It happens when computing government math.

Although former Bitwise Industries CEOs Jake Soberal and Irma Olguin Jr. started serving sentences of eleven and nine years, respectively, on March 18, that is not how long they are scheduled to serve. Last year, both pleaded guilty to wire fraud charges in a $115 million scam to defraud investors.

According to the Federal Bureau of Prisons inmate finder, Soberal is serving in USP Atwater, with a release date of July 31, 2034 — or about nine years, four months.

Olguin is serving in FCI Victorville Medium I, with a Nov. 15, 2032 release date — or about seven years, eight months.

Despite the names, both are minimum security faculties.

The BOP builds in good conduct time credits when calculating release dates, BOP spokesperson Scott Taylor said, speaking generally.

Federal law allows 54 days credit for each year. For Soberal, that is 594 days shaved off his sentence; for Olguin, it’s 486 days.

Taylor also said inmates can earn additional credits for completing certain programs and activities.

Perea Wins LGBT Endorsement

Although she hasn’t officially announced running for state Assembly, Annalisa Perea won the endorsement of the California Legislative LGBTQ Caucus.

Perea filed paperwork to run for AD 31, which represents most of Fresno. She is the first openly gay member of the Fresno City Council, winning election in 2022.  Joaquin Arambula holds the seat, and plans to run for Fresno City Council in 2026.

The caucus said Perea (and three other legislative candidates they endorsed) ” possess the courage and strength to advance the rights and protections of the LGBTQ+ community in a time of unprecedented level of threat and violence directed at our community.”

Sandra Celedon, president/CEO of the nonprofit Building Healthy Communities, also filed to run. She has the financial support of Arambula and his family.

Perea said she plans to officially announce “in the coming weeks.”

Parra Pleads Not Guilty

Although he was not present, Fowler City Councilmember and Orange Cove City Manger Daniel Parra — through his attorney — pleaded not guilty to assault in a Tampa, Florida, courtroom on Monday.

A city councilmember from San Leandro in the Bay Area accused Parra of an unwanted kiss while the two attended a National League of Cities meeting in Tampa last November. Xouhoua Bowen made the accusation publicly at a city council meeting there last month.

Parra did not appear personally for his arraignment, a court spokesperson told Politics 101. A not guilty plea is entered automatically. His next court date is a status hearing on May 12.

He attended the Fowler City Council meeting this week, the city clerk said.

Parra has been on leave from his Orange Cove job since January. It is unclear if his leave has anything to do with the accusation.

Related Story: Bay Area Councilmember Accuses Fowler Politician of Assault

The post If ex-Bitwise CEOs Behave in Prison, How Much Less Time Will They Serve? appeared first on GV Wire.

Soberal, 39, started an 11 year sentence at U.S. Penitentiary Atwater. Olguin, 44, began a nine year sentence at Federal Correctional Institute Victorville Medium I.

Both are low-security facilities and, despite its name, Victorville has a satellite camp for low-level female prisoners.

The U.S. Marshals office said Soberal and Olguin reported directly to the prisons.

Last year, Soberal and Olguin pleaded guilty to two counts of wire fraud. Federal prosecutors accused the pair of defrauding investors to raise millions of dollars.

During sentencing last December, Soberal’s attorneys asked to serve in Lompoc. It is unclear why the request was not followed.

A BOP spokesperson said he couldn’t specifically say why a prisoner is designated at a specific facility, but it is based on several factors.

“Some of the factors include the level of security and supervision the inmate requires, any medical or programming needs, separation, and security measures to ensure the individual’s protection, and other considerations including proximity to an individual’s release residence. The same criteria apply when making decisions for both initial designations and re-designations for transfer to a new facility,” spokesperson Scott Taylor said.

This is the perhaps the last chapter of the rise and fall of Bitwise — a Fresno technology and real estate company built on hopes and a shaky foundation.

The Bitwise Legacy

The company’s mission was to bring tech to “underdog” areas like Fresno, the home region of Soberal and Olguin. They grew up in Clovis and Caruthers, respectively.

Winning acclaim and recognition, Bitwise raised many millions in several rounds of investment funding.

But the idealistic plans ran into financial realities. With a starting salary of $70,000 for every employee, Bitwise could not make payroll, nor pay its property taxes, as GV Wire reported when it broke the story in May 2023.

The pair forged financial documents and lied about the health of the company to raise money to keep the company afloat.

Former employees won a $20 million class action settlement, mainly paid for the remaining insurance of Bitwise and its board of directors.

The post Where Are Convicted Bitwise CEOs Serving Their Prison Terms? appeared first on GV Wire.

Jake Soberal received a sentence of 132 months, or 11 years. Irma Olguin Jr. was sentenced to 108 months, or nine years.

John Coughenour, a visiting judge from Seattle, said the difference in sentences was because Soberal was a licensed lawyer at the time of the fraud crimes while Olguin was an engineer. The judge said lawyers have a sense of responsibility, and called Soberal’s behavior “very troublesome.”

Soberal has since been ruled ineligible from practicing law.

Coughenour said he based his sentencing also on what Elizabeth Holmes received in the Theranos case. Judge Edward Davila —who Coughenour said was a colleague — sentenced Holmes to 135 months.

Olguin, 44, and Soberal, 38, were ordered to surrender to federal authorities to begin their sentences by March 18. While the judge did not assign federal prisons, Soberal’s attorneys asked he serve in Lompoc; Olguin requested Victorville.

Neither Soberal nor Olguin commented on their sentences as they exited the courtroom and headed to the pretrial services office. The U.S. marshals office escorted them away from the courthouse outside the view of the gathering media in front.

Their family members also declined to comment after the sentencing.

Prosecutors accused Olguin and Soberal of lying to investors and forging financial records to keep the company afloat. Soberal and Olguin pleaded guilty to two wire fraud counts each last July.

Packed Courtroom Hears Apologies

Spectators filled very seat in the Courtroom 5 gallery, including several standing. More than 100 came to witness Soberal and Olguin apologize to the court, and to the community.

