Tuesday, Dec. 17, 2024, update with prison sentences for Jake Soberal and Irma Olguin Jr. at this link

Original story

The criminal former CEOs of Bitwise Industries believe they should serve five years in prison. Federal prosecutors say it should be at least 12 years.

Related Story: Former Bitwise CEOs Receive Stiff Federal Prison Sentences

Irma Olguin Jr. and Jake Soberal will learn their fate Tuesday morning, as a federal judge will sentence the pair for two wire fraud charges.

John Coughenour, a visiting judge from Seattle, will preside. Sentencing starts at 9 a.m. in courtroom 5 of the Robert E. Coyle Federal Courthouse in downtown Fresno.

Last July, Olguin, 44, and Soberal, 38, pleaded guilty. Prosecutors charged them with lying to investors and forging documents to save the sinking tech and real estate company.

In court documents filed last week, Olguin and Soberal requested 60 months; the Department of Justice countered with 151. Olguin requested to serve her time at the medium-level Federal Correctional Institution in Victorville. Soberal is asking to serve at FCI Lompoc.

Olguin and Soberal took the blame, saying they were not motivated by greed, but by a misguided effort to save Bitwise. Both said they loaned personal money to keep the company afloat.

The lawyers for each — Olguin and Soberal have different attorneys — also made legal arguments for the lower sentencing. Each attorney highlighted their clients’ respective history helping the community.

“A 60-month sentence would be a general deterrence, reflecting the seriousness of the offense while recognizing Ms. Olguin’s dedication to the underestimated and her life of service, offering both just punishment and the opportunity for positive change,” attorney Daniel Olmos wrote.

“Mr. Soberal is ashamed of his conduct and has not made any excuses. But it is not an excuse to rightly point out that his conduct is not in the same league as defendants who defrauded investors for their own personal gain,” Soberal’s attorney, Eric MacMichael, wrote.

Soberal said he will not contest a presentencing report recommendation to pay $115 million in restitution, but admits it will be “particularly challenging.”

Soberal, Olguin Joked About Crimes

In a federal filing, Olguin and Soberal allegedly joked about their misdeeds.

“Kind of incredible to be doing this dumb f****** thing with you,” Olguin texted Soberal on April 29, 2023.

“People just raves [sic] about watching us do good work and being for us. Old, white, conservative rich dudes. Raving about our crazy, money-losing, progressive ideas,” Soberal texted back.

“I’m really excited to quit this job after we fix this company,” Soberal also texted.

GV Wire previously reported Soberal joking about nefarious business practices during a video company meeting.

Government: Olguin, Soberal Lied, Deceived

In an eight-page memo for sentencing, federal prosecutors said the former CEOs purposely lied to help bolster the company.

“The defendants exploited social impact investors’ desire to do good and continuously deceived them to get more money,” U.S. Attorney for the Eastern District of California Phillip A. Talbert said in the memo.

Talbert said Olguin and Soberal raided the employees’ 401(k) account and reached out to employees’ friends and family for loans.

“Such behavior belies any contention by the defendants that their primary aim in committing the fraud was to protect employees’ jobs,” Talbert said.

Instead of taking advantage of the high-level financial and investment professionals they had access to, “(Olguin and Soberal) hired unqualified family members and friends, which allowed them to compartmentalize information and work in secret to spin the elaborate lies needed to conceal and continue with their misconduct.”

Two of Olguin’s siblings worked at the company.

Despite the criticism, Talbert did say the defendants conducted themselves “commendably” during the investigation.

Some victims may speak at the sentencing hearing, the DOJ’s filing said.

Joseph Barton and Hendry Carbajal III are prosecuting the case.

Olguin Makes Case for Less Time

The defendants filed separate court documents, making their respective cases for leniency.

Olguin said she misjudged the fallout from her actions.

“She feels shame for her failures, the pain she has caused, and the inability to account for the immense suffering her actions would bring. The tunnel vision of ‘payroll at all costs’ was unethical and short-sighted at best,” Olguin’s 46-page sentencing memorandum said.

Olguin’s attorney pointed out that she “affirmatively reached out to the Government,” and cooperated with investigators.

“Since Bitwise’s failing, Ms. Olguin has demonstrated her genuine and steadfast remorse for her conduct; she pled guilty at the earliest opportunity, she has apologized publicly and countless times privately to those who have been affected by her misdeeds, and she stands ready to accept the punishment that this Court hands down,” her court document said.

GV Wire previously reported that Soberal also sent apologetic emails to some investors affected.

