Chinese millionaire who owns America's second largest solar plant accused of funding New Mexico illegal weed farms where workers are treated 'like animals'

A Chinese millionaire who owns America's second largest solar plant has been accused of funding an illegal cannabis operation that treated workers 'like animals', DailyMail.com can reveal.

Denton Peng agreed to plow more than $1million into a network of weed farms in New Mexico that trafficked up to 2,000 migrant workers, forcing them to work 14-hour days in 'horrific' conditions, according to a lawsuit filed in Santa Fe County.

It comes six years after the entrepreneur, now thought to live in California, abandoned his home country following the collapse of his solar business - a debacle that ended with Peng being placed on Beijing's most-wanted list amid accusations of fraud, the complaint alleges.

There is no indication that the 49-year-old, also known as Xiaofeng Peng, is under investigation by US authorities.

But the allegations may spark concerns among those who have green lit his investments in US solar power - an industry in which Peng is set to cash in on taxpayer dollars designed to boost American green energy. 

Denton Peng, CEO of solar giant SPI energy, has been accused in a lawsuit of funding an illegal marijuana operation in network that exploited and abused Chinese migrant workers

The workers claim they were made to work 14-hour days and treated 'like animals' by armed guards as part of the multi-million dollar operation in Navajo Nation, New Mexico 

The allegations against Peng and SPI Energy come as it seeks to position itself as a leading light in America's solar boom. SPI runs a solar panel manufacturer in Sacramento, California, (above), the second largest in the US

Peng is CEO and chairman of SPI Energy, a California-based company worth around $20million that runs America's second largest solar panel plant in Sacramento, via its subsidiary Solar4America. 

The firm boasts that its products are 'Made in the USA'.

But little has been made of the fact that SPI Energy in fact rose from the ashes of his failed Chinese venture, with its parent company still based in Hong Kong.

Nor are investors likely to know that the man once hailed as China's 'solar king' has been named as a defendant, along with SPI Energy and two of its subsidiaries, in a lawsuit filed on behalf of 15 Chinese migrant workers who say they were duped into working in unventilated hotel rooms trimming illegally-grown marijuana.

By the time it was shut down by authorities in October 2020, the operation had ballooned to nearly two dozen farms and more than 1,100 greenhouses spread across 400 acres.

It comes after DailyMail.com revealed Chinese gangs have set up thousands of illicit weed farms across the US as they begin to challenge Mexican cartels for supremacy as America's cannabis kingpins.

Authorities in Oklahoma, Oregon, California, New Mexico and Maine have all been battling a surge in Chinese weed farms, with some thought to be linked to criminal gangs known as 'triads'.

Peng told DailyMail.com that the allegations against him were 'groundless' and denied he had a criminal record.

Abused workers 'treated like prisoners'

Once China's youngest billionaire, the Beijing University graduate has sought to position SPI Energy at the forefront of America's charge for solar power.

The company, which is valued at around $20million, also owns Phoenix Motors, an electric vehicle firm based in Anaheim, California.

It seems bizarre, then, that Peng would get himself mixed up in a scheme to build an illegal cannabis business in the Navajo Nation in New Mexico, as the lawsuit claims.

The explanation may lie in presentations to investors that boast of SPI's 'solar power agriculture' investments, including a CBD and hemp business with state of the art processing plants in Arizona and Central California.

SPI even signed a lease for a hemp and CBD manufacturing facility in Orange Cove, California for production that was expected to begin in November 2019, according to company filings.

Indeed, it is an SPI subsidiary, CBD Group, that is named in the lawsuit as the firm that provided the funding for the New Mexico cannabis business.

A Management Services Agreement (MSA), signed by Peng and the authorized officers of the contractor and management companies involved in the scheme, only makes reference to the cultivation of hemp.

But the lawsuit, filed in September, claims the plan was always to grow marijuana, which the defendants allegedly knew was illegal in the Navajo Nation at the time.

By the time it was shut down by authorities in October 2020, the operation had ballooned to nearly two dozen farms and more than 1,100 greenhouses spread across 400 acres 

A Travel Inn in Farmington, New Mexico, was used to process the cultivated marijuana 

Workers claim they were promised a good wage in exchange for 'gardening' and 'flower cutting'. Instead, they were put to work trimming illegally-grown marijuana 

It also claims that the farms, which ran from 2019 to 2020, relied upon child laborers and 'defrauded and abused' Chinese immigrants, who were patrolled by armed guards who 'barely fed them'.

Job advertisements for the operation in Shiprock allegedly promised $200 per day, housing and food in exchange for 'gardening' and 'flower cutting'.

But when the workers arrived in New Mexico, the complaint says, their phones and car keys were taken away, they were barred from leaving and, in some instances, family members were separated.

Peng and others involved in the operation were 'well-aware' of these conditions after forced labor experts identified it as a hub for human trafficking, it is claimed.

But instead of shutting down the operation, those in charge 'doubled-down' on their exploitation, moving the cannabis from farms to a nearby Travel Inn to be processed and sold for profit, the lawsuit states.

It claims workers were treated like prisoners at the motel and like machines while toiling in the fields.

Farmington police busted the operation in October 2020 after they were called to the motel to investigate a 'strong odor' of marijuana. They found 2,000 pounds of marijuana, worth $3 million to $10 million, according to the lawsuit.

Workers present at the time were arrested, but drug charges later were dropped.

They claim they 'never received a penny for their labor'.

Farmington police busted the operation in October 2020 after they were called to the Farmington motel to investigate a 'strong odor' of marijuana. They found 2,000 pounds of marijuana, worth $3 million to $10 million, according to the lawsuit

Peng and his companies were not involved in the day-to-day running of the operation, but CBD Group was to provide $1,143,750 to fund the scheme, according to the agreement signed between the parties.

