TOLEDO, Ohio — The former co-CEOs of Bitwise Industries surrendered Thursday to federal criminal charges for an alleged fraud scheme totaling over $100 million.
Bitwise CEOs Jake Soberal and Irma Olguin, Jr., ran a $100 million fraud scheme before filing for bankruptcy in June, according to the United States Attorney’s Office, Eastern District of California.
Bitwise, a California tech incubator and job-training company, had partnered with ProMedica to renovate the old Jefferson Center building in downtown Toledo with the goal of opening an innovation center. Most of the renovation work was completed before Bitwise furloughed and later fired all of its workers.
“The defendants could have chosen simply to admit the failure of Bitwise’s business model. Instead, they used lie after lie to pull over $100 million into a dying venture through fraud,” U.S. Attorney Phillip Talbert said Thursday in an announcement of the charges. “Olguin, Jr. and Soberal fabricated bank statements, lied to investors, provided false financial information to their board of directors, forged documents, and used buildings Bitwise no longer even owned as collateral for loans, all while lining their own pockets.”
The company notified 18 Lucas County-based employees that their jobs had been terminated on June 15 and that the company’s planned workforce development and innovation center was closed. The company also closed another Bitwise location at 413 Adams St.
The failed Bitwise innovation center was expected to open this year and create hundreds of regional jobs, according to officials.
“We allege that Soberal and Olguin resorted to blatant fraud, including the creation of fake financial documents, to deceive investors and raise money,” Monique C. Winkler, Regional Director of the SEC’s San Francisco Regional Office said in a media release Thursday. “In one instance, the defendants allegedly conspired to send a purported screenshot to investors of a company bank account showing a cash balance of $23.4 million. In actuality, the account had only $325,100 in it. That’s not a bank error—that’s fraud, and the SEC is taking action to hold the defendants accountable.”