Jake Soberal and Irma Olguin, Jr., founders of Bitwise Industries, have been sentenced to prison for their roles in a $115 million fraud scheme. Soberal received an 11-year sentence, while Olguin was sentenced to nine years. The announcement was made by United States Attorney Phillip A. Talbert.
"Defendants likened themselves to gods and joked about deceiving their well-intentioned investors while committing a massive fraud," said U.S. Attorney Talbert. He further explained that the pair used false financial information and fabricated documents to secure over $100 million for a failing business venture. "These sentences serve as a reminder of the hazards of such financial crimes."
The impact of the fraud extended beyond investors, affecting nearly 1,000 employees and contractors who lost their jobs when Bitwise collapsed. "White-collar crimes are damaging to victims, families, and communities alike," stated IRS Criminal Investigation Oakland Field Office Assistant Special Agent in Charge Kulbir Mand.
FBI Sacramento Special Agent in Charge Sid Patel emphasized the broader repercussions: "The $115 million loss is significant, but the damage to professional reputations and the loss of more than 900 jobs will have a lasting impact." Patel noted that this case highlights the consequences when executives act unethically.
Bitwise Industries was once considered a promising startup aimed at using technology to create jobs for underserved groups in California's Central Valley. Despite gaining national attention through media appearances and TED Talks, by early 2022, Bitwise was struggling financially. To maintain an illusion of success, Olguin and Soberal falsified financial records and misled investors about the company's cash balance and revenue.
Examples of their fraudulent activities include overstating Bitwise's cash balance by millions in presentations to investors and falsely claiming secured investments from other firms. By March 2023, they continued altering audits and financial statements until Bitwise ran out of funds two months later.
Olguin's background as a computer engineer and Soberal's experience as an attorney enabled them to execute this elaborate scheme with assistance from unqualified family members hired within the company. This contributed to special sentencing enhancements for both defendants.
The investigation leading to these convictions was conducted by the FBI and IRS Criminal Investigation with prosecution handled by Assistant United States Attorneys Joseph Barton and Henry Z. Carbajal III.