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FRESNO, Calif. – The co-founders of Bitwise Industries, a failed Fresno-based tech startup that went bankrupt and led to the forced layoff of 900 workers across the country, were sentenced Tuesday by a federal judge in Fresno.
Jake Soberal will spend 11 years in prison. Irma Olguin, Jr. was sentenced to nine years. The two were also ordered to pay more than $114 million in restitution.
The sentence followed a lengthy hearing in which lawyers representing the U.S. government requested maximum prison sentences and a handful of investors provided impassioned testimony about the money the co-founders had taken from them under false pretenses. Attorneys for Soberal and Olguin, Jr. requested five years in prison for their clients, re-framing the two as desperate entrepreneurs who made “some very very bad decisions” in order to save their company and make payroll.
Around 80 spectators had crowded into the courtroom to watch the proceedings. By the final statements, many were in tears.
The hearing closes a chapter in a venture that at one point sought to turn Fresno into a tech hub despite the odds. Instead, hundreds of employees were suddenly left without jobs and projects in various U.S. cities came to a screeching halt in May 2023.
Bitwise Industries formed in 2013. It eventually secured millions in funding and grew enough to hire hundreds of employees across the Valley, and expand into Texas and Ohio.
The news last year that the company had no money left to support its business and all employees would be furloughed came as a shock to many, especially workers. But eventually, some of those same workers and even former investors began to see that the writing had been on the wall for much longer and that the company had rarely been on solid financial ground.
Olguin Jr. and Soberal tried to save it. But in doing so, federal investigators uncovered and ultimately brought forward a tangled web of lies, forged signatures and falsified bank statements. Prosecutors charged the two with defrauding investors of $115 million dollars which eventually brought wire fraud and wire fraud conspiracy charges.
Bitwise’s collapse was felt in Fresno, Merced and Bakersfield, as well as outside the state in places like El Paso and Toledo, Ohio. Last month, a federal judge in Fresno approved a $20 million settlement for its hundreds of former employees.
While tech was at the heart of what Bitwise promised and promoted, its unraveling revealed that the business hinged primarily on workforce training, consulting and real estate. The company tried to place itself in underserved communities and attracted people from marginalized backgrounds.
Prosecutors say much of the money Bitwise received went toward payroll, outfitting office spaces, inflated CEO salaries, and repaying debts owed to prior investors and lenders.
