FRESNO, Calif. — The two founders of Bitwise Industries, a failed tech incubator from California that sought to revitalize job markets in urban areas before flaming out in a fraud scheme, were sentenced to prison for deceiving investors out of around $115 million, the U.S. Attorney's Office in the eastern district of California announced on Tuesday.
Jake Soberal was sentenced to 11 years in prison and Irma Olguin, Jr., was sentenced to nine years. Both of the co-CEOs surrendered to federal criminal charges in November of last year after filing for bankruptcy and furloughing the company's entire workforce months before.
“Defendants likened themselves to gods and joked about deceiving their well-intentioned investors while committing a massive fraud,” U.S. Attorney Phillip Talbert said in a press release. “They lied repeatedly to pull in over $100 million to a dying business venture that they knew never had any meaningful revenue. To make themselves rich and keep up the façade, they used fabricated bank statements, false financial information, forged documents, and fake loan collateral. These sentences serve as a reminder of the hazards of such financial crimes, and my office will continue to work with the FBI, IRS Criminal Investigation, and our law enforcement partners to vigorously investigate and prosecute those who commit them.”
In 2022 and 2023, Soberal and Olguin publicly displayed the Fresno-based company as financially successful and capable of following through on its promises, while falsifying documents that showed promising revenue to investors, according to the attorney's office.
One such failed promise was in Toledo, Ohio, where Bitwise partnered with healthcare company ProMedica to turn a vacant downtown building into a workforce development and innovation center. It was projected to create hundreds of regional jobs and position the city to grow as a technology hub.
Soberal and Olguin also "made a substantial annual salary" while the company continued to hide its flailing funds by altering bank statements, forging documents and misrepresenting its finances, the attorney's office said.
“This case demonstrates how disastrous the impact can be when a company’s executives fail to conduct themselves ethically and lawfully. Bitwise Industries co-CEOs Jake Soberal and Irma Olguin, Jr. repeatedly lied to investors and lenders to keep their massive Ponzi scheme afloat, despite knowing that the business model would never generate positive revenue. The $115 million loss is significant, but the damage to the professional reputations of innocent parties and the loss of more than 900 jobs and associated benefits employees depended on will have a lasting, negative impact on the economy and individual lives,” said FBI Sacramento Special Agent in Charge Sid Patel. “The FBI remains steadfast, safeguarding our economy by working with all partner agencies to ensure that those who exploit positions of trust to commit large-scale corporate frauds are held accountable for their criminal activity.”