Eight months after being criminally charged, the Bitwise Industries founders' saga continues to play out in court.
Irma Olguin Jr. and Jake Soberal, leaders and founders of Bitwise, pleaded guilty earlier this month to one count of wire fraud and one count of conspiring to commit wire fraud. They admitted to defrauding lenders, investors and others out of $115 million, according to the U.S. Attorney's Office.
Olguin and Soberal were criminally charged Nov. 9 with conspiring to commit wire fraud and taking more than $100 million from businesses and individuals.
The Fresno-based company aimed to train tech workers in underserved communities, develop software and invest in tech-friendly real estate.
The company announced in late February 2023 that it had raised $80 million and unveiled expansion plans into Chicago.
But just three months later, Bitwise unexpectedly shuttered all of its operations, including its team in Buffalo, where it had earlier expanded.
“Olguin and Soberal admitted that they used their positions as Bitwise’s co-Chief Executive Officers to conceal their fraud from the company’s board of directors and others at the company. They also admitted to using sophisticated means to deceive and cheat investors and lenders out of their money,” according to the U.S. Attorney’s Office press release.
They are scheduled to be sentenced on Nov. 6. If convicted, they face a maximum of 20 years in prison and a $250,000 fine for each of the wire fraud and conspiracy to commit wire fraud counts.
That means that in total they face a maximum penalty of 40 years in prison and a $500,000 fine. They also agreed to pay full restitution, the release said.
Behind the scenes of the rise and fall of Bitwise
The U.S. Attorney’s Office release laid out more details of the timeline and fraud that went on at Bitwise.
Olguin and Soberal founded the company in 2013 and grew Bitwise to have three business lines:
- a technology workforce training program;
- a technology consulting service;
- and a real estate arm that bought, leased and renovated commercial properties
“The company promised to create jobs for underserved groups of people, revitalize blighted urban areas, and show that such a project could be highly profitable,” the release said.
By early 2022, the company had raised over $75 million through Series A and B investment rounds. At that time, the business had 800 employees and apprentices across multiple states, but the company “was not making a significant profit and was running low on funds.”
Olguin and Soberal then conspired to mislead lenders, investors and others into thinking that Bitwise was succeeding, the release said. They fabricated investor materials’ financial information and forged and altered other financial records to inflate the business’ cash balances, revenues and other financial markers, according to prosecutors.
This alleged pattern of behavior continued until Bitwise ran out of money and the business collapsed in May 2023.
The unlawfully gotten money went toward outfitting Bitwise office spaces, funding the company’s payroll and repaying debts to lenders and investors, among other business expenses, prosecutors said.