The lawsuit argues that while Peng was not 'primarily liable' for the trafficking and mistreatment of workers, he and his companies are responsible for the actions of those running the farms, given the terms of the agreement.

The contract states that the management company, Hemp Biotechnology, was the 'representative' of SPI Energy and would submit weekly progress reports to CBD Group.

SPI's involvement, however, appears to have hit the buffers after employees visited the cannabis farms in Shiprock in August 2019, shortly after the company had paid its first installment of $324,125, company records show.

They reported that the operation 'appeared to be deficient' and the contractor had failed to 'deliver any of the hemp plants'.

Yet, two months later, SPI made a public announcement of its plan to cultivate hemp in New Mexico, causing its stock price to rocket by 40 per cent.

It did not make any further payments.

Peng told DailyMail.com that the first installment was simply a 'deposit' to 'buy some material' that was 'never delivered'.

He added that SPI was taking legal action to get its money back.

When asked what he thought the New Mexico operation was going to involve, he said: 'I don't know.'

Peng's lawyer, Blake Dugger, later said in a statement that the claims were 'vehemently denied as SPI had no involvement in the conduct alleged'.

Cashing in on Biden's billions

A dozen projects with links to Chinese firms have been launched in the US that would be eligible for billions of dollars of taxpayer funding designed to boost American manufacturing

EXCLUSIVEREAD MORE: Beijing could plunder more than $100billion from US taxpayer under scheme designed to BOOST American manufacturing 

A proposed $2.4billion EV battery plant in Marshall, Michigan, spearheaded by Ford, has caught the attention of lawmakers after an investigation revealed four 'highly troubling' Chinese firms were tied to the project

Regardless, it appears a misguided adventure for an entrepreneur seeking to profit from US taxpayer dollars.

Yet the saga seems to have invited little scrutiny from US legislators, who have welcomed Peng's investment in solar projects across the country.

In addition to expanding its facility in Sacramento, SPI struck a deal in April last year for a new plant in South Carolina that aims to provide 3 gigawatts of power by the end of this year.

The $65.9million investment was welcomed by governor Henry McMaster, who described it as 'yet another win' for the state.

Peng, meanwhile, boasted that the project would boost 'our nation's manufacturing capabilities' with American-made solar wafers and modules.

The 'Made in America' angle is crucial to SPI's pitch to investors and legislators as it seeks to tap into a growing demand to boost US renewables production.

Indeed, SPI has made clear that it intends to tap into uncapped tax credits for green energy projects provided in the 2021 Inflation Reduction Act (IRA).

The scheme is designed to improve American competitiveness in sectors that China currently dominates - it currently holds an 80 per cent share of the global solar energy market.

But the billions of taxpayer dollars on offer are not restricted to US companies, leaving the door open for China to cash in.

DailyMail.com recently revealed that Beijing could plunder more than $100billion from the scheme, prompting experts to warn that it could allow Chinese firms to 'extend their global monopoly'.

There are also fears over the national security implications of allowing a hostile foreign nation access to critical infrastructure.

SPI Energy, for its part, is thought to have 'engaged in business ventures' with CSR Corporation Ltd, a Chinese locomotive manufacturer which was sanctioned by the US for its ties to the Chinese military, according to the New Mexico lawsuit.

A pioneer or a fraud? 

In a bid to address these concerns, Senators Marco Rubio (R. Fl) and Carol Miller (R. WV) have tabled a bill aimed at banning Chinese businesses from accessing US green energy subsidies.

But it is not known how this would affect China-based companies like SPI Energy, which are making investments via US subsidiaries.

It is also unclear to what extent authorities are aware of Peng's background.

He describes himself as 'one of the pioneers' of the renewable energy industry, with two decades of experience in the sector.

Yet the entrepreneur's first foray into the business ended with mixed results.

Peng founded LDK Solar in 2005, aged 30, shortly after the Chinese government designated the sector as a target for strategic investment.

According to local media reports, the business was propelled by huge loans from the mayor of Xinyu, Jiangxi province, and by 2007 it listed on the Nasdaq, making Peng a yuan billionaire at the age of 32.

But the company began to struggle among stiff competition and by the end of 2011 it had debts more than treble the size of its assets.

In 2014, the US-listed unit entered bankruptcy proceedings, sparking Peng's resignation.

Denton Peng at the Nasdaq listing of his now defunct Chinese company LDK Solar in 2007. The listing made Peng a yuan billionaire at the age of 32

Although this was the end for LDK, it marked the beginning for SPI.

LDK had bought a 70 per cent stake in a company called Solar Power Inc in 2011.

Following the demise of LDK, Peng reorganized the firm and merged it with a new Cayman Islands incorporated company, SPI Energy Co. Ltd, before it changed its name to SPI Energy.

But this was not the end of his troubles.

Solarbao, an SPI subsidiary offering peer-to-peer lending for solar companies, ran aground in 2017 when it unexpectedly announced it couldn't pay investors due to a delay in receiving subsidies from the Chinese government.

Solarbao had amassed about $92million in debt and left around 11,000 investors in the lurch, according to local media.

Only 1,300 had been repaid by 2018, it was reported.

According to the lawsuit filed in New Mexico, Peng was placed on China's most-wanted list for 'illegally absorbing public deposits' as a result, with Beijing putting out an Interpol 'Red Notice' for his arrest and extradition after he left the country.

Peng's name does not appear on the publicly available Interpol list and he denied that there has ever been a warrant out for his arrest.

His attorney said: 'Mr Peng does not have a criminal record in China or anywhere else in the world for that matter.'

DailyMail.com has contacted Interpol for comment.