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Bitwise Founders Plead Not Guilty to Fraud Charges in Fed Court



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Bitwise founders Jake Soberal and Irma Olguin Jr. pleaded not guilty to fraud charges in Fresno’s federal courthouse Thursday afternoon, the latest legal development stemming from the spectacular collapse of Bitwise Industries.

Earlier in the day, United States Attorney Phillip Talbert formally announced the charges in statements to the media.

Soberal and Olguin founded Bitwise in 2013 in Fresno. The goal was to bring tech to underdog cities. Both were Central Valley natives who won the adulation of the community, and of the tech and social investment worlds.

But by January 2022, Talbert said, things were going south. To keep the business afloat, Soberal and Olguin allegedly committed fraud, forgery, and outright lied to investors.

Talbert said the fraud was $100 million, one of the biggest cases his office has prosecuted.

“Instead of acknowledging that the business was failing to achieve the hoped-for returns, the defendants Olguin Jr. and Soberal repeatedly lied to the board of directors, investors, lenders and others about the business’s revenues and financial condition,” Talbert told the media at a pre-hearing news conference.

The deception was exposed in May when payroll checks bounced. GV Wire first reported on the problem. It was also revealed Bitwise was delinquent paying property taxes in several counties, including Fresno.

Furloughs and layoffs followed, with up to 900 employees nationwide (400 in Fresno) losing jobs. The Bitwise board fired Soberal and Olguin in June. Later that month, the company filed for bankruptcy.

In Court Thursday

Olguin and Soberal surrendered to the custody of the FBI at the Robert E. Coyle Federal Courthouse Thursday morning. They spent most of the day in the courthouse.

Both walked into the 2 p.m. hearing and sat in the back row until their case was called approximately 45 minutes later by U.S. Magistrate Judge Sheila Oberto.

Olguin, her hair now fuchsia colored, wore a jacket, white shirt, and slacks. Soberal wore a navy blue suit.

Oberto asked if they understood the charges. Both answered “yes, your honor.”

Through their attorneys — Daniel Olmos for Olguin, and Eric MacMichael for Soberal — the defendants entered not guilty pleas.

Federal prosecutor Joseph Barton did not push for the pair to remain in custody. Oberto released Soberal and Olguin on several conditions, including surrendering their passports; putting up their homes as collateral (in Olguin’s case, her mother’s home); no contact with the Bitwise board, CFO, or former president; no discussion of the case with other witnesses; and travel restricted to almost all of California (except San Diego and Imperial counties) and Oregon.

Soberal and Olguin will return to court for a Dec. 8 bond and post-bail hearing. The judge also set a preliminary hearing for Jan. 25, 2024.

The U.S. Attorney’s Office says Soberal and Olguin face up to 20 years in prison and $250,000 in fines if they are found guilty.

Tense Moments After Court

The hearing was attended by several former Bitwise employees, and a few attorneys involved in other cases.

Julian Ramos stared intently at Olguin in the courtroom. As she and Soberal emerged, Ramos yelled at them in the hallway.

“Nothing. Your family? Our community? Each one of us loved our community, and you took us down. All we wanted was for Fresno to (expletive) succeed. Look what you done?” Ramos said.

Also in court was attorney Roger Bonakdar, who represents several employees in a civil suit against Bitwise over labor violations. He served Olguin with the lawsuit inside the courtroom.

Olguin was also served another lawsuit by a process server.

After the hearing, the defendants and their attorneys spent time at the U.S. Marshal’s office, in the same building, before filing paperwork in the clerk’s office. They left the courtroom around 4 p.m., with neither speaking to the media.

“The result of their actions was the inevitable collapse of what was an unsustainable Ponzi scheme,” said FBI assistant special agent Crosby Brackett.

The FBI and IRS also investigated the criminal case.

