A lot of questions surfaced when Bitwise Industries unexpectedly shuttered all of its operations in May. Months later, answers may be coming to light.
Irma Olguin Jr. and Jake Soberal, the leaders and founders of Bitwise, were criminally charged Thursday with conspiring to commit wire fraud and taking more than $100 million from individuals and businesses, according to the U.S. Attorney's Office.
The Fresno, California-based company aimed to train tech workers in underserved communities, develop software and invest in tech-friendly real estate.
“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 Talbert said in a news release. “Olguin 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.”
The Securities and Exchange Commission also filed civil charges last Thursday against the two Bitwise founders, alleging they had misled investors about the business' finances.
If convicted on the criminal charges, Olguin and Soberal each face a maximum of 20 years in prison and a $250,000 fine. This case stemmed from an investigation by the Federal Bureau of Investigation and the Internal Revenue Service's Criminal Investigation unit.
According to court documents, after the company furloughed all employees and apprentices in May, it later laid them off permanently. The company's board of directors fired Olguin and Soberal. Those moves came amid recent reports that the business was worth over $500 million and "was financially sound."
During a government investigation, the pair "admitted to significant criminal misconduct," according to the criminal complaint filed in the United States District Court, Eastern District of California. The investigation determined the misconduct caused more than $100 million in losses, according to the complaint.
The two also allegedly admitted that, beginning no later than January 2022, they conspired to lie to lenders, board members, investors and others about the company's finances to get loans and investment money, the complaint said.
They allegedly fabricated financial information, altered and forged financial records and mislead parties into believing the business was succeeding when it was actually failing, according to the court complaint.
The pair started the company that ultimately became Bitwise around 2013.
By the end of 2021, Bitwise had raised more than $70 million in investment funds and had grown to about 400 to 500 employees and 100 to 300 apprentices in multiple states and offices, according to court documents.
