A US court verdict uncovered Buffett's "grief".Jeff Carpoff, the boss of an American solar company, has been sentenced to 30 years in prison for orchestrating a super Ponzi scheme, a local court in California announced on Nov. 9. Buffett has also become a victim of the "Ponzi scheme", which spans nearly eight years, involving 35 investment funds and defrauding nearly $1 billion, with a loss of $340 million (about 2.2 billion yuan). It is the largest fraud in the history of eastern California.

This is not the first fraud in which Buffett stepped on thunder. British media previously reported that Buffett had been cheated out of 643 million euros (about 5 billion yuan) by a German company. There are signs that Buffett is becoming more cautious, with Berkshire Hathaway's paper cash soaring to $149.2 billion (954.1 billion yuan) by the end of the third quarter of this year, an all-time high. and net sales of shares exceeded $2 billion in the third quarter.

Is the caution of the "stock god" warning investors that the current bubble in US stocks is getting bigger and bigger?

"Stock God" trampling on thunder and new energy scam

A super "Ponzi scheme" once again pushed the "god of shares" Buffett to the center of public opinion.

Jeff Carpoff, the boss of a solar energy company in the San Francisco Bay area, has been sentenced to 30 years in prison, a local court in California announced on Tuesday. Us federal prosecutors say Carpoff was sentenced to 30 years in prison for orchestrating a super "Ponzi scheme", the largest criminal fraud in the history of eastern California.

According to the information disclosed by the court, the "Ponzi scheme" defrauded investors of as much as 1 billion dollars, and the famous Wall Street "stock god" Warren Buffett also became one of the "victims", losing 340 million dollars.

According to the verdict, Carpoff, 50, pleaded guilty to telecom fraud and money laundering in court. Meanwhile, his wife, Paulette Carpoff, who admitted involvement in money laundering and complicity in the case, will be sentenced next week and could face up to 15 years in prison.

It is worth mentioning that this "Ponzi scheme" is unexpectedly rubbing the tuyere of new energy, wearing the cloak of "alternative energy innovator", wantonly amassing money, attracting a large number of investors to join the game.

At first, Carpoff and his wife co-founded a company called DC Solar (DC Solar), whose main business is to produce a mobile solar generator set (MSG) that can be freely installed in trailers. Carpoff and his wife trumpeted that the company's solar generators that can convert solar energy into electricity and provide emergency power for mobile phone towers and sports lighting are alternative energy innovators and breakers.

With gimmicks such as new energy concepts and tax breaks, the Carpoff sold DC Solar products to investors and promised to buy the company's generator sets in order to get a federal new energy tax credit and rent the equipment back to the company for a high return.

The Carpoff couple used revolving payments similar to a Ponzi scheme to defraud accounting and rental income, and the company used money from new investors to repay old investors on a growing scale, according to a statement from the US prosecutor's office.

At the same time, the Carpoff couple exaggerated the number of generators the company produced, claiming at one point that the company had produced and sold as many as 17000 mobile solar generators. In addition, the Carpoff couple also used false financial statements and lease contracts to cover up the truth and create the illusion of booming business to investors.

In fact, DC Solar stopped production of mobile solar units a long time ago. More than 50% of the 17000 mobile solar units advertised by the company are fake, and the company also faked vehicle identification numbers (VIN) on mass production equipment, and one device was sold several times to avoid investor scrutiny.

According to US prosecutors, the "Ponzi scheme" is the largest fraud in the history of eastern California, spanning nearly eight years, involving 35 investment funds, at least 17 victimized investors, and defrauding nearly $1 billion. And cost American taxpayers hundreds of millions of dollars in tax credits.

Amazingly, the Carpoff couple's solar company fooled Buffett, the "god of stock", and Berkshire Hathaway's investment company also invested in the fraudulent company's solar project, resulting in a loss of $340 million.

According to US media reports, the mastermind of the Ponzi scheme, Carpoff, who was originally a car mechanic, was carefully designed when he learned that solar equipment could be used to provide a tax credit. After earning a huge amount of illegal income, the Carpoff couple led a luxurious life, including more than 150 rare sports cars, 32 properties and $19 million worth of private jet services.

