True Or False: Warren Buffett Just Lost $377 Million On A Ponzi Scam

(Observer) Warren Buffett’s investment conglomerate, Berkshire Hathaway, took a $377 million hit in the first quarter of 2019 due to prior years’ investments in a group of funds run by a company that’s now believed to be a Ponzi scheme.

Between 2015 to 2018, Berkshire Hathaway invested a total of $340 million in tax-credit investment funds sponsored by a California-based clean energy company called DC Solar.

“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,” Berkshire Hathaway said in its first-quarter financial report. “As a result of our investigation into these allegations, we now believe that it is more likely than not that the income tax benefits that we recognized are not valid.”

Buffett’s secretary, Debbie Bosanek, confirmed to Bloomberg this week that the funds mentioned in the regulatory filing were related to DC Solar.

Founded in 2008, DC Solar touted its ability to provide “very favorable tax consequences” to investors, which turned out to be a lie. The company filed for bankruptcy in February after the FBI and IRS raided its headquarter in Benicia, Calif., in December of last year.

The FBI alleged that the company had been using money from new investors to pay old investors who had leases for the company’s solar-generation equipment.

Authorities determined that DC Solar had sponsored fraudulent funds that totaled $810 million. Other victims included insurer Progressive, which recorded a $156 million loss in the first quarter, and Southern Californian bank East West Bancorp., which took a $7 million hit in Q1.

Popular

More Articles

Popular