‘I am a liar.’ Bitwise founders admit to fraud in Fresno courtroom packed for sentencing
READ MORE
Bitwise
Expand All
In a packed Fresno courtroom, the disgraced co-founders of Bitwise Industries on Tuesday openly admitted to lying to their employees, investors, families and the community in order to keep a multi-million dollar fraud scheme alive.
Jake Soberal and Irma Olguin Jr. — the once-celebrated entrepreneurs behind the Fresno-based technology company — received their sentences before U.S. District Senior Judge John C. Coughenour. Both previously pleaded guilty to one count of wire fraud and one count of conspiring to commit wire fraud.
The judge gave Soberal an 11-year sentence while Olguin received nine years. Coughenour gave Soberal more than Olguin, largely because Soberal is a former attorney who knowingly violated the law.
The judge also ordered restitution of $114.6 million.
During Soberal’s comments in front of the judge, a few audience members grumbled when Soberal said he was motivated to lie, in part, because he was driven by the demand to make sure employees got paid.
Bitwise collapsed in May 2023, forcing 900 people out of work and triggering a wave of revelations that Soberal and Olguin had created a web of lies to defraud people of more than $115 million.
Prosecutors said Soberal and Olguin not only lied, they forged financial documents to show the company was flush with cash when in reality he had just several thousand dollars in the bank.
Soberal didn’t deny any of it, vowing to accept his punishment.
“I have learned that in times of great stress, I am a liar,” Soberal told the judge.
Olguin also admitted she did wrong.
“I’m so sorry for taking your money; I’m sorry I betrayed your trust.”
She also recognized that her actions had the potential to reflect poorly on Mexican-Americans, the LGBTQ+ community and women in business after being held as a high-profile model for those demographics.
“I pulled you down with me,” she said. “I stand ready to accept just punishment.”
Prosecution challenges comments about Bitwise employees
While federal prosecutors praised Soberal and Olguin for their cooperation since the start of the criminal investigation in mid-2023, Assistant U.S. Attorney Henry Carbajal III discounted their statements of contrition.
The prosecution had asked the judge for 12-year sentences.
“It’s easy to have remorse now,” said Carbajal, an apparent reference to the tones used in text messages between Soberal and Olguin in the weeks before the company’s sudden shutdown.
In those texts, which were included in court documents, Soberal and Olguin joked about their ongoing solicitations of money from lenders and investors.
“The no’s sucked this week, but the yeses were crazy good,” Soberal said of his desperate efforts to round up more cash. “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.”
Carbajal added that while Soberal and Olguin had compelling stories, he challenged their theory that they were worried about making sure their employees got paid.
“If you want to make payroll, why go after the employees’ 401(k) and target them for loans?” Carbajal said.
Bitwise employees, investors became victims of company
One of those employees, Kennan Scott, told the judge that he was a former vice president for Bitwise in Oakland, and later became a victim.
Soberal convinced Scott to give the company a bridge loan to shore up a real estate deal.
“I gave my life savings to Bitwise,” he said in court. “I was left with no income and no savings.”
Scott said he’s battled depression worrying about his family’s future and what Bitwise took from him.
Investor Jim Maxwell, a prominent San Joaquin Valley farmer, said he and his family are still reeling from being deceived by Soberal. Maxwell was an early supporter of Bitwise and its mission to create more tech opportunities for people in the Valley.
Maxwell was among the investors who believed Bitwise was financially stable when the company was far from it.
“Everything was a lie,” Maxwell said.
Maxwell added that Bitwise didn’t run out of money, it ran out of people to “steal money” from.
The fallout from Bitwise’s tragic story will be long-lasting, Maxwell said. He said local investors, such as himself, have become skittish about loaning money to Valley start-up companies.
“There is a cloud of mistrust that may take years to get out from under,” Maxwell said.
Jake Soberal, Irma Olguin to begin serving sentences March 18
Roger Bonakdar, a Fresno attorney who represented former Bitwise employees in a class-action lawsuit that resulted in a $20 million settlement over unpaid wages and labor law violations, was also in court to hear the sentencing.
He said he believes most of his employees are saddened rather than happy about Soberal and Olguin being ordered to serve prison time.
“There is no joy from any of this process,” Bonakdar told The Fresno Bee outside the courtroom. “For most of them, they felt a deep emotional connection to Bitwise. And that enterprise they really believed in wholeheartedly.”
“It’s really just a lot of sadness,” he added. “And I think this is going to help them turn the page, or close the book so they don’t have to continue to hear about it. They don’t have to continue to think about it. It doesn’t make them feel any better.”
The judge allowed Soberal and Olguin to remain out of custody until March 18, when they will begin serving their sentences.
Their lawyers requested that Soberal serve his time in Lompoc and Olguin in Victorville.
Soberal is 38 years old and will be 49 if he serves the entirety of the prison sentence. Olguin, 43, will be 51 at the end of her prison term.
This story was originally published December 17, 2024 at 5:31 PM.
