason was that the Solar Eclipse was prone to malfunction. Carpoff had no training in solar engineering. After sketching his idea on a napkin, hed asked Paulettes younger brother, Bobby Amato, a former Ford auto mechanic, to build it. I had no idea how solar worked, Amato told me. Good thing they got Google and all that. The result wasnt bad for a couple of guys whod never done anything like it. But it wasnt great, either. Power would sometimes suddenly cut outplunging makeup trailers for Disneys Alexander and the Terrible, Horrible, No Good, Very Bad Day into darkness, and apparently leaving Pinks trailer without air-conditioning at an MTV concert. A group of Northern California entrepreneurs who thought the early models might aid disaster relief thought again when plugging in a single hair dryer tripped the breaker.
Carpoff began affixing 100-gallon diesel generators to the trailers as backup for breakdowns or cloudy days. But the rumble of diesel on what was supposed to be a fossil-fuel alternative made people wonder how much the planet was really benefiting. If too many weeks passed without a tune-up, generators would exhale plumes of smoke when the diesel activated. You can imagine a solar tower with black smoke coming out of it, the public-safety director at a university that tried them told me. Students would sometimes say, Whats going on? Is it on fire? and wed have to explain that.
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https://www.theatlantic.com/magazine/archive/2023/06/dc-solar-power-ponzi-scheme-scandal/673782/