Lawyers for the defendants felt 60 months, or five years, would be a fair sentence. The government asked for 151 months — 12 and half years.

Soberal spoke to the judge first. Wearing a suit, and partially grown beard, he apologized several times, reflecting on his conduct.

“My dishonesty created this pain and suffering,” Soberal said.

He justified his actions as an effort to save the company from its financial failures. He and Olguin said they did not financially benefit from bilking investors.

Serving 11 years will take Soberal away from his three children.

“Your father has sinned and lied, and it is not okay,” Soberal said.

Soberal admitted enjoying the power and influence running Bitwise. Prosecutor Joe Barton used those words against Soberal in his rebuttal. He said Soberal “weaponized” doing good, by preying upon investors.

“He must face the consequences,” Barton said.

Olguin, with fuchsia hair and wearing a pantsuit, also apologized. She sobbed at times, speaking to the judge.

“I’m sorry I betrayed your trust. I’m sorry I broke your heart,” she said.

Olguin called her life — from the fields of Caruthers in poverty, to a celebrated tech CEO — “Hallmark movie” worthy.

She is concerned that her actions may reflect poorly on Mexican-Americans, the queer community, and women.

“I let them all down,” Olguin said. “I fear I dragged them down with me.”

Victims Testify

Soberal stood sober-faced hearing from four victims of his financial crimes.

Brian Maxwell of CA Ag said Bitwise bilked him for $1.6 million. He compared his meetings with Soberal to his niece’s fantasy tea parties. The losses affected Maxwell and his wife from making a down payment on a new home.

Referring to Soberal’s several references to his faith, Maxwell said “Is it Christlike to steal from my mom?”

Brian’s father, Jim Maxwell of Agri Capital, also testified. He said Bitwise took advantage of local investors who wanted to do good for local businesses. He is concerned how that may affect legitimate businesses seeking finances in the future.

“Entrepreneurs now face suspicions and closed doors,” Maxwell said.

Kennan Scott, a former Bitwise vice president, said his experience left him without income and without savings. He testified Soberal and Olguin convinced him to invest his own money into the sinking company. He said the pair “upended” his family’s future.

Luke Hewko, an accountant who examined Bitwise’s financial records, said fraud dated back to at least 2018. He said the company spent outrageous salaries for “friends, family and lovers.”

Olguin’s sister Sandi Olguin, and brother Santana Olguin both had Bitwise jobs. Both attended the sentencing hearing. They had no comment about whether their Bitwise careers were aided by nepotism.

Unlike prior court hearings for Olguin and Soberal, the defendants did not face jeers nor scorn while walking in and out of court.

Laura Splotch, a former Bitwise employee, attended the hearing, as she has done several times in the last 18 months.

“I think they should have had more time thrown at them. I’m happy that they’re going away for as long as they are. But I really think that the amount of damage they did to most of us … nothing would have made me happier than to see them go away for good,” Splotch said after the hearing.

The Bitwise Legacy

The tech and real estate startup based in Fresno won acclaim from the business and social equity world for the company’s mission to hire and bring tech training to the unserved.

Soberal and Olguin earned recognition, not only from the social equity investors they convinced to give money, but from the tech and governmental worlds as well.

At one point, Gov. Gavin Newsom appointed Olguin to the state’s community college board.

But the idealistic plans ran into financial realities. With a starting salary of $70,000 for every employee, Bitwise could not make payroll, nor pay its property taxes, as GV Wire reported when it broke the story in May 2023.

The government accused Bitwise of using forged documents to induce loans from several investors. Olguin and Soberal also lied to their own board of directors, painting an optimistic financial picture instead of the impending doom.

Former employees recently won a $20 million class action settlement, mainly paid for the remaining insurance of Bitwise and its board of directors.

In a bit of courtroom levity, as Jim Maxwell testified, he said he is 75 and still working. Coughenour interjected, saying he is 83 and working right now.

Noting Maxwell was a farmer dressed in a suit, the judge relayed a story of catching the last car rental out of Portland, and driving to Seattle. The man behind him asked for a ride as well, which Coughenour agreed. In a suit, the man said he was a farmer. He turned out to be Baron Philippe de Rothschild.

Related Story: What Is Justice in the Bitwise Case? 5 Years or 12 Years in Prison for CEOs?

Family Leaving the Courthouse

The post Former Bitwise CEOs Receive Stiff Federal Prison Sentences appeared first on GV Wire.

Original story

The criminal former CEOs of Bitwise Industries believe they should serve five years in prison. Federal prosecutors say it should be at least 12 years.

Related Story: Former Bitwise CEOs Receive Stiff Federal Prison Sentences

Irma Olguin Jr. and Jake Soberal will learn their fate Tuesday morning, as a federal judge will sentence the pair for two wire fraud charges.

John Coughenour, a visiting judge from Seattle, will preside. Sentencing starts at 9 a.m. in courtroom 5 of the Robert E. Coyle Federal Courthouse in downtown Fresno.

Last July, Olguin, 44, and Soberal, 38, pleaded guilty. Prosecutors charged them with lying to investors and forging documents to save the sinking tech and real estate company.

In court documents filed last week, Olguin and Soberal requested 60 months; the Department of Justice countered with 151. Olguin requested to serve her time at the medium-level Federal Correctional Institution in Victorville. Soberal is asking to serve at FCI Lompoc.

Olguin and Soberal took the blame, saying they were not motivated by greed, but by a misguided effort to save Bitwise. Both said they loaned personal money to keep the company afloat.

The lawyers for each — Olguin and Soberal have different attorneys — also made legal arguments for the lower sentencing. Each attorney highlighted their clients’ respective history helping the community.

“A 60-month sentence would be a general deterrence, reflecting the seriousness of the offense while recognizing Ms. Olguin’s dedication to the underestimated and her life of service, offering both just punishment and the opportunity for positive change,” attorney Daniel Olmos wrote.

