Feds allege Calif. tech execs lied about ‘dying venture’ to get $100M

Federal officials alleged this week that the two leaders of a Fresno-based tech company defrauded investors out of tens of millions of dollars to prop up their struggling company.

The United States Attorney’s Office for the Eastern District of California filed a criminal complaint Wednesday against Irma Olguin Jr. and Jake Soberal, co-founders of the tech company Bitwise. The complaint was accompanied by a sworn affidavit from FBI agent Chet Johnston that detailed the findings of a joint probe by the FBI and the IRS’ criminal investigation team. Johnston wrote that, in interviews, Olguin and Soberal admitted to forging financial records and misleading investors, saying they “admitted to significant wrongdoing.”

The U.S. Attorney’s Office issued a press release about the charge, conspiracy to commit wire fraud, on Thursday. The news comes nearly six months after Bitwise’s sudden collapse, which left its 900 employees out of work and the firm declaring bankruptcy.

Both of the former executives, who were sacked by Bitwise’s board in early June, pleaded not guilty in a Fresno courthouse Thursday, according to the Fresno Bee. If convicted, Olguin and Soberal would each face up to 20 years in prison and a $250,000 fine. 

Olguin and Soberal founded Bitwise together in 2013, and the company eventually juggled three lines of business: workforce training, software consulting and real estate management. According to Johnston’s affidavit, Olguin and Soberal raised $20 million for the company from investors in December 2019, $48 million in December 2021 and $38 million during an investment round in 2022. Much of the money, according to the complaint, went toward repaying prior debts, meeting payrolls — including $600,000 salaries each for Olguin and Soberal — and outfitting office spaces. Bitwise declared bankruptcy in June 2023.

“The defendants could have chosen simply to admit the failure of Bitwise’s business model,” U.S. Attorney Phillip Talbert wrote in the Thursday press release. “Instead, they used lie after lie to pull over $100 million into a dying venture through fraud.”

Johnston’s affidavit references interviews with anonymous former employees — a few of whom were allegedly promoted to high-paying positions with little qualifying experience — and alleges that the company’s executives used fake bank statements and lied about revenues to trick investors.

At one point, according to the affidavit, Olguin and Soberal sent an investor an “altered” bank statement that showed a Bitwise account on March 31, 2022, with over $20 million in cash in it. First Republic Bank provided the government with the actual statement, which showed that the company had just $325,000, the affidavit said. Olguin and Soberal “explained that they made the alterations because they believed … no one would invest in the Series B-2 if people knew the company’s actual condition,” per the affidavit.

Lawyers for the former executives did not immediately respond to SFGATE’s requests for comment. The Fresno Bee also reported that in court Thursday, a lawyer handed Olguin a civil lawsuit on behalf of former Bitwise employees and said, “You have been served.”

Hear of anything happening at a California tech company? Contact tech reporter Stephen Council securely at [email protected] or on Signal at 628-204-5452.