The product was a lens; the attraction was the tax return
In November 2015, the Justice Department sued the promoters of a solar venture in Utah’s Millard County. Customers across the country were being sold pieces of a purported power system and told they could claim depreciation deductions and energy tax credits. The government sought to stop the promotion and recover its proceeds. At that point, those assertions were allegations in a civil complaint. After trial, the courts would reach far more definitive conclusions. [1]
The eventual judgment ordered more than $50 million in disgorgement and permanently restricted the scheme’s promotion. The case was not simply a technology project that missed a deadline. The trial court found that the promoters knew, or had reason to know, that their tax-benefit statements were false or fraudulent. A failed commercial experiment and unlawful tax promotion are different propositions. [2]
From a solar concept to individually owned components
Neldon Johnson’s International Automated Systems, Inc. had originally investigated supermarket checkout systems before turning toward solar energy. Johnson’s concept used plastic Fresnel lenses to concentrate sunlight. Arrays would track the sun, warm a fluid, produce steam and drive a turbine. The Tax Court’s later account describes a project that remained in research and development, rather than becoming the promised operating energy business. [3]
The financial structure let customers buy components instead of building a complete plant. As the Tenth Circuit described it in 2020, purchasers paid roughly one-third of the lens price up front. The seller financed the balance through nonrecourse loans, meaning repayment generally depended on the specified collateral rather than the buyer’s other assets. Further payments were deferred until electricity sales had produced revenue for five years. Customers would lease the lenses to LTB1, LLC, whose rental obligations likewise depended on revenue generation. [4]
A sale could happen without a working power plant
The contracts created a striking timing mismatch: cash came from purchasers before commercial electricity, while customers were encouraged to claim present tax benefits. The appellate account says between 45,000 and 50,000 lenses were sold and fewer than 5 percent installed. Nineteen towers stood near Delta, but the record lacked a functioning grid connection and an electricity-purchase agreement. The court affirmed the ruling against the promoters on June 2, 2020. [4]
Johnson’s companies and promoter R. Gregory Shepard used a multilevel sales structure. The 2015 complaint said customers could receive commissions for recruiting additional buyers. It also said the IRS had already disallowed claimed benefits and that at least 70 related Tax Court cases were pending, with more than $4 million of Treasury harm alleged in those cases alone. That early estimate concerned a subset of taxpayer disputes; it was not the later disgorgement amount or a final total for the entire venture. [1]
The trial separated advertising from eligibility
After a 12-day bench trial in 2018, the district court found that lens purchasers were not conducting the lens-leasing trade or business represented by the defendants. It also found gross valuation overstatements and that the technology could not produce commercially viable electricity or solar process heat. Merely describing an item as solar equipment did not establish eligibility for the advertised tax treatment. [2]
The court ordered disgorgement of $50,025,480 in gross receipts, based on what it accepted as a reasonable approximation of the scheme’s receipts. It also prohibited claims that purchasing a lens entitled a customer to the associated business deductions or energy credit. This was a civil injunction and disgorgement case. The amount ordered is a liability imposed by the court, not proof that the same sum was collected or distributed. [2]
Purchasers faced their own tax disputes
The consequences extended beyond the promoters. In April 2021, the Tax Court ruled against Preston and Elizabeth Olsen’s claimed lens-related deductions and credits for the years before it. More than 200 other cases were being held pending the outcome. The opinion described refunds being used to buy more lenses and generate further deductions and credits. The IRS conceded accuracy-related penalties because it had not secured timely supervisory approval; the disallowance of benefits should not be described as a blanket victory on every penalty originally asserted. [3]
The Tenth Circuit affirmed the Olsens’ result in November 2022, focusing on the finding that the purchases lacked a genuine profit motive. The court examined the actual activity, including the absence of rental revenue and the way annual purchases followed tax considerations. It upheld the denial of the benefits without turning every investor’s circumstances into an identical case. The promoter litigation established the unlawful marketing scheme; an individual tax case determined what particular taxpayers could claim. Those proceedings addressed related conduct through distinct legal questions. [5]
A judgment began another phase of work
In 2018, the district court appointed R. Wayne Klein as receiver to take control of assets and investigate whether affiliated entities held proceeds. Thirteen affiliated entities were subsequently added to the receivership. Six appealed their inclusion on due-process grounds, but in June 2020 the Tenth Circuit dismissed that appeal for lack of jurisdiction. That procedural dismissal should not be called a merits ruling rejecting every objection the entities raised. [6]
Asset tracing generated additional orders. In September 2020, the district court granted a receiver motion concerning funds and properties held by Glenda Johnson. The court found that the relevant assets could be traced to receivership entities and ordered turnover. A receivership is a court-supervised effort to locate, preserve and recover property; identifying an asset, obtaining an order, selling it and receiving cash are separate steps. The order itself does not establish a final recovery total. [7]
The long recovery tail
A later court order shows that recovery litigation continued years after the original trial. Signed on October 24, 2025, and filed October 27, it approved a settlement with trusts represented by Kristine Hamblin. The order said the agreement would bring $112,082.48 into the receivership estate and authorized the receiver to enter it. That is a settlement authorization and expected inflow, rather than independent confirmation of cash receipt. [8]
The documented story therefore has three outcomes: the promotion was judicially restrained, the main civil judgment survived appeal, and related tax and recovery proceedings continued afterward. No final estate accounting establishing collection of the full $50 million was verified for this article. RaPower-3’s promise turned future energy production into present tax claims; the ensuing cases examined both the claims themselves and the slower task of recovering money after the promise failed. [4] [8]
Sources
- Justice Department, civil complaint announcement, November 23, 2015Official sourceBack to text: ↑1↑2
- Justice Department, court findings and disgorgement announcement, October 5, 2018Official sourceBack to text: ↑1↑2↑3
- U.S. Tax Court, Olsen v. Commissioner, T.C. Memo. 2021-41, April 6, 2021; court opinion hosted by Briefly TaxingSource · PDFBack to text: ↑1↑2
- Tenth Circuit, United States v. RaPower-3, Nos. 18-4119 and 18-4150, June 2, 2020; opinion hosted by JustiaSourceBack to text: ↑1↑2↑3
- Tenth Circuit, Olsen v. Commissioner, November 4, 2022Official source · PDFBack to text: ↑
- Tenth Circuit, RaPower affiliated-entity receivership appeal, June 22, 2020Official source · PDFBack to text: ↑
- U.S. District Court, RaPower asset-turnover order, September 15, 2020, document 1007Official source · PDFBack to text: ↑
- U.S. District Court, Hamblin trusts settlement authorization, signed October 24 and filed October 27, 2025Source · PDFBack to text: ↑1↑2