“Mr. Soberal is ashamed of his conduct and has not made any excuses. But it is not an excuse to rightly point out that his conduct is not in the same league as defendants who defrauded investors for their own personal gain,” Soberal’s attorney, Eric MacMichael, wrote.

Soberal said he will not contest a presentencing report recommendation to pay $115 million in restitution, but admits it will be “particularly challenging.”

Soberal, Olguin Joked About Crimes

In a federal filing, Olguin and Soberal allegedly joked about their misdeeds.

“Kind of incredible to be doing this dumb f****** thing with you,” Olguin texted Soberal on April 29, 2023.

“People just raves [sic] about watching us do good work and being for us. Old, white, conservative rich dudes. Raving about our crazy, money-losing, progressive ideas,” Soberal texted back.

“I’m really excited to quit this job after we fix this company,” Soberal also texted.

GV Wire previously reported Soberal joking about nefarious business practices during a video company meeting.

Government: Olguin, Soberal Lied, Deceived

In an eight-page memo for sentencing, federal prosecutors said the former CEOs purposely lied to help bolster the company.

“The defendants exploited social impact investors’ desire to do good and continuously deceived them to get more money,” U.S. Attorney for the Eastern District of California Phillip A. Talbert said in the memo.

Talbert said Olguin and Soberal raided the employees’ 401(k) account and reached out to employees’ friends and family for loans.

“Such behavior belies any contention by the defendants that their primary aim in committing the fraud was to protect employees’ jobs,” Talbert said.

Instead of taking advantage of the high-level financial and investment professionals they had access to, “(Olguin and Soberal) hired unqualified family members and friends, which allowed them to compartmentalize information and work in secret to spin the elaborate lies needed to conceal and continue with their misconduct.”

Two of Olguin’s siblings worked at the company.

Despite the criticism, Talbert did say the defendants conducted themselves “commendably” during the investigation.

Some victims may speak at the sentencing hearing, the DOJ’s filing said.

Joseph Barton and Hendry Carbajal III are prosecuting the case.

Olguin Makes Case for Less Time

The defendants filed separate court documents, making their respective cases for leniency.

Olguin said she misjudged the fallout from her actions.

“She feels shame for her failures, the pain she has caused, and the inability to account for the immense suffering her actions would bring. The tunnel vision of ‘payroll at all costs’ was unethical and short-sighted at best,” Olguin’s 46-page sentencing memorandum said.

Olguin’s attorney pointed out that she “affirmatively reached out to the Government,” and cooperated with investigators.

“Since Bitwise’s failing, Ms. Olguin has demonstrated her genuine and steadfast remorse for her conduct; she pled guilty at the earliest opportunity, she has apologized publicly and countless times privately to those who have been affected by her misdeeds, and she stands ready to accept the punishment that this Court hands down,” her court document said.

GV Wire previously reported that Soberal also sent apologetic emails to some investors affected.

Since Bitwise’s collapse, Olguin has volunteered with nonprofits and small businesses, her memo said, but did not specify which companies.

Olguin’s memo detailed her upbringing of poverty in the Central Valley. Education was her ticket to success, awarded a scholarship by the University of Toledo. This eventually led to a career in tech, and the startup of Bitwise in 2013.

She also described accepting herself as queer, despite great fear coming out of the closet.

Soberal: ‘Resorted to Lies’

Soberal also made his case through court documents, asking the sentencing judge to look at his motives.

“In his misguided effort to save Bitwise, Mr. Soberal resorted to lies that became more and more egregious as the situation became more and more desperate. When his efforts to save Bitwise failed, Mr. Soberal took complete responsibility for his actions, volunteering to cooperate with the government and immediately confessing to all of his mistakes, with no promises of leniency,” his 41-page memorandum said.

Despite raising $70 million in investor financing, it was not enough.

“Mr. Soberal buckled under the pressure to raise money to support Bitwise’s growing workforce and embarked on a series of terrible decisions. During the fundraising effort that followed, Mr. Soberal and Ms. Olguin altered the company’s bank statements to reflect inflated cash balances, and also altered an audit report to show higher revenues in a desperate attempt to raise money,” the memo said.

Mistakes escalated.

“What started as a willingness to shade the truth or ignore bad facts quickly turned into overt lies. And as always, those initial lies lead to more lies, more false statements, and more desperation. Mr. Soberal deluded himself into thinking that allowing Bitwise to fail was worse than lying to raise money,” the memo said.

Asking for 60 months, Soberal’s attorney mentioned his three young children.

Soberal described growing up in a dysfunctional family, with expectations to become successful. He also discussed his community service and religious faith.

He turned to alcohol to cope with Bitwise’s mounting problems, his memo said.

Letters of Support

Olguin and Soberal included dozens letters of support.

Jenn Guerra, a former Bitwise employee who has attended several court hearings, wrote a letter on behalf of Olguin.

“Irma’s willingness to meet with me, answer my questions, and take responsibility for her actions has been meaningful in my own healing process. For these reasons, I ask the court to consider a balanced sentence that allows for accountability, restitution, and the possibility of redemption,” Guerra wrote.

Letters came from Shelley Manser, assistant superintendent of Caruthers Unified School District, and several members of a white collar criminal support group Olguin recently joined.

Soberal received support from his wife Sarah Soberal, several former employees, and members of his church.

Wrote his wife, “He made desperate decisions that he so badly wishes he could go back and do differently.”

One jilted investor, Rick Berry of Cal Custom Tile, also defended Soberal, despite not being paid back a $100,000 loan in May 2023.

“I believe he/they got in over their heads and were trying to dig out the best they could. I don’t believe Jake maliciously or intentionally set out to take advantage or scam me,” Berry wrote.

John Dodson, a silent partner during Bitwise’s startup and first CFO, also wrote a letter for Soberal.

Phil Skei, a pastor at On Ramps Covenant Church, and a member of Mayor Jerry Dyer’s administration in the planning department, wrote a letter. Skei wrote about Soberal’s faith, asking for leniency.