Irma Olguin Jr. and Jake Soberal sit in the U.S. Marshal’s office Thursday after pleading not guilty to fraud charges. (GV Wire/David Taub)

Investigation and Criminal Complaint

The criminal complaint unsealed on Thursday revealed some details. Olguin and Soberal paid themselves $600,000 as co-CEO. The investigation spoke with several former employees and investors.

“Much of the money Olguin, Jr. and Soberal obtained by fraud went towards paying Bitwise’s payroll and fringe benefits, including their $600,000 per year salaries, outfitting the company’s office spaces, and repaying debts owed to prior lenders,” the complaint said.

The complaint also detailed how the company raised nearly $70 million in financing through December 2021. Soberal and Olguin painted a rosy financial picture to the board, but it was all fabricated, the complaint said.

During the news conference, Talbert said the defendants altered bank records that appeared to show the company had $20 million more in its account than it actually did.

The complaint identified a woman, only listed as the company president, telling the government that Olguin and Soberal “would often make short term loans to the company that would be repaid with ten percent interest and that they would ask her and other key personnel to do the same. They called it ‘passing the hat.'”

Bethany Mily served as company president until its closing in June. She is not currently charged, although Talbert would not say if others could also be arrested.

Bitwise was accused of not using standard accounting practices in any of its presentations to the board or other investors.

SEC Also Files Case

Meanwhile, the Securities and Exchange Commission filed a parallel civil case against Soberal and Olguin for misleading investors. The SEC says Bitwise raised $70 million from investors in 2022, fraudulently inflating the value of the company.

“We allege that Soberal and Olguin resorted to blatant fraud, including the creation of fake financial documents, to deceive investors and raise money,” Monique Winkler, SEC regional director based out of San Francisco, said in a news release.

“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, and the SEC is taking action to hold the defendants accountable.”

The SEC is charging Soberal and Olguin with violating the antifraud provisions of the federal securities laws.

“Soberal and Olguin have each agreed to the entry of a partial judgment, subject to court approval, imposing permanent and conduct-based injunctions as well as an officer and director bar, and reserving the issues of disgorgement, prejudgment interest, and a civil penalty for further determination by the court,” the SEC said.

Read the Criminal Complaint

Several Suits, Bankruptcy Ongoing

Bitwise filed for bankruptcy June 28, a month after it furloughed then laid off its entire workforce.

The company and its managers have been embroiled in several lawsuits from investors, business partners and former employees, in both federal and state courts.

Founded in 2013, Bitwise’s business model was to train traditionally disadvantaged people how to code. Bitwise also delved into real estate, buying several buildings in downtown Fresno and rehabbing them.

Bitwise eventually expanded to other cities such as Bakersfield, Oakland, Buffalo, New York, Toledo, Ohio and others.

This story has been updated.

Read the Securities and Exchange Commission Complaint

Curiosity drives David Taub. The award-winning journalist might be shy, but feels mighty with a recorder in his hand. He doesn't see it his job to "hold public officials accountable," but does see it to provide readers (and voters) the information needed to make intelligent choices. Taub has been honored with several writing awards from the California News Publishers Association. He's just happy to have his stories read. Joining GV Wire in 2016, Taub covers politics, government and elections, mainly in the Fresno/Clovis area. He also writes columns about local eateries (Appetite for Fresno), pro wrestling (Off the Bottom Rope), and media (Media Man). Prior to joining the online news source, Taub worked as a radio producer for KMJ and PowerTalk 96.7 in Fresno. He also worked as an assignment editor for KCOY-TV in Santa Maria, California, and KSEE-TV in Fresno. He has also worked behind the scenes for several sports broadcasts, including the NCAA basketball tournament, and the Super Bowl. When not spending time with his family, Taub loves to officially score Fresno Grizzlies games. Growing up in the San Francisco Bay Area, Taub is a die-hard Giants and 49ers fan. He graduated from the University of Michigan with dual degrees in communications and political science. Go Blue! You can contact David at 559-492-4037 or at Send an Email