Light charges against Bitwise Industries co-founders shows a tale of two fraud cases

The fraud case of Bitwise Industries’ co-founders features bigger losses yet fewer charges than those against former Rep. TJ Cox (D–Fresno).

All signs point to Bitwise founders Jake Soberal and Irma Olguin Jr. having negotiated with the Federal government over their charge of conspiracy to commit wire fraud in excess of $100 million. 

While a full-blown deal may not have been agreed to, local legal experts tell The Sun it’s clear that the government is open to offering some sort of concessions if Soberal and Olguin tell the truth. 


The backstory: Last week, Soberal and Olguin pleaded not guilty in Fresno’s Federal court to the fraud charge. 

  • The criminal complaint accused them of falsifying financial records and lying to investors to receive over $100 million in funding. 
  • The U.S. Securities and Exchange Commission also filed a complaint against the duo, alleging that they misled investors about finances relating to $70 million that was raised last year. 
  • Soberal and Olguin agreed to a judgment with the SEC, signaling their openness to working out a deal with the government. 

An expert’s take: Along with their willingness to deal with the SEC, Soberal and Olguin “admitted to significant wrongdoing” in an interview with the government in September. 

  • Fresno criminal defense attorney Mark Broughton told The Sun that Soberal and Olguin have clearly negotiated with the government for the criminal case, something that’s not uncommon. 
  • One sign of negotiations is that the Federal government only charged them with one count of conspiracy. In comparison, former Congressman TJ Cox was indicted on nearly 30 counts.
  • Their admissions to the Federal government, per the complaint, paint a clear picture that negotiations took place, although Broughton warned that a full-blown deal is not necessarily in place at this point. 
  • “I would be very surprised if they agreed to anything specific going in,” Broughton said. “[Federal prosecutors] may have had said, ‘We’ll agree not to ask for your clients to be detained, or we’ll agree initially only to file a single count.’ Something like that. I don’t see that they would’ve done anything substantive. It’s still too early in the case.” 
  • Broughton said it wouldn’t be a complete surprise if a deal was negotiated, but he noted it’s more likely that the government simply wanted to ensure that Soberal and Olguin couldn’t travel out of the country by asking the court to take their passports away – part of the requirements they consented to in order to avoid incarceration.
  • Broughton has been in many such negotiations with the government on behalf of clients and said Soberal and Olguin had to go in in September and tell the truth if they wanted any hope of striking a deal at anytime throughout the case. 
  • “[Prosecutors] know a lot of information by the time they talk to you,” Broughton said. “And they will tell you – and I’ve had this happen before – that ‘if you lie to us we’re getting up and leaving and you’re going to get no deals whatsoever.’ And I’m pretty sure that that message was conveyed.”
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