A Conclusion to the Company’s Fall

GV Wire first reported in May 2023 about financial cracks in Bitwise. Property taxes went unpaid; employees could not deposit payroll checks. In a matter of weeks, nearly 1,000 workers were furloughed then laid off; the company’s board of directors fired Olguin and Soberal; and the company filed for bankruptcy.

Investors, business partners and former employees filed several lawsuits. Recently, employees settled a class action lawsuit for $20 million.

Olguin documented the Bitwise philosophy, that employees should be rewarded for hard work. All employees would earn a starting salary of $70,000 “regardless of whether the team member held a janitorial role or was a digital marketer.”

The company expanded to Bakersfield, Merced and Oakland, with the goal of offices across the country.

Bitwise did not require any education prerequisites, and aimed to hire those on the margins.

Soberal said the company was about to provide free childcare before Bitwise went under.

Expansion including raising $70 million in two rounds of investments. But, expansion came at a cost.

“Despite receiving considerable funding, Bitwise struggled to cover the ever-growing list of expenses,” Soberal’s attorneys wrote. “While Bitwise created competitive jobs and inspiring office spaces to fuel support of its employees, Bitwise never built an operable financial team.”

Read Sentencing Memos

• Irma Olguin Jr. sentencing memo
• Jake Soberal sentencing memo
• DOJ sentencing memo

The post What Is Justice in the Bitwise Case? 5 Years or 12 Years in Prison for CEOs? appeared first on GV Wire.

Fresno attorney Roger Bonakdar, representing a group of employees who lost their jobs, said any former Bitwise employee could collect. He estimates nearly 700 employees could be entitled to up to $15,000 each.

“It’s a landmark decision,” Bonakdar said Wednesday. “Everyone should be made whole on what was stolen from them.”

Payments could come by early next year, he said.

“I’m truly happy for my clients. Many of the clients have reached out this morning expressing their satisfaction. And really the closure that comes with it,” Bonakdar said.

The settlement was filed today in a Delaware bankruptcy court. Read the bankruptcy settlement here.

Criminal Former CEOs not Involved

Former Bitwise co-CEOs Jake Soberal and Irma Olguin Jr. are not directly involved in the settlement. Federal investigators said their malfeasance led to the company’s destruction. Instead of being honest about Bitwise’s financial troubles, Soberal and Olguin lied to its board of directors, lied to investors, and falsified financial records.

The federal Department of Justice charged Soberal and Olguin with fraud. They eventually pleaded guilty, and are scheduled to be sentenced Dec. 17 at 8:30 a.m. at the Fresno federal courthouse.

After GV Wire broke the story of the company’s financial problems in May 2023, Bitwise furloughed its entire staff on Memorial Day, and laid them off a few weeks later.

The Bitwise board of directors fired Soberal and Olguin in June 2023, and the company filed for bankruptcy a few weeks later.

Related Story: I Am a Former Bitwiser and This Is My Story

Bankruptcy Slows Down Litigation

Two separate set of employees filed class action lawsuits — the Garza class filed in Fresno County Superior court, and the Nunn class filed in federal court in Fresno.

Those were two of several lawsuits Bitwise and its several related companies faced from employees, investors, and business partners. The bankruptcy automatically halted the lawsuits.

The employee lawsuits accused Bitwise of violating state and federal regulations requiring notification of layoffs. Bitwise also bounced payroll checks.

The current negotiations with employees began in earnest this past January.

“The reason the case settled is how much work we put into establishing the exposure for these entities and the directors. An immense amount of work, thousands of hours of time went through combing through the terabytes of data and documents to hold Bitwise accountable.” Bonakdar said.

The settlement holds members of Bitwise’s board of directors and its insurance carriers responsible. The board includes Mitchell Kapor, Paula Pretlow, Ollen Douglass, and Joseph Proietti — all venture capitalists to some degree.

Related Story: Stacks of Lies and Fake Documents: Prosecutors Detail the Fraud Hatched by ...

Who Is Paying for the Settlement?

Former Bitwise president Bethany Mily is involved in the settlement, although she will make no direct payments.

The size of the class is not exactly known. Bonakdar said bankruptcy officials are still determining that number.

Bonakdar urges any former employee who is part of the claim to reach out to him through his Facebook page to make sure they are included.

The settlement allows attorneys’ fees of up to 30%, or $6 million.

Bonakdar said recovery money in a class action lawsuit against a bankrupt company is unusual.

“What we’ve done here is is truly exceptional. These people deserve it. We’re very proud of all the work that went into it, and we’re appreciative for the faith and confidence of the community to help out our friends and neighbors,” Bonakdar said.

The breakdown of where the settlement money comes from:

• $5 million from Great American insurance policy
• $5 million from director Mitchell Kapor
• $4.5 million from Scottsdale insurance policy
• $3.425 million from other Kapor entities
• $2 million from Hanover TPL insurance police
• $75,000 from Motley Fool Ventures (affiliated with director Ollen Douglass)

The post Former Bitwise Employees Settle for $20 Million: Fresno Attorney appeared first on GV Wire.

Meanwhile, attorneys for Soberal, co-defendant Irma Olguin Jr. and federal prosecutors are asking a judge for a delay in sentencing.

In a motion filed Thursday by Soberal’s attorney Eric MacMichael, the parties are asking U.S. Magistrate Judge Barbara McAuliffe to push back sentencing from Nov. 6 to Dec. 17.

The attorneys are asking for the delay “due to defense counsels’ work and travel commitments.”

“This is the first continuance the parties have requested and they do not anticipate requesting any additional continuances of the sentencing date,” MacMichael wrote in the motion, signed off by the other attorneys.

In an update since this story first published, McAuliffe signed the request on Friday, officially moving the sentencing to Dec. 17.

Related Story: Bitwise Settling With Employees for $20 Million. How Much Will Each Get?

Soberal and Olguin, the founders and co-CEO of Bitwise — the technology and real estate company based in Fresno — pleaded guilty to two counts of wire fraud in July. The federal government accused them of lying to investors to raise millions of dollars for the company that eventually failed in 2023.

The court docket lists documents related to character reference letters, and victim impact statements. Those have not been publicly released.

