Bitwise Industries co-founders facing prison over fraud claims. ‘They swindled investors'
Co-founders Irma Olguin Jr. and Jake Soberal have surrendered to authorities in a wide-ranging white collar criminal investigation
Bitwise Industries co-founders Jake Soberal, left, and Irma Olguin Jr., right, exit the federal courthouse in downtown Fresno, Calif., on Thursday, Nov. 9, 2023./Esther Quintanilla/KVPR
EDITOR’S NOTE: This story is reported by KVPR, a key partner of CVJC. For the latest click here.
By Cresencio Rodriguez-Delgado and Esther Quintanilla/KVPR
Bitwise Industries co-founders Irma Olguin Jr. and Jake Soberal have surrendered to authorities in Fresno in a wide-ranging white collar criminal investigation that charges them with defrauding investors of $100 million as they ran their Fresno-based technology business.
“They used lie after lie to pull over $100 million into a dying venture through fraud,” United States Attorney Phillip Talbert said in a press release Thursday morning, shortly before taking questions from reporters during a press conference at the Robert E. Coyle Federal Building in downtown Fresno.
Moments later, Olguin Jr. and Soberal appeared before a federal judge to begin facing charges by multiple agencies that they deliberately fabricated bank statements, lied to investors, provided false financial information to their board of directors, and used buildings Bitwise Industries was operating in as collateral for loans.
Talbert told reporters a large part of the $100 million collected by the company went toward paying company salaries. He did not elaborate on whether more charges could follow for others involved in the dealings.
At the press conference, Talbert showed bank statements that prosecutors say were doctored by Olguin Jr. and Soberal next to statements obtained through the investigation.
At every step, Talbert said, Olguin Jr. and Soberal “had choices on what to do … and they chose to double down and lie.”
“The defendants were lying to everybody,” Talbert said. Most notably, he said the lie spread in “a community that hoped that dream really was real – that the company could survive and provide those sorts of services here in the Central Valley.”
In May, Bitwise Industries furloughed 900 employees nationwide, including nearly 400 in the Fresno area. The sudden collapse of the company – which promised to create thousands of jobs in the technology sector by bringing in people who didn’t typically get the opportunity to do so – halted projects and investments locally and in various U.S. cities.
Prosecutors said in their announcement Thursday “deceptive practices” like those alleged against Bitwise have “far-reaching consequences.”
The Federal Bureau of Investigations, Internal Revenue Services and the Securities and Exchange Commission were all involved in investigating alleged wire fraud activity by Bitwise Industries.
Investigators further accuse Olguin Jr. and Soberal of inflating Bitwise’s revenues, cash balances and property holdings. Prosecutors say much of the money taken in by Bitwise went toward payroll, retrofitting offices and paying debts to prior lenders. On top of that, the co-founders reportedly each secured $600,000 salaries.
“These sorts of white-collar crimes often root from greed and mismanagement and leave hard working tax paying citizens damaged in their wake,” said IRS Criminal Investigation Acting Special Agent in Charge Mark Silva.
Olguin Jr. and Soveral each face up to 20 years in prison for their criminal charges.
United States Attorney Phillip Talbert points to bank statements that prosecutors argue were doctored by Bitwise Industries co-founders. Charges against Irma Olguin Jr. and Jake Soberal were announced on Thursday, Nov. 9 in Fresno, Calif./Esther Quintanilla/KVPR
Swindling investors with ‘blatant fraud’
The Securities and Exchange Commission on Thursday also announced it was charging Olguin Jr. and Soberal on antifraud provisions of the federal securities laws for allegedly misleading investors about company finances.
Monique C. Winkler, regional director of the SEC’s San Francisco office, also appeared at the federal building Thursday and said Olguin Jr. and Soberal misrepresented and falsified documents about Bitwise’s financial performance as they raised $70 million in 2022.
The misrepresentations “painted Bitwise as a healthy, growing business,” the SEC stated in a previous press release. Instead, the SEC argues the company faced constant cash shortages and often on the brink of failure. The SEC says the co-founders used “blatant fraud” to deceive investors and raise money.
“In one instance, the defendants allegedly conspired to send a purported screenshot to investors of a company bank account showing a cash balance of $23.4 million. In actuality, the account had only $325,100 in it. That’s not a bank error—that’s fraud,” the SEC charging announcement stated.
Winkler told reporters the misrepresentations were not “small exaggerations.”
“They swindled investors,” Winkler said. “They knew investors would not have invested in Bitwise if they knew the truth about its poor financial condition.”
Cresencio Rodriguez-Delgado is KVPR's News Director. Prior to joining the station's news department in 2022, he was a reporter for PBS NewsHour and The Fresno Bee.
Esther Quintanilla reports on diverse communities for KVPR through the Central Valley News Collaborative, which includes The Fresno Bee, Vida en el Valle, KVPR and Radio Bilingüe.