Carpoff Ponzi Scheme – DC Solar Entities’ Trustee Brings a Fraudulent Conveyance Action Against Solarmore Investments, Inc.
January 24, 2021, District of Nevada - Christina W. Lovato, the Chapter 7 trustee for the bankruptcy estates of DC Solar Solutions, Inc. (“DCSS”), DC Solar Distribution, Inc. (“DCSD”), DC Solar Freedom, Inc. (“DCSF”, and with DCSD and DCSS, “DC Solar”), Double Jump, Inc. (“DJ,” and with DC Solar, the “Debtors”) brings a fraudulent conveyance action against Defendant Patrick Moore and Solarmore Investments, Inc., alleging that the officers of one of the Debtors acquired memberships in the Defendant club and received certain payments as actual and fraudulent transfers.
Debtor DCSS was engaged in a business related to manufacturing, marketing, selling, and leasing mobile solar generators (“MSGs”) since 2010. As alleged in the complaint, some of the DC Solar’s insiders, including Jeff Carpoff and Paulette Carpoff (together, the “Carpoffs”), were perpetrating a Ponzi scheme (“Carpoff Ponzi Scheme”) through DC Solar and other entities. The Carpoffs allegedly caused DC Solar to transfer monies obtained from new buyers of MSGs to cover obligations owed to earlier buyers. This was contrary to the Carpoffs’ representations (directly or indirectly) to the financial investors that sub-lessee revenue would pay those obligations.
According to the complaint, around December 2010, Mr. Moore created Solarmore Inv. to serve as the managing member of certain investment funds for the DCCS-sponsored tax-advantaged transactions. Mr. Moore and Jeff Carpoff was an officer, director, and equity holder of Solarmore Inv.
The Trustee alleges that Mr. Moore and the Carpoffs caused DCSD and DCSS to make transfers worth $1.3M to Solarmore Inv. for the benefit of Mr. Moore and in furtherance of and related to the Carpoff Ponzi Scheme.
Since these transfers were purportedly made within two years of the petition date with the actual intent to hinder, delay or defraud its creditors, the Trustee argues that they are liable to be recovered as actual fraudulent transfers under 11 U.S.C. § 548(a)(1)(A) of the Bankruptcy Code. Further, DCSD and DCSS allegedly did not receive reasonably equivalent value in exchange for the said transfers; and as such, they are recoverable according to 11 U.S.C. §§ 548(a)(1)(B) as constructively fraudulent transfers.