FRESNO, Calif. – The co-founders of Bitwise Industries, Jake Soberal and Irma Olguin Jr., pleaded guilty on Wednesday to two counts each of wire fraud and wire fraud conspiracy, more than a year after their business collapsed, went bankrupt, and authorities uncovered a web of fraud.
Soberal and Olguin Jr. initially pleaded not guilty to the criminal charges when they surrendered in November, but recently reached a plea deal.
In exchange for pleading guilty, Soberal and Olguin Jr. accepted the charges, will pay up to $115 million in restitution, and could receive a sentence on “the low end of applicable guideline range,” according to court records. The two face at least five years in prison. They were allowed to be free on supervised release, but sentencing is scheduled for Nov. 6.
A max sentence in the case carries up to 20 years in federal prison and a $250,000 fine.
“I am glad they [pleaded] guilty,” said Jenn Guerra, a former Bitwise employee. “This has dragged on for over a year. We [former employees] all knew that they're guilty.”
The Federal Bureau of Investigations, Internal Revenue Services and the Securities and Exchange Commission were all involved in investigating alleged wire fraud activity by the tech company.
On Wednesday, the pair walked out of court – Olguin Jr. dressed in a white pantsuit and Soberal in a blue suit – as the press followed them to a car waiting for them. They did not speak to reporters or make statements.
“They never said that they were sorry for what they did,” said Laura Splotch, another former employee, after the founders left the courthouse. “They never took any responsibility for hurting all of us like they did.”
How Soberal, Olguin Jr. got here
Bitwise’s business model hinged primarily on workforce training in technology, consulting and real estate. The company billed itself as a job producer in underserved communities and for people from marginalized backgrounds.
But the plea deal put the actions of Soberal and Olguin Jr. squarely: “[they] knowingly devised, intended to devise, participated in, and executed a material scheme and artifice to defraud Bitwise’s investors and lenders, among others, and to obtain money and property from them, by materially false and fraudulent pretenses, representations, and promises.”
The initial criminal investigation charged Soberal and Olguin Jr. with defrauding investors of more than $100 million as they ran their Fresno-based technology business which was founded nearly a decade ago.
Investigators say by 2022, the company had raised as much as $75,000,000, but ”was not making a significant profit and was running low on funds.” The founders were accused of regularly presenting fraudulent cash balances to investors.
Investigators also found that the money Bitwise received went toward payroll, outfitting office spaces, repaying debts owed to prior investors and lenders, and expenses incurred in the company’s ordinary course of business.
Last May, 900 employees were furloughed nationwide, including 400 in the Fresno area. The sudden collapse of the tech company caused a ripple across the country, halting various projects and investments that were underway in places such as Toledo, El Paso and San Antonio.
Former employees in the Fresno area also filed a class action lawsuit against the company for violating the Worker Adjustment and Retraining Notification (WARN) Act, which requires employers to notify workers at least 60 days ahead of mass layoffs.
“[The plea today is] talking about the money that investors lost,” said Roger Bonakdar, the attorney who brought the employee class action lawsuit. “They aren't talking about the 401K payments that weren't made. They aren't talking about that bounced paychecks. They're talking about someone else's losses. So, it's unfortunate that this won't trickle down to benefit the employees.”
Bonakdar, who is currently running for a Fresno City Council seat, said he would continue to litigate the class action lawsuit on behalf of employees.
