We wonder what reaction Bernie Madoff is having in the cell that’s serving as home for all of his life sentences, now that DC Solar’s alleged Ponzi scheme has claimed its third financial victim, this one more severe than the last.
Just under a month ago, Progressive and Hancock Whitney reported that they’d been hit by the alleged $810 million scheme, with Progressive reporting “tens of millions” in losses and Hancock Whitney, a bank with locations in Louisiana and Mississippi, had to lower its first quarter earnings by $10.1 million.
The newest development is much, much larger, as multinational holding conglomerate Berkshire Hathaway shared that the recent $377 milli0n loss that the company experienced recently was related to DC Solar. The loss came as an “income tax expense adjustment” once the conglomerate learned about “allegations of fraudulent income conduct” relating to DC Solar. Berkshire Hathaway’s initial investment in the bankrupt former PV manufacturer and distributor was $340 million.
The DC Solar saga has been rolling since December, when the FBI raided company headquarters in Benicia, California, as well as the home of the company’s CEO. Per an affidavit, the scheme operated as follows:
The Company primarily operated through Company S (Real property Lake Tahoe branch), which raised capital to manufacture and sell solar equipment to tax equity investors, and Company D (Real Property Martinez branch), which leased the solar equipment from the tax equity investment funds affiliated with Company S. The Company represented to investors that investing in the solar equipment—i.e., purchasing it through the tax equity investment fund—had very favorable tax consequences, including valuable tax credits and depreciation.
DC Solar had originally filed for Chapter 11 bankruptcy, but as of March that has since become Chapter 7, meaning that, if all goes according to plan, a final liquidation via asset sales to creditors.
And while $377 million is an unfathomably large number for most of us, the loss is essentially a drop in the barrel for Berkshire Hathaway. The company’s asset base is reported at $738 billion, with $191 billion in equity investments and $114 billion in cash.
Oh, and for fun, that cash figure, just the $114 billion figure, if laid end to end around the equator as $1 bills would wrap around the earth nearly 1,400 times. Seriously, it comes up three feet short.
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