RaPower-3: the solar lenses that sold tax benefits before electricity

Plastic lenses sold as tax savings

In November 2015, the Justice Department sued the promoters of a solar venture in Utah’s Millard County. Neldon Johnson, his companies RaPower-3 LLC, International Automated Systems Inc. and LTB1 LLC, salesman R. Gregory Shepard and Roger Freeborn were named as defendants. The government said customers nationwide were buying pieces of a purported power system on the promise of depreciation deductions and solar energy tax credits. It asked the court to stop the promotion. At that stage these were allegations in a civil complaint. ^{[1] [9]}

After a trial, the court went much further. It found that the promoters knew, or had reason to know, that their tax statements were false or fraudulent, ordered disgorgement of more than $50 million and barred further promotion of the scheme. The case was not about a clean-energy project that simply missed a deadline. The court described the lenses as a smokescreen for unlawful “sales” of tax deductions and credits to customers. ^{[2] [4]}

From supermarket checkouts to solar towers

Johnson incorporated International Automated Systems to investigate supermarket checkout systems before turning it toward solar energy. He had no engineering background, and RaPower and its affiliates never employed a full-time engineer. His design mounted plastic Fresnel lenses on metal towers. A tracker would follow the sun, the lenses would concentrate light onto a receiver that warmed a fluid, and the heat would make steam to drive a turbine. Johnson experimented with water, molten salt and oil as the fluid but never settled on one. ^[3]

In 2006, the company built 19 towers at a test site in Delta, Utah. By 2015, only one of them carried a full array of lenses; some lenses were broken and thousands sat in a warehouse. The equipment produced small amounts of electricity in tests but never came close to commercial production. Even so, the project brought in tens of millions of dollars. The money came from selling lenses to investors seeking tax benefits, not from selling power. ^[3]

How the deal was structured

Customers bought individual lenses rather than a share of a plant. As the Tenth Circuit described it in 2020, a buyer paid roughly one-third of the lens price up front. The seller financed the rest with a zero-interest nonrecourse loan, meaning the buyer had no enforceable personal obligation to repay it, and further payments were due only after the lenses had produced electricity revenue for five years. Buyers then leased their lenses to LTB1, whose rent likewise depended on revenue that never arrived. ^[4]

The pitch was explicit. Shepard’s marketing materials told prospects, “Your objective in purchasing your systems is to zero out your taxes,” and he helped buyers review their tax records to work out how many lenses they needed to do it. By 2011, buyers were told they needed to pay only 10 percent of the down payment at signing, with the rest due after their tax refunds arrived. ^[3]

The sales force was built as a multilevel structure, with commissions for recruiting new buyers. The 2015 complaint 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 harm to the Treasury alleged in those cases alone. That figure covered a subset of taxpayer disputes, not the venture as a whole. ^[1]

What the trial found

After a 12-day bench trial in 2018, the district court found that lens buyers were not running the lens-leasing businesses the defendants described. It found that the technology did not work and was unlikely to produce commercially viable electricity or solar process heat, and that the defendants made gross valuation overstatements whenever they quoted a lens price. ^[2]

The valuation numbers were stark. Each plastic sheet from which lenses were cut cost the defendants between $52 and $70, the court found the correct value of a lens did not exceed $100, and lenses were being sold for $3,500. Between 45,000 and 50,000 lenses were sold and fewer than 5 percent were installed. The defendants never secured an agreement to sell electricity to anyone, and many towers had no way to transmit energy from a receiver. ^[4]

The court ordered disgorgement of $50,025,480 in gross receipts. Johnson was liable for the full amount, while the caps for the others were set at what each received: $25,874,066 for RaPower, $5,438,089 for International Automated Systems and $702,001 for Shepard. The injunction also barred telling customers that buying a lens entitled them to the advertised deductions or credit. The Tenth Circuit affirmed on June 2, 2020. A disgorgement order is a liability the court imposed, not proof that the same sum was ever collected. ^{[2] [4]}

Buyers faced their own tax bills

Lens buyers fought their own tax cases. Preston Olsen, a Utah lawyer in Ballard Spahr’s public finance group who later became a partner there, signed his first purchase agreement in July 2009: $60,000 of lenses with an $18,000 down payment, the balance due only if the lenses produced electricity. He and Elizabeth Olsen claimed deductions and credits for 2010 through 2014 that reduced their taxable income to zero or close to it, then used the refunds to buy more lenses. The IRS determined deficiencies of $20,668 to $30,760 a year. ^[3]

In April 2021, the Tax Court denied all of the Olsens’ claimed lens benefits. More than 200 other investor cases were being held pending that outcome. The IRS had conceded the accuracy-related penalties because it had not obtained timely supervisory approval for them, so the ruling disallowed the benefits without imposing those penalties. ^[3]

The Tenth Circuit affirmed in November 2022, resting on the finding that the purchases lacked a genuine profit motive. It pointed to the absence of rental revenue and the way annual purchases tracked tax considerations. The promoter case established that the marketing was unlawful; each buyer’s case decided what that particular taxpayer could claim. ^[5]

The receiver chases the money

On October 31, 2018, the court appointed R. Wayne Klein as receiver over RaPower-3, International Automated Systems, LTB1 and the assets of Johnson and Shepard. As of November 30, 2018, he held about $1.7 million. Under the receivership order, recoveries go first to the Justice Department’s litigation costs, then $14,207,517 to the Treasury, and only then to lens buyers. The receiver has said it is unlikely there will be enough to pay the first two in full, so buyers are unlikely to receive anything. ^[9]

Thirteen affiliated entities were later added to the receivership. Six appealed on due-process grounds, and in June 2020 the Tenth Circuit dismissed that appeal for lack of jurisdiction without ruling on the merits of their objections. ^[6]

Much of the tracing led to Glenda Johnson, Neldon Johnson’s wife, who was the primary bookkeeper and check signer for many of the companies and often wrote company checks to herself. In September 2020, the court ordered her to turn over 14 properties in Utah and California and $1.4 million in bank accounts, finding they could be traced to receivership entities. The receiver also pursued other people and firms that had received money from the scheme; in June 2020 he asked the court to approve a group of settlements that included one with the law firm Snell & Wilmer. In July 2020, the court issued its second order holding Neldon, Glenda, LaGrand and Randale Johnson in contempt. ^{[7] [9]}

In December 2021, federal prosecutors in Salt Lake City indicted Neldon and Glenda Johnson on felony criminal contempt charges: one count against him and five against her. The outcome of that prosecution could not be confirmed for this article. ^[10]

Still recovering, a decade later

Recovery cases were still producing orders in 2025. An order signed October 24, 2025, and filed October 27 approved a settlement with trusts represented by Kristine Hamblin that was expected to bring $112,082.48 into the receivership estate. That is an approved settlement, not confirmation that the cash arrived. ^[8]

In December 2021, federal prosecutors in Salt Lake City indicted Neldon and Glenda Johnson on felony criminal contempt charges: one count against him and five against her (case 2:21-cr-00513). We did not find a public record of a verdict or sentence. ^[10]