Fresno-based marketing company Catalyst Communications filed a lawsuit against Bitwise and former co-CEO Jake Soberal alleging fraud in a short-term loan transaction the failed tech and real estate company solicited.
The lawsuit reveals claims by Soberal that Bitwise was flush with cash just weeks before its financial collapse at the end of May.
The big picture: Soberal contacted Catalyst Communications CEO Mark Astone on May 10 to solicit a $200,000 loan for Bitwise.
- An email provided by Astone in the lawsuit shows that Soberal claimed Bitwise was earning over $200 million in annual revenue and had $65 million cash on hand.
- Soberal offered a 15 percent return on the loan, meaning Catalyst Communications would have received $30,000 in profit when the term of the loan ended on Sep. 12.
- Unlike other prospective deals shared with The Sun, which were collateralized via shares owned by Bitwise’s co-founders, this loan was backed by a corporate guarantee.
- Astone agreed to fund the loan, and Bitwise had the $200,000 in hand on May 12.
Driving the news: On May 29, just a few weeks after Soberal asked Astone for the short-term loan, Bitwise furloughed its 900-person workforce as the company was in financial ruin.
- “These claims of financial strength and reliability were completely and utterly false when made,” the lawsuit reads. “The unfortunate truth is that Defendants have recently failed to make payroll payments to their employees, have furloughed their entire workforce, and are substantially behind on property tax and lease payments.”
What we’re watching: Catalyst Communications is seeking $525,000 in damages from the firm and Soberal.
- The lawsuit is scheduled for a case management conference on Sep. 27.