Apology Email?

One of the investors shared with GV Wire an email sent by Soberal apologizing for the incident.

The investor asked GV Wire not to identify him or her because of privacy concerns.

Dated July 26, Soberal addressing his victim, wrote:

I will not pretend to have any understanding of what it is like to see my name pop up in your inbox. I am writing here to apologize, not because I think that an apology is enough, but because it is something that I owe you.

I lied to you and that harmed you, financially at least, and possibly in other ways that I am unaware of. I am deeply sorry for my wrong actions. I also understand that this may feel long overdue. It is. I apologize for that also.

In neither case do I expect or feel entitled to your forgiveness.

If ever it would be helpful to connect by phone or video, please let me know.

Best,

Jake

GV Wire asked other investors if they received a similar email. Of those who responded, they said no.

Soberal and Olguin posted a community apology on social media a day after their July 17 change of plea hearing.

Attorneys for Soberal and Olguin did not return messages left by GV Wire.

Related Story: I Am a Former Bitwiser and This Is My Story

How Much Access Will Media Have?

The court has not assigned a judge for the sentencing, whether held on Nov. 6 or Dec. 17. It is listed in court records just as “District Judge.”

Any member of the public, including media, can attend the hearing in person, a right guaranteed in the Constitution. However, the right to record images — video and photographs — are limited.

No images are allowed at all inside the courtroom. Elsewhere in the building is a matter of interpretation.

Federal code grants an exception to media for photography and videos within “building entrances, lobbies, foyers, corridors, or auditoriums for news purposes.”

The same code also grants an exception to the exception “where security regulations, rules, orders, or directives apply or a Federal court order or rule prohibits it.”

However, the Fresno federal court has local rules — specifically Rule 173 — that bans “All forms, means, and manner of taking photographs, tape recordings, broadcasting, or televising” within the courtroom and “corridors adjacent thereto.”

During the July 17 change of plea hearings for Soberal and Olguin, Judge Dale Drozd banned any cameras within the building at all. Media had to wait outside the Fresno courthouse.

The post Did Bitwise’s Soberal Apologize? Attorneys Ask For Sentencing Delay appeared first on GV Wire.

Attorney Roger Bonakdar of Fresno estimates the settlement will mean about $15,000 for each employee, which could be paid by the end of the year.

“This is huge. It’s an incredible development, for these employees who’ve been shorted and stolen from. And we’re really proud to get them some relief,” Bonakdar told GV Wire.

According to the court documents, “Any awarded Service Payments shall be characterized as non-employee compensation to the Class Representatives and shall be reported to the Taxing Authorities on behalf of each Class Representative on an IRS Form 1099.”

The remainder of the money, according to court documents, will go toward the bankruptcy administrators and attorneys — who are entitled to up to one-third of the settlement amount.

The settlement applies just to employees and not other creditors. Bonakdar said the former employees have priority to collect.

Court documents said fighting for a full settlement in court would be difficult. The trustee investigated 1.4 million documents.

“When weighed against the risks of an adverse outcome, with respect to both liability and to damages, the $20 million that will be realized under the Settlement Agreement … is a very favorable recovery,” attorneys for interim bankruptcy trustee Jeoffrey Burtch said in court documents.

Related Story: Former Bitwise CEOs Answer ‘Guilty’ to Fraud Charges in Federal ...

Preliminary Settlement Filed

The Delaware-based bankruptcy trustee filed the preliminary agreement in bankruptcy court on Monday. Any objection among the parties must be filed by Aug. 14, with a potential hearing on Aug. 21.

Bitwise, the once shining Fresno technology and real estate company, failed on Memorial Day 2023. All employees were furloughed and eventually laid off. The company had been experiencing financial hardship, failing to pay property taxes and having payroll issues.

Court documents said Bitwise’s payroll at the time of its demise was $6 million, when revenues may have been only $3 million. By June 2023, the company had $73 million in outstanding private loans, and liabilities of more than $100 million.

The company filed for bankruptcy in June 28, 2023, weeks after the board fired co-CEOs and company founders Jake Soberal and Irma Olguin Jr.

The federal government charged Soberal and Olguin on two fraud counts, alleging they lied to investors and lenders, and altered financial documents in an attempt to save the company.

Soberal and Olguin pleaded guilty earlier this month, and will be sentenced Nov. 6. Sentencing guidelines indicate a penalty of 12 to 15 years in prison. The plea agreement also requires the defendants to pay $115 million in restitution to the investors and lenders they ripped off.

Related Story: Community Reacts to Social Media Apology From Guilty Bitwise CEOs

Employee: Layoff a Struggle

Two separate groups of employees filed lawsuits, one in the Fresno County Superior Court — the Garza case, represented by Bonakdar, who is also running for Fresno City Council in November — and one in the Fresno-based federal court, the Nunn case.

Victor Carranza worked as a Salesforce administrator at Bitwise for three years. He was a plaintiff in the Garza case.

“It definitely provides some closure,” Carranza says. “It does help.”

Carranza said it was a “struggle” finding work.

“Being able to find work, at a time where a lot of tech companies were going through layoffs, specifically in my space … and since then, it was until about nine months, I found a new role with the new company,” Carranza said.

He said he is “loving” is new company.

Former Employees to Receive Notice

Negotiations started in January among the parties.

Bonakdar said the process is complex, with several more court hearings before the settlement is final.

“We’ve done all the work. We’ve done the heavy lifting. Everyone will start to get notices in the mail in several months from the court. And, the process is moving forward,” Bonakdar said.

Court documents said debtors had a claim against the board of directors — consisting at the time of the company’s collapse of Ollen Douglass, Paula Pretlow, Joseph Proietti, and Mitchell Kapor — “based primarily on an alleged failure to exercise oversight.”

Former Bitwise president Bethany Mily was also part of the defendants settling.

Related Story: Stacks of Lies and Fake Documents: Prosecutors Detail the Fraud Hatched by ...

