Date
22 September 2019
Warren Buffett's Berkshire Hathaway said it had invested US$340 million in various tax equity investment funds,  before learning that federal authorities had alleged “fraudulent income conduct” by the funds’ sponsor. Photo: Reuters
Warren Buffett's Berkshire Hathaway said it had invested US$340 million in various tax equity investment funds, before learning that federal authorities had alleged “fraudulent income conduct” by the funds’ sponsor. Photo: Reuters

Berkshire takes US$377 million charge as ‘Ponzi’ victim

Warren Buffett’s Berkshire Hathaway Inc. said a US$377 million charge it incurred recently was tied to a solar generation company that US authorities have linked to fraud, Reuters reports.

Berkshire said in its first-quarter report on Saturday it had invested US$340 million in various tax equity investment funds from 2015 to 2018, before learning that federal authorities had alleged “fraudulent income conduct” by the funds’ sponsor.

“We now believe that it is more likely than not that the income tax benefits that we recognized are not valid,” and took the charge for “uncertain tax positions” related to its investments, Berkshire said.

Buffett’s assistant Debbie Bosanek confirmed that the charge related to DC Solar. Bloomberg News earlier reported its identity.

Berkshire’s report had not identified the sponsor by name, and Buffett’s Omaha, Nebraska-based conglomerate has not been accused of wrongdoing.

Lawyers for DC Solar did not immediately respond to requests for comment.

DC Solar, whose products include solar generators as well as light towers that can be used at sports events, filed for Chapter 11 bankruptcy protection in February in Reno, Nevada.

In a Feb. 8 affidavit related to those proceedings, an FBI agent said the manner in which the Benecia, California-based company appeared to have operated reflected “evidence of a Ponzi-type investment fraud scheme”.

The US Securities and Exchange Commission accused DC Solar’s owners by name of engaging in a Ponzi scheme, according to a separate court filing.

Berkshire’s charge reduced first-quarter operating profit to US$5.56 billion, up 5 percent from a year earlier.

This year’s results excluded the impact of Berkshire’s 26.7 percent stake in Kraft Heinz Co., which has yet to report audited quarterly results.

Berkshire’s US$340 million investment is small relative to its US$738.7 billion asset base, which includes US$191.8 billion of equity investments and US$114.2 billion of cash. The company also has its own renewable energy projects.

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