The founders of a failed California tech company were charged by federal authorities Thursday for their roles in a $100 million fraud scheme in which they bankrolled their lavish lifestyles and hefty salaries.
Irma Olguin, Jr. and Jake Soberal, who headed the Fresno-based startup Bitwise Industries, surrendered to authorities on charges they conspired to commit wire fraud and took millions of dollars from various businesses and individuals, the US attorney for the Eastern District of California announced.
The pair allegedly created a tangled web of lies and fabricated documents to create the illusion the private technology company was succeeding.
They are accused of fabricating bank statements, lying to investors, providing false financial information to their board of directors, forging documents, and using buildings Bitwise no longer even owned as collateral for loans, “all while lining their own pockets,” United States Attorney Phillip Talbert said in a press release.
Olguin and Soberal allegedly agreed to start their complicated string of lies in January 2022, 16 months before Bitwise abruptly collapsed — despite recent reports the company was worth over $500,000,000 and was financially sound.
The duo allegedly faked its financial records to obtain investments, loans and other funding, which they put toward Bitwise’s payroll and fringe benefits, outfitting the company’s office spaces and repaying debts owed to prior lenders.
They also took care to fulfill their own $600,000 annual salaries, investigators said.
When the scheme was finally exposed in May 2023, the company’s 900 employees and apprentices were immediately furloughed and later laid off.
Olguin and Soberal were fired by the company’s board of directors and Bitwise filed for bankruptcy protection the following month.
“These sorts of white-collar crimes often root from greed and mismanagement and leave hard-working tax-paying citizens damaged in their wake,” Mark Silva, IRS Criminal Investigation Acting Special Agent in Charge of the Oakland Field Office, said in a statement.
The pair have admitted to carrying out the scheme, but plead not guilty in court in a Fresno courthouse Thursday.
They claimed they did so in a genuine effort to resuscitate the dying business.
“Jake and Irma have taken full responsibility for the mistakes they made while trying to preserve Bitwise. Their sincere desire not to see Bitwise fail caused them to make numerous grave and consequential errors in judgment,” lawyers for Soberal and Olguin said in a statement.
Both have agreed to a bar preventing them from serving as officers or directors of public companies, as well as other penalties, the SEC said.
If convicted, the two face a maximum penalty of 20 years in prison and a $250,000 fine.
With Post Wires