“I’d like to see these folks get that get money before Christmas. That might be a bit ambitious. But we’re going to be at the mercy of the Delaware bankruptcy court and its timelines,” Bonakdar said.

In both parties’ lawsuits, they claimed Bitwise violated state and federal laws requiring advance notice of layoffs. The plaintiffs will dismiss those claims — as well as any other claim — as part of the settlement.

Potential members of the class action could opt out of the settlement by Nov. 8.

Who Owes What

The settlement money comes from various insurance polices, and members of the Bitwise board of directors or their affiliates.

Court documents specified which party owes how much:

• Hanover Insurance Company: $2 million
• Scottsdale Insurance Company: $4.5 million
• Great American E & S Insurance Company: $5 million
• Director Mitchell Kapor, as part of his preference claim: $5 million
• Motley Fool Ventures (associated with Director Douglass): $75,000
• Kapor and Kapor-related entities: approximately $3.425 million

The post Bitwise Settling With Employees for $20 Million. How Much Will Each Get? appeared first on GV Wire.

But one expert GV Wire spoke to and the federal government downplays the chances that victims will be made whole.

“Most of the time (defendants) use that money to fund a lifestyle or to fund a business or to do something. And by the time they get charged and arrested, they no longer have the funds. And then in other cases … someone has, over the years, done things to convert that money either into assets that are protected or untouchable,” said criminal defense attorney Todd Spodek.

Spodek is based in New York, but has a Los Angeles office. He specializes in financial crimes. He is not directly involved in the Bitwise case, but he has been paying attention.

The Department of Justice accused Jake Soberal and Irma Olguin Jr. of lying, cheating and falsifying documents to keep their company afloat amid a financial collapse. Avoiding a trial, the pair changed their pleas last week to guilty.

Even in its own website, the federal government says not to count on full restitution.

“Unfortunately, as a practical matter, a defendant who has no money or potential to make money may be unlikely to ever make meaningful restitution to the victims of a crime,” the U.S. Department of Justice says, explaining restitution. “Chances of full recovery is very low.”

Related Story: Community Reacts to Social Media Apology From Guilty Bitwise CEOs

Who Gets Paid First?

Victims would share any money equally as it comes in, Spodek said.

“There’s some sort of schedule and it’s pro-rated based on the losses. And each victim receives a share,” Spodek said.

There is not necessarily a pecking order of who gets paid first. When money comes in, it will be distributed to all the claimants proportionally.

The DOJ has not identified all potential victims in court documents but does say there are at least 10. Only victims of the actual crime would be eligible for restitution, which could leave many  unpaid employees and vendors out in the cold. Victims would need to reach out to the court to receive any restitution money.

The federal probation office will examine Soberal’s and Olguin’s financial information to determine how much the defendants have. The plea deal requires cooperation. Spodek said the DOJ is responsible for enforcing the restitution order, which will be distributed by the clerk of the court.

The plea deal also includes a forfeiture agreement, in which Soberal and Olguin agreed to give up any purchases made with ill-gotten gains.

“The judge has the authority to order restitution as part of sentencing, and it’s based on the evidence in the case, so it’s based on the victims’ losses. So in that particular case, it’s a significant amount because of the amount of the fraud and the losses from the individual investors,” Spodek said.

Court documents state that the ill-gotten money “went towards paying the company’s payroll, outfitting office spaces, repaying debts owed to prior investors and lenders, and expenses incurred in the company’s ordinary course of business.”

Bitwise filed for bankruptcy in June 2023, weeks after it laid off its estimated 900 employees, and the Bitwise board fired Soberal and Olguin. The board, in court documents, said the pair lied to them as well about the financial health of the company.

Bankruptcy documents list dozens of people and entities Bitwise owes. Subsequent civil lawsuits revealed some of those that Soberal and Olguin bilked which could be entitled to restitution in the criminal case, including Catalyst Communications, NICBYTE and Agri Capital.

The  criminal victims would have first crack of collecting money, ahead of bankruptcy creditors. The government has 20 years to collect on behalf of victims, once the sentence is final.

Federal restitution law does not allow Soberal and Olguin to get out of paying by filing for personal bankruptcy.

Related Story: I Am a Former Bitwiser and This Is My Story

What Assets Do Soberal and Olguin Have?

Some of the wages earned by Soberal and Olguin, whether in custody or once they are released, would go toward restitution.

The indictment filed last year stated that Soberal and Olguin earned salaries of $600,000 each before the company failed.

Real estate records show that Soberal and his wife Sarah Soberal own a Tower District area home. Real estate website Zillow estimates the value at $544,000.

Olguin owns a home in Port Orford, Oregon, with a Zillow estimate of $795,000.

Soberal used his home, and Olguin used her mother’s home in Caruthers as collateral for bond after the pair initially pleaded not guilty last year.

Spodek said the defendants might be allowed to keep some things of value.

“In a case like this, they would likely negotiate some sort of resolution where they keep some of the assets and some money for their family to live,” Spodek said. “It’s not like the government just takes everything.”

Such items are up for negotiation, Spodek said.

Soberal and Olguin Engaged in Real Estate Sales

Real estate records show Soberal and Olguin engaging in buying and selling several properties over the last few years.

The Soberals bought a home in April 2021 — next to their current residence — for $320,000 and sold it three months later for $400,000.

The couple also flipped a home in 2023 a few blocks away, netting a $23,000 profit in three months.

Olguin sold two homes in 2023. She sold a central Fresno home — bought in 2020 — for $330,000, netting a $95,000 profit. Another central Fresno home bought in 2022 for $220,000, sold in November 2023 — weeks after she pleaded not guilty to the fraud charges — for a $68,000 profit.

The Soberals, Olguin, and former Bitwise president Bethany Mily, invested in a home near Fresno City College in 2021. In eight months, they made a $159,000 profit after the sale.

Sentencing in November

Soberal and Olguin return to federal court Nov. 6 for sentencing. As part of the plea agreement, the federal government will not pursue any other charges, and recommend the low end of sentencing guidelines — 151 months. The defendants can make a recommendation of no lower than 60 months.

