Fresno attorney Roger Bonakdar estimates nearly 700 former Bitwise employees could be entitled to up to $15,000 each following the announced settlement of a class action lawsuit. (GV Wire/Paul Marshall)
- The remnants of Bitwise Industries settled claims with former employees.
- The settlement total of $20 million could mean $15,000 per employee.
- Payments to employees could come by early 2025.
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Nearly 18 months after Bitwise Industries went out of business, its former employees settled with the remnants of the company for $20 million.
Fresno attorney Roger Bonakdar, representing a group of employees who lost their jobs, said any former Bitwise employee could collect. He estimates nearly 700 employees could be entitled to up to $15,000 each.
“It’s a landmark decision,” Bonakdar said Wednesday. “Everyone should be made whole on what was stolen from them.”
Payments could come by early next year, he said.
“I’m truly happy for my clients. Many of the clients have reached out this morning expressing their satisfaction. And really the closure that comes with it,” Bonakdar said.
The settlement was filed today in a Delaware bankruptcy court. Read the bankruptcy settlement here.
Criminal Former CEOs not Involved
“It’s a landmark decision … Everyone should be made whole on what was stolen from them.” — Attorney Roger Bonakdar
Former Bitwise co-CEOs Jake Soberal and Irma Olguin Jr. are not directly involved in the settlement. Federal investigators said their malfeasance led to the company’s destruction. Instead of being honest about Bitwise’s financial troubles, Soberal and Olguin lied to its board of directors, lied to investors, and falsified financial records.
The federal Department of Justice charged Soberal and Olguin with fraud. They eventually pleaded guilty, and are scheduled to be sentenced Dec. 17 at 8:30 a.m. at the Fresno federal courthouse.
After GV Wire broke the story of the company’s financial problems in May 2023, Bitwise furloughed its entire staff on Memorial Day, and laid them off a few weeks later.
The Bitwise board of directors fired Soberal and Olguin in June 2023, and the company filed for bankruptcy a few weeks later.
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Bankruptcy Slows Down Litigation
Two separate set of employees filed class action lawsuits — the Garza class filed in Fresno County Superior court, and the Nunn class filed in federal court in Fresno.
Those were two of several lawsuits Bitwise and its several related companies faced from employees, investors, and business partners. The bankruptcy automatically halted the lawsuits.
The employee lawsuits accused Bitwise of violating state and federal regulations requiring notification of layoffs. Bitwise also bounced payroll checks.
The current negotiations with employees began in earnest this past January.
“The reason the case settled is how much work we put into establishing the exposure for these entities and the directors. An immense amount of work, thousands of hours of time went through combing through the terabytes of data and documents to hold Bitwise accountable.” Bonakdar said.
The settlement holds members of Bitwise’s board of directors and its insurance carriers responsible. The board includes Mitchell Kapor, Paula Pretlow, Ollen Douglass, and Joseph Proietti — all venture capitalists to some degree.
Related Story: Stacks of Lies and Fake Documents: Prosecutors Detail the Fraud Hatched by ...
Who Is Paying for the Settlement?
Former Bitwise president Bethany Mily is involved in the settlement, although she will make no direct payments.
The size of the class is not exactly known. Bonakdar said bankruptcy officials are still determining that number.
Bonakdar urges any former employee who is part of the claim to reach out to him through his Facebook page to make sure they are included.
The settlement allows attorneys’ fees of up to 30%, or $6 million.
Bonakdar said recovery money in a class action lawsuit against a bankrupt company is unusual.
“What we’ve done here is is truly exceptional. These people deserve it. We’re very proud of all the work that went into it, and we’re appreciative for the faith and confidence of the community to help out our friends and neighbors,” Bonakdar said.
The breakdown of where the settlement money comes from:
- $5 million from Great American insurance policy
- $5 million from director Mitchell Kapor
- $4.5 million from Scottsdale insurance policy
- $3.425 million from other Kapor entities
- $2 million from Hanover TPL insurance police
- $75,000 from Motley Fool Ventures (affiliated with director Ollen Douglass)
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