Two plead guilty to participation in a Ponzi scheme involving $2.5 billion in transactions and

[TexasTowelie]

Two plead guilty to participation in a Ponzi scheme involving $2.5 billion in transactions and $1 billion in loss


SACRAMENTO, Calif. — Two defendants pleaded guilty today to their participation in a massive fraud scheme involving a solar energy company in Benicia, that defrauded investors of approximately $1 billion, U.S. Attorney McGregor W. Scott announced. Those losses resulted from investment transactions in solar energy hardware valued at approximately $2.5 billion.

According to court documents, between 2011 and 2018, the solar energy company manufactured mobile solar generator units (MSG), solar generators that were mounted on trailers. The company touted the versatility and environmental sustainability of the MSGs and claimed that they were used by cellphone companies to provide emergency power to cell towers in the case of a power failure. They were also claimed to be used to power lights at sporting and other events.

The company solicited investors by claiming that there were very favorable federal tax benefits associated with investments in alternative energy. The company structured the transactions in order to maximize the tax benefits to the investors. Investors would buy the MSGs without ever taking possession of them. They would pay a percentage of the sales price and finance the balance with the company. Then the investors would lease the MSGs back to the company, which in turn leased them to third parties. A portion of the lease revenue would be used to pay the investors’ debts to the company and to the investors. The third‑party leases, however, generated little income and the company paid early investors with funds contributed by later investors.

According to court documents, Ronald J. Roach, 53, of Walnut Creek, a certified public accountant, provided accounting and tax services to the solar energy company. To trick investors, Roach prepared years of financial statements that falsely characterized investments to purchase MSGs as revenue earned from the rental of those MSGs. Roach and his co-conspirators used those 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—in a classic, Ponzi-like scheme. Roach also pleaded guilty to securities violations associated with the same investment fraud scheme.

Read more: https://www.justice.gov/usao-edca/pr/two-plead-guilty-participation-ponzi-scheme-involving-25-billion-transactions-and-1