Ultimately, it is up to the judge — so far unassigned — to pass final sentence.

The post Who Is First in Line to Get $115 Million Restitution From Former Bitwise CEOs? appeared first on GV Wire.

And they said that an apology now “is too little, too late.”

That was one of several revelations that Irma Olguin Jr. and Jake Soberal made in a two-page letter posted on several of the pair’s social media sites on Thursday. The letter, addressed to “former teammates, investors, lenders, and your respective families,” lists wrongdoings and apologies for committing fraud to keep the company afloat.

Olguin’s attorney Daniel Olmos confirmed the authenticity of the apology, which came hours after former Bitwise employee and current GV Wire journalist Tony Haddad posted a column about his experience at the company.

Related Story: I Am a Former Bitwiser and This Is My Story

“We are deeply sorry,” the pair wrote.

On Wednesday, Olguin and Soberal pleaded guilty to two counts — wire fraud, and conspiracy to commit wire fraud — in federal court. They face prison time likely from five to 12 years, although the judge will make that determination. Sentencing takes place Nov. 6.

The federal government charged them with committing fraud by falsifying financial documents to investors and lenders. Soberal and Olguin admitted to bilking $115 million. They said “those will be the headlines.”

“What hasn’t been in the headlines is our apology — one you are owed, and that is long overdue.”

Related Story: Former Bitwise CEOs Answer ‘Guilty’ to Fraud Charges in Federal ...

Olguin, Soberal Break Silence

Olguin and Soberal continually refused to comment during their prior court appearances. After Wednesday’s change of plea hearing, attorneys on their behalf issued an apology statement via email.

In Thursday’s letter, the defendants said they lied in “egregious ways” to receive money to keep the company going. They kept employees in the dark about the dire financial health of the company, and did not understand the “collateral damage” they caused.

At the peak of Bitwise, I was often asked, “Irma, what would you tell your younger self, knowing what you know now?”

The answer is this: Learn to apologize with your whole heart, and don’t ever let go of the people who still love you when you mess everything up. pic.twitter.com/hoA3tgbZB9

— Irma L. Olguin Jr. (@irms) July 18, 2024

They said they said nothing because “we were asked to.” The letter did not say who made that request.

“It never felt right to us to say nothing to you. If we had shown up and said something, anything, at least … you’d have recognized that,” the letter said.

The Community’s Reaction

After the apology letter was posted on social media, former Bitwisers and the community had mixed reactions on social media:

• “Bitwise was a great idea that inspired many people to start companies and try code that won’t have had that chance otherwise. I hope that Fresno has more companies in the future that dream big but that can actually survive and thrive because it seemed like Bitwise was so close to long-term success.”
• “In a time when my daughter’s life was on the line and my entire world was falling apart, you stepped up as a person of kindness and generosity and that is something I will never forget.”
• “The biggest lesson was apologizing and not committing wire fraud and scamming people? Your company wiped out retirements and hard-working people’s checks that would bounce. You didn’t care about social justice, you were just greedy and exploited your colleagues until you got caught. This apology was just apart of your scam to get less of sentence. Have fun in federal prison!”
• “You intentionally and maliciously deceived investors for your own personal gain of greed and financially hurt the dedicated employees who trusted you as a leader, believed in your mission that were employed at your company who had families that depended on them.”
• “Nobody belongs in the situation you are more than you ”
• “You state, “We lied to lenders and investors… to keep the company going, and keep our teammates employed.” This isn’t some noble sacrifice for Pete’s sake; it’s a calculated lie to cover your failures. You exaggerated Bitwise’s financial health with fake cash balances and revenues, claiming $44 million when it was less than $12 million and $143 million when it was minimal. (Just ask her about “passing the hat” — aka borrowing money from your employees to keep the lights on). Cut the act, this wasn’t about saving jobs although you can say it is and your apologists will keep chiming-in about it; it was frankly about maintaining a façade for your personal gain.”
• “Jake Soberal and Irma Olguin are both crooks, thieves, and ruthless money-hungry individuals who bilked so many employees, businesses, banks, and firms out of tens of millions of dollars!”
• “There is no forgiveness for “Serial Thieves.” You were deliberated and deceitful on your actions. And I am sure you would continue doing it, had you not get caught.”

The Crash and Burn of Bitwise

By avoiding a trial with the guilty plea, the exact narrative of how a company founded with such promise in 2013 crashed and burned 10 years later is yet to be revealed. Bitwise became the darling company championing underdog communities like Fresno, winning acclaim in the tech and venture capital world and from high-profile politicians such as Gov. Gavin Newsom. Olguin spoke at TED Talks.

A made-for-DEI story Olguin told — a gay Latina from the farming community of Caruthers who by sheer determination made it big — gathered attention from the media, and the political world.  At one point, Newsom appointed Olguin to the state’s community college board.

The company toward the end listed dozens of executives, with company insiders saying they earned well over six figures. Among those on the payroll were Olguin’s sister and brother, and reportedly other relatives.

Bitwise raised millions in investments — or so it said. To keep up the charade of a successful company, the Department of Justice said that Olguin and Soberal cooked the books, lied to investors and lenders, and even misled its own board of directors.

GV Wire exposed the financial problems of Bitwise in May 2023. The company did not pay its property taxes, and struggled to make payroll. In the ensuing weeks, the company furloughed and then laid off a reported 900 workers, and the board fired Olguin and Soberal before filing for bankruptcy.

Bitwise still faces civil lawsuits from former employees, investors and lenders. As part of their plea deal, Olguin and Soberal agreed to pay up to $115 million in restitution.

(GV Wire’s Anthony Haddad contributed to this article.)

The post Community Reacts to Social Media Apology From Guilty Bitwise CEOs appeared first on GV Wire.

We even had animals walking around, including my favorite — a little pig that we kept pleading with its owner to bring in (it bit me but it was worth it).

Anthony W. Haddad

The Millennial View

Bitwise often felt surreal. But for those of us deeply committed to the company’s mission, we missed out on many of these perks because we were working tirelessly to drive the organization forward.

