The criminal hearing for two former Bitwise Industries co-CEOs, scheduled for Thursday, was pushed back more than two months.
Jake Soberal and Irma Olguin Jr. will now face a preliminary hearing in Fresno federal court on April 4 in front of Magistrate Judge Erica Grosjean.
The pair faces one count of conspiracy to commit wire fraud each, in the wake of Bitwise’s failure and subsequent bankruptcy last year. Soberal and Olguin are accused of forging bank documents, among other records, to solicit investments. They have pleaded not guilty.
The amount of evidence — 850,000 pages of records, according to court documents — is the primary reason for the delay.
“The continuance (is) because the extension is required to allow defense counsel reasonable time to complete their review of the discovery, prepare for any litigation, and fully consider a pre-indictment resolution of the case,” said a stipulation agreed to by U.S. Attorney Phillip Talbert (through prosecutor Joseph Barton) and the attorneys for Olguin and Soberal.
Magistrate Judge Stanley Boone signed the order on Jan. 9.
Since the last hearing on Dec. 8, both Soberal and Olguin submitted court documents offering collateral for their release. For Soberal, it was the deed to his Fresno home. For Olguin, it was the deed to her mother’s home.
What About the Tax Documents?
Meanwhile, hundreds of employees are awaiting tax documents that may never come. Generally, employers send W-2 forms, a recap of wages and taxes taken out the prior year.
A reported 900 employees nationwide, with 400 based in Bitwise’s headquarters in Fresno, lost jobs.
When a company undergoes bankruptcy, the trustee is responsible for sending out the documents.
“Once you file bankruptcy, all assets, all debts, anything related to that entity becomes property of the bankruptcy estate, and the trustee administers part of that estate,” said Joyce Cheng, the advocacy and governance manager for the California Society of Enrolled Agents.
The court appointed Delaware-based Jeoffrey Burtch as trustee. Burtch’s attorney did not give a clear answer when asked by GV Wire about if and when the documents will be transmitted to the former employees.
“If employees or plan participants have questions, then we are happy to answer them when they reach out to us,” said Burtch’s attorney, Mark Felger.
Felger also said they do not anticipate any problems with the tax forms.
His office can be reached at Cozen O’Connor, 1201 N. Market St., Suite 1001, Wilmington, Delaware, 19801 or by phone at 302-295-2000.
Roger Bonakdar, a Fresno attorney representing nearly 100 former employees in a class action lawsuit against Bitwise, said he is having trouble getting an answer as well.
“All we get is deflection or excuses that don’t make sense,” Bonakdar said.
Bonakdar said the trustee has access to Bitwise’s payroll company and software.
“Why they aren’t doing it is beyond me. It’s just continuing to trample these people at every turn, deepening the wound and causing continued harm. When they’re going to stop, I don’t know,” Bonakdar said.
Expert: Keep Your Records
If Bitwise’s trustee does not send tax documents, keep your records, said tax expert Cheng, herself an enrolled agent. An enrolled agent is credentialed by the IRS to represent taxpayers at hearings.
“The important message for employees is to maintain their records, maintain proof of all their contributions, whatever they can do to substantiate and support what they contributed, what they’ve lost,” Cheng said.
Records can include paystubs, or at the very least, the last paystub Bitwise issued around June 2023.
“It is probably inevitable that they’ll get a letter from the IRS,” Cheng said.
Cheng said the IRS should have records of withholdings to match up with tax returns, whether the company ever remitted that amount or not.
“The employees is entitled to credit for whatever was supposedly withheld from his paycheck,” Cheng said. “The IRS has options to get compensated for that.”
The IRS could go after the company, or individuals in the company, responsible for not remitting taxes taken from employees, Cheng said. Workers who are victims will not be in trouble.
Only employees, and not contractors, would be affected. The company does not take withholdings from contractors.
Cheng recommends that employees contact a tax professional. CSEA has a link to help find a professional here.