Bigger scam: 5 billion or lost

In fact, this is not Buffett's first case of "treading thunder" fraud. As recently as May 2020, the Guardian reported that Buffett was defrauded of 643 million euros (5 billion yuan) by a German manufacturing company.

The company, called Wilhelhel Schulz, is a small and medium-sized family business in Germany, which mainly produces pipe fittings. Under the endorsement of Germany's powerful manufacturing industry, many investors are very optimistic about the company's development prospects, including Buffett.

Based on this judgment, Berkshire Hathaway, controlled by Buffett, bought William Schultz for 800 million euros in February 2017.

Three months after Buffett's acquisition, the company began to explode. In May 2017, an anonymous insider found that the William Schultz company, which Buffett bought heavily, had a lot of suspicious financial data, probably falsifying the transaction volume and faking the appearance of a booming business. there's even a risk of bankruptcy.

According to internal information quoted by German local media, the fraud method of this company actually relied on "P map". The employees of the company first scanned the stationery of the customer's company and used P map to make false orders and receipts, through these documents, at least 47 business transactions were fabricated.

After taking into account these fraudulent transactions, the actual value of the company is only 157 million euros, and according to the ruling of the New York Court of Arbitration, William Schultz must make up the gap of 643 million euros. In addition, the company also faces an investigation by the local judicial department in Germany, and its operating condition is declining rapidly.

Subsequently, the US District Court confirmed the arbitration panel's ruling and asked Wilhelm Schultz of Germany to pay Berkshire Hathaway 643 million euros to make up for the losses caused to the company by its financial fraud. However, there has been no progress so far, and the operating performance of the German company Wilhelm Schultz is also in trouble, or will face the risk of bankruptcy, so it is very difficult to compensate.

It means that Buffett's 800 million euro investment is likely to be wiped out.

Buffett's caution, US Stock Bubble

On the other hand, stepping on mines everywhere may be Buffett's inevitable reality. Berkshire Hathaway's paper cash reserves were so large that it soared to $149.2 billion (954.1 billion yuan) by the end of the third quarter, an all-time high. If Berkshire Hathaway is to keep growing, it must put its cash into promising corporate equity, and if there are too many projects, individual projects will be the inevitable result.

But Buffett seems increasingly cautious, with few outbound mergers and acquisitions, especially in the face of soaring U. S. stocks. Berkshire Hathaway sold more than $2 billion in net stock sales in the third quarter of this year.

Buffett, who has no ticket to speculate, can only buy his own stock. According to data, Buffett bought back at least $1.7 billion of Berkshire Hathaway shares between the end of September and October 27, bought back $7.6 billion of its own shares in the past three quarters, and in the past three years, Buffett's cumulative repurchase amount is as high as 51 billion US dollars.

Buffett, who is becoming more cautious, may be warning investors from the other side that the current bubble in US stocks is getting bigger and bigger.

The S & P 500 now trades at 21.6 times expected earnings over the next 12 months, and is even higher, at nearly 33 times, weighted by market capitalization. In addition, the five major signs of a bubble in US stocks: a lot of liquidity, a sharp rise in leverage, the "democratization" of the stock market, an increase in the number of IPO and an increase in trading volume have all emerged.

At present, there are more and more warnings on Wall Street about the US stock bubble. Recently, legendary Wall Street investor Jeremy Grantham warned that the US stock market is in a "huge bubble" and that the longest bull market in history is coming to an end. Watch out for the bursting of multi-asset bubbles.

The key to the future of US stocks still depends on the Fed. Not long ago, the Federal Reserve announced the launch of the contraction table, which means that this round of quantitative easing is coming to an end. Fed "big hawk" Brad said a few days ago that the Fed is expected to raise benchmark interest rates twice in 2022 after ending its bond-buying program.

Once this expectation comes true, the tight supply of dollars in the global market will accelerate, and the bubble created by the 13-year rise in the US stock market will be tested again.

In addition, the US inflation rate is also putting pressure on the Federal Reserve. According to the latest data, the annual CPI rate reached 6.2% in October, the highest decline in 31 years. U. S. President Joe Biden urgently said that reversing inflation is a top priority.