Since Bitwise’s collapse, Olguin has volunteered with nonprofits and small businesses, her memo said, but did not specify which companies.

Olguin’s memo detailed her upbringing of poverty in the Central Valley. Education was her ticket to success, awarded a scholarship by the University of Toledo. This eventually led to a career in tech, and the startup of Bitwise in 2013.

She also described accepting herself as queer, despite great fear coming out of the closet.

Soberal: ‘Resorted to Lies’

Soberal also made his case through court documents, asking the sentencing judge to look at his motives.

“In his misguided effort to save Bitwise, Mr. Soberal resorted to lies that became more and more egregious as the situation became more and more desperate. When his efforts to save Bitwise failed, Mr. Soberal took complete responsibility for his actions, volunteering to cooperate with the government and immediately confessing to all of his mistakes, with no promises of leniency,” his 41-page memorandum said.

Despite raising $70 million in investor financing, it was not enough.

“Mr. Soberal buckled under the pressure to raise money to support Bitwise’s growing workforce and embarked on a series of terrible decisions. During the fundraising effort that followed, Mr. Soberal and Ms. Olguin altered the company’s bank statements to reflect inflated cash balances, and also altered an audit report to show higher revenues in a desperate attempt to raise money,” the memo said.

Mistakes escalated.

“What started as a willingness to shade the truth or ignore bad facts quickly turned into overt lies. And as always, those initial lies lead to more lies, more false statements, and more desperation. Mr. Soberal deluded himself into thinking that allowing Bitwise to fail was worse than lying to raise money,” the memo said.

Asking for 60 months, Soberal’s attorney mentioned his three young children.

Soberal described growing up in a dysfunctional family, with expectations to become successful. He also discussed his community service and religious faith.

He turned to alcohol to cope with Bitwise’s mounting problems, his memo said.

Letters of Support

Olguin and Soberal included dozens letters of support.

Jenn Guerra, a former Bitwise employee who has attended several court hearings, wrote a letter on behalf of Olguin.

“Irma’s willingness to meet with me, answer my questions, and take responsibility for her actions has been meaningful in my own healing process. For these reasons, I ask the court to consider a balanced sentence that allows for accountability, restitution, and the possibility of redemption,” Guerra wrote.

Letters came from Shelley Manser, assistant superintendent of Caruthers Unified School District, and several members of a white collar criminal support group Olguin recently joined.

Soberal received support from his wife Sarah Soberal, several former employees, and members of his church.

Wrote his wife, “He made desperate decisions that he so badly wishes he could go back and do differently.”

One jilted investor, Rick Berry of Cal Custom Tile, also defended Soberal, despite not being paid back a $100,000 loan in May 2023.

“I believe he/they got in over their heads and were trying to dig out the best they could. I don’t believe Jake maliciously or intentionally set out to take advantage or scam me,” Berry wrote.

John Dodson, a silent partner during Bitwise’s startup and first CFO, also wrote a letter for Soberal.

Phil Skei, a pastor at On Ramps Covenant Church, and a member of Mayor Jerry Dyer’s administration in the planning department, wrote a letter. Skei wrote about Soberal’s faith, asking for leniency.

A Conclusion to the Company’s Fall

GV Wire first reported in May 2023 about financial cracks in Bitwise. Property taxes went unpaid; employees could not deposit payroll checks. In a matter of weeks, nearly 1,000 workers were furloughed then laid off; the company’s board of directors fired Olguin and Soberal; and the company filed for bankruptcy.

Investors, business partners and former employees filed several lawsuits. Recently, employees settled a class action lawsuit for $20 million.

Olguin documented the Bitwise philosophy, that employees should be rewarded for hard work. All employees would earn a starting salary of $70,000 “regardless of whether the team member held a janitorial role or was a digital marketer.”

The company expanded to Bakersfield, Merced and Oakland, with the goal of offices across the country.

Bitwise did not require any education prerequisites, and aimed to hire those on the margins.

Soberal said the company was about to provide free childcare before Bitwise went under.

Expansion including raising $70 million in two rounds of investments. But, expansion came at a cost.

“Despite receiving considerable funding, Bitwise struggled to cover the ever-growing list of expenses,” Soberal’s attorneys wrote. “While Bitwise created competitive jobs and inspiring office spaces to fuel support of its employees, Bitwise never built an operable financial team.”

Read Sentencing Memos

• Irma Olguin Jr. sentencing memo
• Jake Soberal sentencing memo
• DOJ sentencing memo