What's at stake?
The duo was facing up to 40 years in prison in connection with charges of conspiracy to commit wire fraud and wire fraud.
The disgraced former CEOs of Bitwise Industries, once the Central Valley’s tech startup darling before its spectacular fall, will spend nearly a decade in prison, a federal judge ruled Tuesday.
The sentence was handed down by Judge John C. Coughenour, more than a year after Jake Soberal and Irma Olguin Jr. surrendered to federal authorities.
Soberal, a former attorney, received an 11-year federal prison sentence, while Olguin was hit with nine years in prison.
The judge said Soberal’s training and experience as an attorney was a factor in the additional two years on his term.
The duo was facing up to 40 years in prison in connection with charges of conspiracy to commit wire fraud and wire fraud. Soberal and Olguin pleaded guilty to the charges in July in exchange for a more lenient sentence.
But this hearing is hardly the end of the Bitwise story, with the company’s Chapter 7 bankruptcy case still pending, and hundreds of workers still waiting on payouts from a $20 million settlement in one of the many class action lawsuits filed against the company in the wake of its collapse.
The scene in the courtroom Tuesday
Defense attorneys for Soberal and Olguin both pleaded with the judge to hand down the minimum sentence agreed to in the pair’s plea bargain, which was five years.
Both also cited dozens of letters shared with the court from friends and family of Soberal and Olguin as proof of their character outside the commission of their crimes.
The U.S. attorney’s office was meanwhile requesting 151 months of prison time, or about twelve-and-a-half years, for both Soberal and Olguin.
Multiple investors who lost millions of dollars as the result of the former CEOs’ actions also addressed the judge Thursday, requesting the maximum sentence for Soberal and Olguin’s crimes – which is 20 years for each count.
“The real business model was to steal from as many people as possible,” said Brian Maxwell, who had loaned Bitwise over $1 million.
Maxwell’s father Jim, who also lent money to Bitwise, said Olguin and Soberal’s crimes “poisoned the well of trust up and down the Valley,” especially when it comes to social-impact investing.
Coughenour, a Reagan-appointee and visiting judge to the Eastern District of California, referenced the sentencing of Elizabeth Holmes, the former CEO of blood-testing company Theranos, in handing down Soberal’s sentence.
“Out of my respect for Judge (Edward) Davila,” Coughenour said, he opted to give Soberal the same number of years behind bars.
The judge also included three years of supervised release in Soberal and Olguin’s sentences and ordered them to pay more than $114 million in restitution.
What are people saying about the sentencing?
Courtroom 5 at the Robert E. Coyle Federal Courthouse in downtown Fresno was brimming with former Bitwise employees Thursday, even before the hearing began.
By the time Olguin delivered an emotional apology to the court, it was also overflowing with emotion.
Both Olguin and several members of the audience shed tears as she apologized to employees, directly addressing some of them for the first time in months.
“I’m sorry I broke your heart,” she said.
Olguin also expressed grief over the touting of her success story – as a queer Latina charting a course in tech – and how that will affect the future of entrepreneurship in the Central Valley.
“I fear that I dragged them all down with me today,” she said.
Soberal also apologized during the hearing, saying his actions were “out of step” with the Christian worldview he tries to live by.
“I told you the company was succeeding when it wasn’t,” he said regarding employees.
“I will find a way to do good while incarcerated,” he added.
Leaving court, other employees shared their mixed emotions regarding the former CEOs’ sentences.
“I think it’s just a sad, unfortunate situation for everybody involved,” said David Ramirez, who got his first full-time job out of college for Bitwise.
“Any extended time in prison isn’t really something I would wish on anybody, much less two people that I know and respected.”
Jenn Guerra, who had previously called for the maximum sentences for Soberal and Olguin, submitted a letter requesting greater leniency for Olguin.
“By no means (do) I think that they’re innocent or that they shouldn’t go to jail at all,” she told Fresnoland in an interview after the hearing.
“It’s just, I felt like maybe they’d do more good if they could pay people back,” she said. “I don’t know if they could really do that if they’re in prison for most of their life.”
What comes next for the Bitwise story?
The judge gave Soberal and Olguin 90 days, or until March 18, to surrender themselves.
Soberal’s attorney requested Soberal serve his sentence at the low-security federal correctional institution in Lompoc, citing the availability of a substance abuse treatment program at the facility for his client to use.
Olguin’s attorney requested the federal prison camp in Victorville.
But while this signals the end of Soberal and Olguin’s criminal case, the Bitwise fallout continues to unfold in bankruptcy and civil courts.
Hundreds of employees who abruptly lost their jobs when Bitwise collapsed also saw their final paychecks bounce – and have yet to be repaid.
But a $20 million settlement reached in two of the class action lawsuits filed against Bitwise for failing to notify employees in advance of mass layoffs means that “virtually all, if not all, employees” will recover those lost wages, attorney Roger Bonakdar told Fresnoland on Monday.
Bonakdar, one of the attorneys representing ex-Bitwise workers in one of the class action suits, said in bankruptcy court, there’s a statutory cap of $15,000 per employee as far as how much they can receive for “wage theft and those related claims.”
But many of the employees he’s representing are owed less than that.
He expects between 500 and 800 former employees to benefit from this settlement – a number that the bankruptcy court claims administrator will finalize in the first three months of 2025, he added.
The soonest employees will get payouts from the settlement is “toward the end of the first quarter of 2025,” he estimated.
“What we’ve achieved was achieved in record time,” he added, “and is nothing short of outstanding for these deserving employees.”
Bonakar, who attended Thursday’s hearing, told reporters following the sentencing that from the perspective of some of his clients, “no sentence was going to make it right.”
“They’re heartbroken,” he said, “but I hope that today it just helps bring closure to them and their families to move forward.”
Comments are closed.