Ace investor and billionaire Warren Buffett’s Berkshire Hathaway has been tricked into a bad investment by an enterprise that ran Ponzi schemes on solar energy and was luring investors by flaunting federal tax credits.

Berkshire Hathaway reportedly lost tax credits and faced charges as the investments were invalid.

DC Solar allegedly defrauded many investors with its fanfare, and charity activities and concealed alleged fraudulent ways.

The Bay Area business was making mobile solar generators and also leased them.

Warren Buffett’s company plunked money to derive mileage from significant tax credits and profits. Many regional banks also stepped in as financial backers of the company.

The names included Pasadena’s East West Bancorp, Valley National Bancorp, and United Financial Bancorp Inc.

DC Solar was promoted by a former car mechanic Jeff Carpoff along with his wife Paulette.  They succeeded in creating an impression of running a growing business dedicated to environment-friendly products.

According to reports, Berkshire sank $340 million in DC Solar. Now Berkshire is facing tax benefits reversal worth millions that were due from DC Solar investments.

The pitch of DC Solar for trapping investors was big federal tax credits and accompanying profits. Soon it brought hordes of sophisticated investors, despite the enterprise being unknown outside California barring some people in the car-racing industry as a sponsor.

The promoters were noted for ostensible luxury. They flaunted 90 premium cars including Fords, Plymouths, and Bentleys. Besides owning 20 properties they also ran a professional baseball team in Martinez.

DC Solar scam was cracked open when a former employee informed federal authorities that the number of leased mobile units being claimed by DC Solar was false, per a court filing.

FBI raid unravels the big scam

The elements of a fraud inside the business tumbled out after an  FBI raid on the company that followed a glittering Christmas party where big money was spent.

The raid brought curtains to the extravagant life of Carpoffs. DC Solar and the business bust. The 100 plus workforce lost jobs.

The Martinez mansion of the promoters stretching 4,100-square-foot is in foreclosure now.

The flashy enterprise attracted the attention of many investors who included Warren Buffett’s Berkshire Hathaway Inc and many others who came on board as investors eyeing federal tax credits.

According to authorities, Carpoffs managed to fleece $800-million by enticing investors to put in money as a do-good incentive that would fetch big tax credit in the solar sector.

Carpoffs built up favorable media hype by funding charitable pursuits including support to victims at Northern California neighborhoods affected by wildfires.

Loss of Berkshire

Berkshire admitted that it was “more likely than not” lapse the tax benefits it drew from some investments spanning 2015 to 2018 on the ground that they may be invalid.

The May filing finally identified the name of the sponsor which was none other than DC Solar.

By reversing the tax benefit, Warren Buffett’s company incurred $377-million charges in the first quarter.

Even big companies including JPMorgan Chase, Bank of America and paint maker Sherwin-Williams have been investing in renewable energy firms to earn tax credits.

Although the Federal program was free of scams, the  DC Solar episode has been a shocker and sent a signal to all investors running after investment tax credit solar without due diligence on the credibility and health of such business units.

While the FBI and Securities and Exchange Commission are saying investigations are in progress, the FBI and SEC did not comment.