Former C-Quest Capital (CQC) Chief Government Officer Kenneth Newcombe was indicted on expenses of wire fraud and commodities fraud. Federal prosecutors accused him of falsifying emissions-reduction information to safe hundreds of thousands of carbon credits and over $100 million in investments.
Newcombe, who based C-Quest in 2008, allegedly manipulated information from emission-reduction initiatives, reminiscent of offering cooking stoves in creating international locations, to magnify their success. Prosecutors declare he lined up lower-than-expected emissions reductions to drive aggressive challenge progress.
The case, often known as US v. Newcombe, 24-cr-567, is being dealt with within the US District Court docket for the Southern District of New York (Manhattan).
What C-Quest Capital Does
Washington-based C-Quest focuses on high-impact carbon discount initiatives, enhancing lives in creating nations whereas combating local weather change. CQC generates high-impact carbon credit via three core platforms:
- Cleaner cooking,
- Sustainable power, and
- Environment friendly lighting.
The corporate distributes clear power applied sciences, reminiscent of cookstovesto cut back deforestation and carbon emissions. Their initiatives span over 20 international locations and have improved the lives of greater than 41.5 million individuals, aiming to cut back 1 billion tonnes of CO₂ emissions by 2030.
Their initiatives deal with sustainable growth objectives and are verified by main requirements. C-Quest has been acknowledged for excellence in power effectivity and public well being initiatives.
The carbon challenge developer created the “Transformation Carbon” initiatives. Every challenge complies with established carbon offset requirements and undergoes strict third-party audits to make sure the credit are real, measurable, and impactful.
But, the alleged fraud scheme towards CQC’s CEO shakes up the corporate’s outcomes and achievements.
False Offsets: Emissions Knowledge Manipulation Scandal
Kenneth Newcombe performed a pivotal function in advancing carbon buying and selling throughout his tenure on the World Bank. In 1994, he spearheaded the Financial institution’s participation within the Forest Market Transformation Initiative, a coalition involving conservation NGOs, forest business firms, researchers, and financiers.
This initiative led to the institution of Forest Tendencies, a Washington, D.C.-based NGO selling carbon buying and selling, with CEO Michael Jenkins additionally having ties to the World Financial institution. Ecosystem Market, a web based publication advocating for carbon buying and selling, emerged from Forest Tendencies.
In 2006, Newcombe transitioned from the World Financial institution to Local weather Change Capital, the most important non-public sector carbon fund globally. He subsequently led the carbon desk at Goldman Sachs for a yr earlier than founding his personal firm, C-Quest Capital.
Newcombe served on Verra’s, a number one issuer of carbon credit, board from 2007 till December 2023. Nevertheless, in February 2024, on the age of 76, he introduced his resolution to step down as CEO of C-Quest Capital, stating that he was amongst a number of senior executives and staff who have been “terminated.”
Newcombe now faces as much as 20 years in jail if convicted of essentially the most critical expenses. Prosecutors allege that Newcombe, together with C-Quest staff, manipulated information to current sure initiatives as extra profitable than they have been.
One of many key accusations pertains to the carbon offsets C-Quest earned by implementing these initiatives. These carbon offsets are then bought to firms trying to offset their emissions. One carbon offset represents one tonne of emissions averted or eliminated.
The accusations come as a major blow to the carbon offset development business, the place C-Quest and Newcombe had been outstanding gamers. The buyers allegedly deceived by Newcombe stay unidentified. C-Quest’s backers, in keeping with its web site, embrace Macquarie Group and GenZero, a unit of Temasek Holdings.
A spokesperson for Newcombe, who’s battling most cancers at 77, denied the allegations, stating that Newcombe believes the fees are false. The assertion additionally expressed Newcombe’s confidence that ought to he dwell to see a jury trial, his title can be cleared.
Federal prosecutors additionally charged C-Quest’s former head of carbon and sustainability accounting, Tridip Goswami, alongside Newcombe. Goswami, who’s in India, was not instantly accessible for remark. Nevertheless, former Chief Working Officer Jason Steele has already pleaded responsible and agreed to cooperate with the authorities.
C-Quest itself was not charged, as the corporate self-reported the alleged wrongdoing in July and cooperated with legislation enforcement. On the time, Verra suspended C-Quest’s initiatives whereas reviewing the matter. Prosecutors famous that C-Quest’s proactive reporting and cooperation performed a major function in sparing the corporate from prison expenses.
First Fraud Case Shakes Belief in Voluntary Carbon Credit
In a separate however associated motion, the Commodity Futures Trading Commission (CFTC) filed a lawsuit towards Newcombe, amplifying the authorized troubles confronted by the previous CEO.
The Fee accused him of offering deceptive data to carbon credit registries and Third-party reviewers to safe extra credit than the corporate was entitled to.
The CFTC is searching for penalties, disgorgement of income, and a everlasting buying and selling ban. Moreover, the CFTC issued orders towards CQC Influence Traders and its former Chief Working Officer Jason Steele.
These are the primary actions for fraud within the voluntary carbon credit marketmarking a pivotal second for market integrity. CQC was discovered responsible of submitting false data to acquire hundreds of thousands of carbon credit between 2019 and 2023. These credit concerned initiatives geared toward lowering carbon emissions in areas like Africa, Asia, and Central America.
CQC cooperated with the CFTC’s investigation, leading to a $1 million penalty, however the penalty was lowered as a result of firm’s efforts to handle misconduct. CQC admitted its wrongdoing and has agreed to retire or cancel carbon credit in response to its fraudulent actions. This cooperation, alongside the corporate’s remediation steps—reminiscent of terminating key personnel concerned within the scheme—helped cut back its penalty.
Newcombe’s accusation raises considerations about integrity in the voluntary carbon market. This pivotal carbon credit score fraud underscores the significance of transparency and strict enforcement.
