Former C-Quest Capital (CQC) Chief Executive Officer Kenneth Newcombe was indicted on charges of wire fraud and commodities fraud. Federal prosecutors accused him of falsifying emissions-reduction data to secure millions of carbon credits and over $100 million in investments.
Newcombe, who founded C-Quest in 2008, allegedly manipulated data from emission-reduction projects, such as providing cooking stoves in developing countries, to exaggerate their success. Prosecutors claim he covered up lower-than-expected emissions reductions to drive aggressive project growth.
The case, known as US v. Newcombe, 24-cr-567, is being handled in the US District Court for the Southern District of New York (Manhattan).
What C-Quest Capital Does
Washington-based C-Quest focuses on high-impact carbon reduction projects, improving lives in developing nations while combating climate change. CQC generates high-impact carbon credits through three core platforms:
- Cleaner cooking,
- Sustainable energy, and
- Efficient lighting.
The company distributes clean energy technologies, such as cookstoves, to reduce deforestation and carbon emissions. Their projects span over 20 countries and have improved the lives of more than 41.5 million people, aiming to reduce 1 billion tonnes of CO₂ emissions by 2030.
Their initiatives address sustainable development goals and are verified by leading standards. C-Quest has been recognized for excellence in energy efficiency and public health projects.
The carbon project developer created the “Transformation Carbon” projects. Each project complies with established carbon offset standards and undergoes strict third-party audits to ensure the credits are genuine, measurable, and impactful.
Yet, the alleged fraud scheme against CQC’s CEO shakes up the company’s results and achievements.
False Offsets: Emissions Data Manipulation Scandal
Kenneth Newcombe played a pivotal role in advancing carbon trading during his tenure at the World Bank. In 1994, he spearheaded the Bank’s participation in the Forest Market Transformation Initiative, a coalition involving conservation NGOs, forest industry corporations, researchers, and financiers.
This initiative led to the establishment of Forest Trends, a Washington, D.C.-based NGO promoting carbon trading, with CEO Michael Jenkins also having ties to the World Bank. Ecosystem Marketplace, an online publication advocating for carbon trading, emerged from Forest Trends.
In 2006, Newcombe transitioned from the World Bank to Climate Change Capital, the largest private sector carbon fund globally. He subsequently led the carbon desk at Goldman Sachs for a year before founding his own company, C-Quest Capital.
Newcombe served on Verra’s, a leading issuer of carbon credits, board from 2007 until December 2023. However, in February 2024, at the age of 76, he announced his decision to step down as CEO of C-Quest Capital, stating that he was among several senior executives and employees who were “terminated.”
Newcombe now faces up to 20 years in prison if convicted of the most serious charges. Prosecutors allege that Newcombe, along with C-Quest employees, manipulated data to present certain projects as more successful than they were.
One of the key accusations relates to the carbon offsets C-Quest earned by implementing these projects. These carbon offsets are then sold to companies looking to offset their emissions. One carbon offset represents one tonne of emissions avoided or removed.
The accusations come as a significant blow to the carbon offset development industry, where C-Quest and Newcombe had been prominent players. The investors allegedly deceived by Newcombe remain unidentified. C-Quest’s backers, according to its website, include Macquarie Group and GenZero, a unit of Temasek Holdings.
A spokesperson for Newcombe, who is battling cancer at 77, denied the allegations, stating that Newcombe believes the charges are false. The statement also expressed Newcombe’s confidence that should he live to see a jury trial, his name would be cleared.
Federal prosecutors also charged C-Quest’s former head of carbon and sustainability accounting, Tridip Goswami, alongside Newcombe. Goswami, who is in India, was not immediately available for comment. However, former Chief Operating Officer Jason Steele has already pleaded guilty and agreed to cooperate with the authorities.
C-Quest itself was not charged, as the company self-reported the alleged wrongdoing in July and cooperated with law enforcement. At the time, Verra suspended C-Quest’s projects while reviewing the matter. Prosecutors noted that C-Quest’s proactive reporting and cooperation played a significant role in sparing the company from criminal charges.
First Fraud Case Shakes Trust in Voluntary Carbon Credits
In a separate but related action, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Newcombe, amplifying the legal troubles faced by the former CEO.
The Commission accused him of providing misleading information to carbon credit registries and 3rd-party reviewers to secure more credits than the company was entitled to.
The CFTC is seeking penalties, disgorgement of profits, and a permanent trading ban. Additionally, the CFTC issued orders against CQC Impact Investors and its former Chief Operating Officer Jason Steele.
These are the first actions for fraud in the voluntary carbon credit market, marking a pivotal moment for market integrity. CQC was found guilty of submitting false information to obtain millions of carbon credits between 2019 and 2023. These credits involved projects aimed at reducing carbon emissions in regions like Africa, Asia, and Central America.
CQC cooperated with the CFTC’s investigation, resulting in a $1 million penalty, but the penalty was reduced due to the company’s efforts to address misconduct. CQC admitted its wrongdoing and has agreed to retire or cancel carbon credits in response to its fraudulent activities. This cooperation, alongside the company’s remediation steps—such as terminating key personnel involved in the scheme—helped reduce its penalty.
Newcombe’s accusation raises concerns about integrity in the voluntary carbon market. This pivotal carbon credit fraud underscores the importance of transparency and strict enforcement.