We endured long nights. We experienced breakdowns in the office. I cannot speak for everyone at the company but my team did whatever we could to get the job done.

Some of the strongest relationships I’ve built stemmed from trauma bonding with coworkers.

I still remember the many times I’d stride over to our media production team with a last-minute project that needed immediate attention, inevitably pushing everyone else’s work to the back burner. And then there were the moments my team would just sit at the table outside during lunch, staring into oblivion, from the amount of work we had to do. Oh, and bugging my boss every morning was truly a highlight.

We felt like we were working tirelessly to keep the ship afloat, not realizing we had already sunk.

The Writing Was on the Walls

We had our issues. Occasionally, our paychecks were issued as paper checks instead of direct deposits because of “bank issues.” Sometimes our AMEX cards were declined due to what we thought were delays in the accounting department. The warning signs were there, but living in this quasi-wonderland, we chose a blissful ignorance.

The “3EOs”— the two CEOs and the president — were seen by many as strong, inspiring leaders by some. The belief was so strong that one of our activities was the chance to get a matching tattoo with Irma Olguin Jr., one of the CEOs, when we returned to the office after COVID. People were so excited for their chance, but it was horrifying to witness them eagerly getting matching tattoos with someone they barely interacted with in person, driven by a sort of celebrity complex that reigned supreme.

Fortunately, my direct coworkers and I didn’t pay much attention to their constant displays of authority, whether walking around the offices or during their weekly Thursday calls, where they mostly asked each other, “How was your day?”

Sitting there for an hour just to hear one of them talk about how they slept the night before or how one just had a stomach ache was a waste of everyone’s time. When we returned to the office, many of us were ushered into the auditorium to watch these chats live. The marketing events team, which really brought the fun to the work environment, would blast music and distribute free food while we were getting ready to waste our next hour. However, the idea persisted that we would dedicate a full hour of company time each week to listen to three people talk about nonsense.

They preached that we were there to help the underserved, that our purpose was to ensure that those without a place had one at Bitwise, encapsulated by the tagline, “No One Belongs Here More Than You.”

What we didn’t realize was how much of what they said was a lie.

Perhaps Bitwise began with genuine intentions to help the community. But it soon became clear that media attention, money, and influence were the leaders’ true goals.

Related Story: Stacks of Lies and Fake Documents: Prosecutors Detail the Fraud Hatched by ...

A Memorial Day That Will Live in Infamy

On Memorial Day we were sent an email and given eight minutes to scramble to our computers on a holiday evening to hear our leaders say, “This sucks.” No apology, no explanation — just an announcement that we were immediately furloughed and our checks would most likely bounce.

Something fishy about this situation is that all Bitwisers were sent to work from home with the option to take all of their belongings because, supposedly, we were moving into our newly renovated, larger building the following week. Convenient timing for a clean-up, huh?

Prior to this, GV Wire published an article about Bitwise not paying taxes. Jake Soberal, co-CEO, gave an interview about the company’s booming finances, that we now know were blatant lies. Shortly after, another article addressed the payroll issues, which Bitwise employees were already dealing with.

We rushed to that article, hoping for more information than what the company was providing. At that moment, it felt like the dream job was close to over. However, we worked as if this would blow over and everything was fine. We learned, quickly, that nothing was fine.

I remember when, during one of the Thursday calls, Soberal made what we all thought was a joke about how to commit crimes involving investors. The video definitely did not age well once we discovered he was actually telling the truth.

When we lost our jobs, we lost more than just our income. Many Bitwisers lost their cars, their houses, their marriages, their friends, and their sense of security.

I quickly learned how to apply for unemployment benefits and obtain an EBT card. I was one of the lucky ones; all I lost was my roommate, but we stayed in touch. Still, I felt alone and worthless, sitting there with no job, feeling like the world was crashing around me. I watched many people that I saw every day lose everything. The CEOs didn’t just take our money, they stripped years from our lives.

For a couple of weeks, we were in limbo about our furlough until we received an email from our new company president stating that we were terminated. We had no details on whether we would ever get our money back. They owed us 401K matches, employer-paid taxes, and our last paychecks. Thousands of dollars that I will probably never see.

Some Sort of Resolution

Now, after more than a year of waiting, we’ve finally received some “justice.” It’s not the money owed to us, but it’s something to help us cope with what happened.

On Wednesday, Soberal and Olguin pleaded guilty in federal court. Soberal and Olguin altered financial documents, deceived investors, and lied to everyone. They took a plea deal for one count of wire fraud and conspiracy to commit wire fraud. As part of the plea, the federal government will not pursue additional charges and they’ll likely be sentenced to five years each in prison.

And, they agreed to make $115 million restitution — like there’s any chance of that ever happening.

Even though the courts have completed most of their process and I’m glad there is some punishment for their actions, it doesn’t erase what they did. The nearly 900 employees of Bitwise will forever bear the scars of having their lives upended and being forced onto a different path. Luckily, the Bitwisers are resilient and we relied heavily on each other (and also the kindness of the community).

Their defense attorneys issued a statement: “The important message for today is that Jake and Irma are profoundly sorry for the hurt they’ve caused.”

When we were fired, we never received an apology. When our coworkers approached them in public, they never offered an apology. Nothing from them on social media, either. Not even a simple “sorry.”

Knowing them like I do, I doubt they’re truly sorry for the damage they caused. Like most criminals, they’re sorry they got caught.

Irma Posts Apologies

Hours after this column was released, Olguin Jr. posted a two page apology on behalf of herself and Soberal on social media.

At the peak of Bitwise, I was often asked, “Irma, what would you tell your younger self, knowing what you know now?”

The answer is this: Learn to apologize with your whole heart, and don’t ever let go of the people who still love you when you mess everything up. pic.twitter.com/hoA3tgbZB9

— Irma L. Olguin Jr. (@irms) July 18, 2024

The post I Am a Former Bitwiser and This Is My Story appeared first on GV Wire.