Former Bitwise co-CEOs Jake Soberal and Irma Olguin Jr. will each spend roughly the next decade in prison.
U.S. District Court Judge John Coughenour sentenced Soberal to 11 years in prison and Olguin to 9 years.
The big picture: Coughenour gave Soberal the more lengthy sentence of 132 months, compared to 108 months for Olguin, because he was a licensed attorney in California.
- Coughenour said Soberal deserved a harsher punishment because attorneys should be held to a higher standard.
- They both have to report for their incarceration on March 18, 2025.
- Soberal and Olguin agreed to pay $115 million in restitution to their victims, which they admitted in court they will likely never be able to.
- They will both have three years of supervised release after they serve their sentences in prison. Soberal requested to serve his sentence at Federal Correctional Institution, Lompoc. Olguin requested to serve her sentence at Federal Correctional Institution, Victorville.
The backstory: Earlier this year, Soberal and Olguin agreed to a plea deal in the $115 million federal fraud case, pleading guilty to one count of conspiracy to commit wire fraud and one count of wire fraud.
- They were arrested and charged with fraud after Bitwise collapsed on Memorial Day 2023, resulting in a federal investigation that revealed the co-founders and co-CEOs repeatedly lied to investors, lenders and employees about the failed company’s finances.
- Soberal and Olguin each pushed to be incarcerated for five years, while the government asked the court to sentence them to 12 years and seven months in prison – which was the low-end of the sentencing guidelines.
What they said: Soberal and Olguin presented themselves in court on Tuesday morning as compassionate and remorseful community leaders who never committed the fraud for personal gain.
- They both addressed Coughenour and the dozens of former employees and victims who attended their sentencing.
- Soberal apologized, saying he deliberately lied, which goes against the Christian ethics that he tries to live by.
- “It is my dishonesty that created the pain and suffering,” Soberal said. He said he is deeply sorry to the lenders and investors and will spend a lifetime trying to fix his mistakes.
- Soberal admitted to being a liar who will lie to get what he wants.
- “I will admit I enjoyed the power and influence,” Soberal said when talking about how he enjoyed being the co-CEO of Bitwise.
- Olguin also apologized for committing fraud. “I am so sorry for taking your money,” she said. Olguin added, “It was a deliberate effort to mislead.”
- Olguin also appealed to the judge based on her race, gender and sexual orientation when pushing for a five-year sentence.
- “I’m worried that people will distrust Mexican Americans, queer people and women more than they did before because of my actions,” Olguin said.
The government’s response: Federal prosecutor Joe Barton asked Coughenour to give Soberal and Olguin over 12 years in prison, arguing that the victims are out of $115 million, with the prospects of getting restitution nonexistent.
- “The fraud here was egregious,” Barton said. He also discussed the text messages that the government submitted in its sentencing memo, which revealed Soberal and Olguin saying they felt powerful after scamming investors. Barton said those messages showed their true arrogance, arguing that this was a detailed scheme that was not simply to make payroll.
Victims speak: Four victims addressed the court and asked Coughenour to impose the maximum sentences on Soberal and Olguin.
- One of those victims was local farmer Brian Maxwell, who told the court that he lost $1.6 million to Bitwise because of the lies perpetuated by Soberal and Olguin.
- Maxwell said he invested four times, starting in 2019. In the final meeting they had before the company collapsed, Soberal showed Maxwell a bank statement showing that Bitwise had $65 million in the bank, when in reality the company only had $3,000.
- Maxwell added that the narrative Soberal and Olguin spun for themselves as compassionate community heroes is false.
- “They didn’t have empathy in robbing my family,” Maxwell said. He continued, “They weren’t building a business. They were building a pedestal for themselves.”
