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The Government Begins to Hunt Down Individuals Who Received Commissions and Referral Fees from RaPower-3

The Government Begins to Hunt Down Individuals Who Received Commissions and Referral Fees from RaPower-3

By Anthony Diosdi

Over the past few years, a company known as RaPower-3 has marketed ownership in solar lenses to investors throughout the United States. Investors were promised ownership in solar lenses located throughout the Southwestern United States. Investors were told that they could “zero out” their federal income tax liability by buying enough solar lenses and claiming both a depreciation deduction and solar energy tax credit for the lenses. The purported solar energy technology and solar lenses, however, did not work and could not generate energy.

Notwithstanding the fact that the solar lenses and technology never worked, RAPower-3 continued to sell solar lenses to customers emphasizing that they would qualify for depreciation deductions and/or the solar energy tax credit. Between 45,205 and 49,415 solar lenses were sold to customers. The solar lenses were sold through multi-level marketing schemes throughout the United States. These agreements involved an investment of money in a common enterprise with an expectation of profit from the efforts of others which constituted “investment contracts.” Investment contracts are securities and, as such, their offer and sale must comply with applicable state and federal securities laws. (The RaPower-3 investment contracts did not comply with state and federal securities laws). When investors purchased lenses, the customer would sign an operations and maintenance agreement with an entity related to RaPower-3 known as LTB1. LTB1 agreed to operate and maintain the investors’ lenses so it can produce revenue. A bonus incentive program paid commissions or referral fees to persons who persuaded others to purchase solar lenses.

RAPower-3 and its related entities collected at least $32,796,196 in gross receipts and possibly much more. These lens sales constituted a massive tax fraud. Based on these facts and others, RAPower-3 and its owners were enjoined from promoting solar lenses and providing tax advice by the United States District Court for the District of Utah in 2018.

The United States Department of Justice also identified customers who they said claimed bogus tax credits and forwarded the names of these individuals to the Internal Revenue Service (“IRS”). The IRS has been aggressively auditing individuals that have claimed deductions or tax credits associated with RaPower-3 solar lenses. Unfortunately, most RaPower-3 investors were blissfully unaware of any problems associated with claiming deductions and/or tax credits associated with RaPower-3 lenses until a terse letter showed up from the IRS.

In addition, the United States District Court established a Court-Appointed Receiver to collect the assets of RaPower-3 and its owners. The Court-Appointed Receiver is also utilizing its powers to name as defendants any individuals (throughout the United States) that sold lenses or received commissions through RaPower-3’s multi-level marketing scheme. The Court-Appointed Receiver is demanded that each defendant disgorge any commissions or referral fees received in the connection of the sale of RaPower-3’s solar lenses. The Court-Appointed Receiver is also demanding interest, costs, fees, and attorney fees. In addition, the Court-Appointed Receiver is alleging that individuals that received commissions or referral fees from RaPower-3 violated federal and Utah securities laws. These demands and allegations have serious consequences. If you were connected in any way with RaPower-3 or you have been served with a summons, you have a very limited time to act. Ignoring this very serious situation may only result in you forfeiting any defenses that you may have.

If you have invested in a RaPower-3 tax plan, received commissions or referral fees from RaPower-3, it is critically important that you contact an attorney who is familiar with RaPower-3 as soon as possible. We have represented both customers that purchased  RaPower-3’s solar lenses and individuals that have received commissions and referral fees from RaPower-3 throughout the United States.

Anthony Diosdi is a partner and attorney at Diosdi Ching & Liu, LLP, located in San Francisco, California. Diosdi Ching & Liu, LLP also has offices in Pleasanton, California and Fort Lauderdale, Florida. Anthony Diosdi represents clients in federal tax controversy matters and federal white-collar criminal defense throughout the United States. Anthony Diosdi may be reached at (415) 318-3990 or by email: adiosdi@sftaxcounsel.com

This article is not legal or tax advice. If you are in need of legal or tax advice, you should immediately consult a licensed attorney.