The billion-dollar Ponzi scheme that hooked Warren Buffet and the US Treasury

“Giant corporations could decide how much they wanted to save in taxes, then—through an investment fund created just for them—buy exactly the number of generators to achieve that figure. All they’d have to put down was 30 percent of the generators’ price—the exact amount they could deduct, dollar for dollar, from their federal tax returns through the investment tax credit.

“DC Solar would not only loan buyers the other 70 percent; it would pay it back for them, with the money it made leasing out generators on their behalf. Carpoff was confident enough in the rental market—DC Solar, he said, had long-term leases in the works with major telecom, entertainment, and construction companies—that he guaranteed the loan payments and promised cash payouts of leftover leasing revenue.

“The upshot was that buyers could collect the tax credits and lease payments without ever having to use, maintain, or even see their own generators. The deals offered so much value, for so little down, that pitch decks advertised internal rates of return of more than 50 percent.”