Bitwise leaders allegedly altered bank statements in $100 million fraud. See documents here
Court filings Thursday show that Bitwise Industries co-founders allegedly used ginned-up bank statements and other falsified financial documents to entice would-be investors and lenders to pour money into the failing company.
The Fresno Bee is publishing those court documents – a criminal complaint by the FBI and IRS and a civil complaint by the U.S. Securities and Exchange Commission. At a press conference Thursday, agents lined up what they said were altered bank statements alongside the genuine statements to show examples of the alleged financial chicanery.
Agents showed two pages from the criminal complaint against Jake Soberal and Irma Olguin Jr. that allegedly showed altered bank statements reflecting “tens of millions of dollars” more than what the company actually had in the bank. One of the bank statements for March 2022, for example, showed that the company had more than $23 million on hand, but the genuine statement obtained by investigators revealed that the true amount was only $325,000, according to the criminal complaint.
See both the criminal complaint and civil complaint below.
Federal prosecutors on Thursday announced criminal and civil charges against Soberal, 37, and Olguin, 42, the co-founders and former co-CEOs of Bitwise Industries. The technology company was launched with a great deal of promise 10 years ago but came to a crashing end earlier this year.
Soberal and Olguin each pleaded not guilty in their first court appearance Thursday afternoon before federal Magistrate Judge Sheila Oberto at the U.S. District Courthouse in Fresno. Each is charged with one count of wire fraud and, if ultimately convicted, could face a maximum penalty of 20 years in prison and a $250,000 fine.
Prior to the hearing, U.S. Attorney Phillip Talbert and investigators from the FBI, Internal Revenue Service and the Securities and Exchange Commission outlined the overall framework of the cases contained in the complaints filed in court. The documents outline the lengths to which Soberal and Olguin allegedly went to deceive their own board members, as well as investors and their own employees, long after it became evident that the company was unable to financially sustain itself.
In the meantime, the complaint adds, Soberal and Olguin were each receiving salaries of $600,000 per year.
The criminal complaint includes documents such as altered bank statements and audit reports to conceal the company’s true condition. Those documents, the complaint alleges, were used by Soberal and Olguin to leverage more investments and loans.
FBI Special Agent in Charge Crosby Brackett said the investigation “uncovered overwhelming evidence that (Soberal and Olguin) orchestrated a multifaceted scheme which involved over $100 million in fraud.”
“The result of their actions was the inevitable collapse of what was an unsustainable Ponzi scheme,” Brackett added.
“As Bitwise’s financial condition worsened early this year, the defendants misrepresented the company’s finances to several businesses and people to obtain millions more in loans,” Talbert said Thursday, “including from their business partners, board members, and employees and their employees’ families and friends.”
Despite knowing that the business was failing, Soberal and Olguin “chose to double down and lie to get another $30 million or more in loans to try to keep the company afloat a little while longer,” Talbert said.
This story was originally published November 9, 2023 at 4:38 PM.
