Bitwise founders and former co-CEOs Jake Soberal and Irma Olguin Jr. could be barred from having their attorneys be paid for by insurance.
Former Bitwise Industries directors Joseph Proietti and Ollen Douglass filed an amended complaint in the Fresno County Superior Court alleging fraud by Soberal and Olguin.
The big picture: Proietti and Douglass are seeking to keep Soberal, Olguin and former Bitwise President Beth Mily from having their legal costs covered by Scottsdale Insurance Company.
- Bitwise had a policy with Scottsdale Insurance to provide an annual limit of $5 million in Directors and Officers and Company Liability insurance coverage.
- According to the lawsuit, Scottsdale has agreed to provide coverage for Soberal, Olguin and Mily. The complaint argues that Bitwise secured the policy with Scottsdale based on material misrepresentations made by Soberal and Olguin, which should preclude them from being covered by it.
- On the other hand, Scottsdale has refused to cover Proietti and Douglass in separate lawsuits from former Bitwise employees. The two directors are seeking a ruling from the court to force Scottsdale to cover them.
Go deeper: Proietti and Douglass accuse Soberal, Olguin and Mily of using false financial records and lies to solicit loans, insurance coverage and investments in Bitwise.
- “During this time, the Management Defendants paid themselves lavish salaries and perks such as company cars,” the lawsuit reads.
- The two directors claim that the $5 million policy from Scottsdale will be used up “defending the fraudsters” unless the court intervenes.
- “In an attempt to enrich themselves and avoid responsibility for their unethical, self-dealing actions for as long as possible, the CEO Defendants told lie after lie to cover up previous lies,” the lawsuit reads. “They borrowed millions upon millions of dollars without Board knowledge or authorization, often using funds from one defrauded party to pay themselves or another defrauded party.”