A company owned by billionaire Warren Buffett was recently hit by a major Ponzi scheme.
Buffett’s Berkshire Hathaway, the multinational corporation, reported $377 million first-quarter investment losses related to a solar Ponzi scheme. This was revealed in a regulatory filing during its recent annual
“In December 2018 and during the first quarter of 2019, we learned of allegations by federal authorities of fraudulent income conduct by the sponsor of these funds,” the filings read. “We now believe that it is more likely than not that the income tax benefits that we recognized are not valid.”
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Berkshire Hathaway had invested $340 million in tax-equity investment funds tied to a California company called DC Solar. According to federal authorities, the fake mobile solar generator company boasted it could offer “very favorable tax consequences” for its investors and this was all a lie.
Berkshire said it had a $190-billion stock portfolio at the end of the first quarter.
So it seems even an investment whiz like Buffett can be scammed.
But other companies were also caught up in this particular scheme.
“Companies including Progressive Corp. and East West Bancorp Inc. also say they’ve been hurt by tax-related investments involving DC Solar, which allegedly promoted its ability to provide ‘very favorable tax consequences,’” Bloomberg reported.
Tax benefits are common in renewable-energy tax-equity investments and often banks and insurers will “passively invest” in clean-power projects so they can benefit from federal tax credits that offset their own tax liabilities.