In a stunning development, the U.S. Securities and Exchange Commission (SEC) has filed charges against Jake Soberal and Irma Olguin, Jr., the former co-CEOs of Fresno-based tech startup Bitwise Industries Inc. The allegations suggest the duo engaged in deceitful practices to mislead investors about the financial status of the company. Both Soberal and Olguin have agreed to a settlement of these charges.
Simultaneously, the U.S. Department of Justice (DOJ) has accused them of conspiring to commit wire fraud, implicating them in the misappropriation of over $100 million from various entities and individuals. This figure contrasts with the SEC’s complaint, which alleges the fraudulent raising of approximately $70 million from investors in 2022.
The SEC claims that Soberal and Olguin provided investors with doctored bank statements and a counterfeit audit report, inflating Bitwise‘s financial figures. These fabricated documents portrayed the company as financially stable and growing, while, in reality, Bitwise struggled with ongoing cash shortages and was on the verge of failure. The company’s financial turmoil became evident in May 2023 when it failed to meet its payroll obligations, leading to a mass furlough and eventual layoff of its entire staff.
Monique C. Winkler, Regional Director of the SEC’s San Francisco Office, accused Soberal and Olguin of “outright fraud.” She highlighted an instance where they allegedly showed investors a doctored bank account screenshot displaying a $23.4 million balance, in stark contrast to the actual $325,100. Winkler emphasized the SEC’s commitment to holding the defendants accountable for these fraudulent actions.
The SEC’s lawsuit, awaiting court approval, seeks permanent injunctions, conduct-based restrictions, and bars Soberal and Olguin from serving as officers or directors. The court will later decide on disgorgement, prejudgment interest, and civil penalties.
U.S. Attorney Talbert criticized the defendants for perpetuating lies instead of admitting Bitwise’s business failures. He detailed their fraudulent activities, including falsifying bank statements and financial information and misusing properties as loan collateral while enriching themselves.
IRS Criminal Investigation Acting Special Agent in Charge Mark Silva and FBI Special Agent in Charge Sean Ragan echoed these sentiments, highlighting the impact of such white-collar crimes on communities and the resolve of law enforcement to pursue justice.
Court records reveal that despite previous valuations of over $500 million and reports of financial stability, Bitwise collapsed earlier this year, leading to the abrupt layoff of approximately 900 employees. The board of directors subsequently fired Olguin, Jr. and Soberal. The complaint alleges that since at least January 2022, Olguin, Jr. and Soberal conspired to deceive board members, investors, lenders, and others about Bitwise’s financial state to secure funding. They reportedly manipulated financial records to exaggerate the company’s revenue and assets, with much of the misappropriated funds used for payroll, lavish office spaces, and repaying debts, including their own substantial salaries.
