Jake Soberal and Irma Olguin Jr., co-founders and former co-CEOs of failed Fresno tech firm Bitwise Industries, will face federal criminal charges in connection with the collapse of the 10-year-old company earlier this year.
Federal authorities with the U.S. Attorney’s Office, the Federal Bureau of Investigation, Internal Revenue Service and Securities & Exchange Commission will detail the charges in a press conference Thursday afternoon.
Court documents filed Thursday with the U.S. District Court in Fresno indicate that Soberal and Olguin have surrendered to authorities and are expected to make their initial court appearance Thursday.
The FBI, in a criminal complaint filed Wednesday and unsealed Thursday, stated that in interviews with investigators, Soberal and Olguin “have admitted to significant criminal misconduct” that “caused more than $100 million in losses” to investors.
“The defendants could have chosen simply to admit the failure of Bitwise’s business model. Instead, they used lie after lie to pull over $100 million into a dying venture through fraud,” U.S. Attorney Phillip A. Talbert said in a news release. “Olguin, Jr. and Soberal fabricated bank statements, lied to investors, provided false financial information to their board of directors, forged documents, and used buildings Bitwise no longer even owned as collateral for loans, all while lining their own pockets.”
If convicted, authorities reported that Soberal and Olguin could each face a maximum penalty of 20 years in prison and a $250,000 fine, depending on what a judge ultimately determines.
Bitwise collapse, bankruptcy
Thursday’s activities represent the latest developments in a convoluted chain of events that became public in May, when Soberal and Olguin abruptly announced to Bitwise employees over the Memorial Day weekend that all of the company’s labor force — about 900 people in Fresno, across California and nationwide — were being placed on immediate furlough.
Within days, Bitwise’s board of directors fired Soberal and Olguin from their positions as co-CEOs. The furloughs became permanent layoffs in June. Later that month, Bitwise and related entities filed for Chapter 7 bankruptcy in a federal court in Delaware.
Multiple sources confirmed to The Fresno Bee in June that federal criminal investigations were underway into the company’s seemingly abrupt demise.
Bitwise was founded in 2013 as a downtown Fresno hub for training students in software coding and website design, technology services for local companies, and providing leased space to budding technology entrepreneurs and other businesses. From those beginnings, the company embarked on a program of expanding its geographic footprint — first throughout downtown Fresno, then across California and, in recent years, to out-of-state communities in Colorado, Illinois, New Mexico, New York, Ohio and Texas.
FBI criminal complaint against Bitwise
The FBI criminal complaint states that Olguin, 42, and Soberal. 37, “have admitted that, beginning no later than January 2022, they conspired with each other to lie to board members, investors, lenders, and others about Bitwise’s finances to obtain investment money and loans.”
“They did so by fabricating financial information in board presentations and investor materials, as well as altering and forging bank statements, board consents, and other financial records to inflate the company’s revenues, cash balances, and property holdings,” the complaint alleges. “They also misled the board members, investors, lenders, and others into believing Bitwise was excelling when it was instead failing.”
The two former co-CEOs reportedly told investigators that “they were the only ones at Bitwise who were involved in the criminal activity and that they limited other employees’ access to information to conceal their scheme to defraud,” according to the FBI criminal complaint. “The government’s investigation to date has not identified other conspirators.”
The complaint adds that much of the money fraudulently raised by Soberal and Olguin “went towards paying Bitwise’s payroll and fringe benefits, including their $600,000 per year salaries, outfitting the company’s office spaces, and repaying debts owed to prior lenders.”
The SEC, in its own complaint filed with the federal court, stated that Soberal and Olguin conducted an offering Bitwise stock in 2022 to raise funds to cover operating expenses, generating about $70 million from new and existing investors.
In making the stock offering, the SEC alleges that Soberal and Olguin “made numerous false and misleading statements and provided false documents to investors because they knew the underlying facts would have revealed Bitwise’s poor financial condition.”