Fresno city officials are looking to claw back grant money from Bitwise Industries amid the company’s drastic financial collapse over the last week that resulted in the furlough of 900 employees.
During a Thursday press conference at City Hall, City Council members Mike Karbassi and Nelson Esparza announced a proposal to cancel an existing $1 million contract that Fresno has with Bitwise Industries.
Driving the news: Last year, the city solicited organizations with $10 million total in American Rescue Plan Act funding to help various parts of the community recover from the COVID-19 pandemic. Bitwise was awarded a $1 million contract and had received $500,000 so far from the city.
- The proposal before the council next week would terminate the agreement and cease any further business with Bitwise Industries until the present financial situation has been resolved.
- City Manager Georgeanne White told reporters Thursday that the city received the first quarterly report earlier this year for how Bitwise spent the first $120,000. The second report is due on July 14. The council will discuss how to recapture any of the remaining $380,000 that has not yet been spent.
Bitwise’s tax delinquency: Fresno Mayor Jerry Dyer revealed in a letter Wednesday that Bitwise has not paid its city business taxes since September 2021. White said Bitwise has a tax cap of $21,000, meaning that number is the most that the city has not received in delinquent tax payments from the company.
- Businesses self report their taxes to the city, and White stressed that the city does not try to punish businesses for being late on payments, especially during the height of the COVID-19 pandemic. White said the city sent multiple delinquent notices to Bitwise.
- When asked how Bitwise was eligible for the $1 million contract while being delinquent on its taxes, White provided the following answer: “I think that’s one of the things that we need to tighten up. I asked specifically, whether it be Bitwise or any company that we do business with on any Thursday council meeting, if we have included in our process to ensure that they have their business tax certificate. We’re still looking into where that is in the system. Clearly that didn’t happen in this instance.”
- White added, “We’re going to have to take a look at our process and make sure that we have the checks and balances. As with any bureaucracy you have different departments doing different things, so we need to make sure that we have a comprehensive checkoff system to make sure that everybody – before the contract is signed – that that’s part of the checklist that people have a current business tax certificate.”
The WARN Act: City officials also with Bitwise violating the California Worker Adjustment and Retraining Notification Act (Cal WARN Act), which requires employers with 75 or more workers to provide 60 days to advance notice to the employees, the Employment Development Department and the local government for a furlough of this size.
- Karbassi stressed that the city needed that time to set up its response and help employees with the transition to other jobs, and he called out Bitwise co-founder and co-CEO Jake Soberal for not doing that.
- “I firmly believe Jake Soberal and Bitwise have robbed this city of that time, that critical time,” Karbassi said.
- In a follow-up question pointed towards Soberal’s culpability, Karbassi said “I can’t comment if anyone’s criminal. But I can say in the case of Mr. Soberal, he’s very irresponsible. And no, I would not hire him or the other 54 vice presidents the company has for some reason.”